[Mon]: Chinese exports are not expected to pick up steam until the second half of the year, The Hightower Report said. They noted that the market is continuing to probe for a low enough price level to clear the short-term supply “without help from China”… [Fri]: National carcass base was 13 cents lower… Iowa-Minnesota was 34 cents higher… USDA reported carcass cutout values this afternoon fell 29 cents… Analysts are concerned for hog markets if no trade deal happens…
Farm Commodity Newsletter/Iowa Farmer Today
Mon 2/11/2019 8:51 AM
Lean hogs - “The chart continues to be a technical graveyard and a retest of the contract lows are in play,” Blue Line Futures said. “There will likely be a short squeeze at some point, but you have to remember that the market can stay irrational a lot longer than you can remain solvent.”
Chinese exports are not expected to pick up steam until the second half of the year, The Hightower Report said. They noted that the market is continuing to probe for a low enough price level to clear the short-term supply “without help from China.” They also note that if tariffs on U.S. pork come down “China buyers might turn active,” but there is no sign of a low.
More African swine fever reported by China
Another African swine fever outbreak was confirmed in the Hunan province, Allendale said. “The outbreak was on a farm with 4,600 live pigs in the city of Yongzhou, infecting 270 of the animals and killing 171, the Ministry of Agriculture and Rural Affairs said,” Allendale said.
In the cattle markets, there was news packers were bidding $125.00 for cash cattle in the southern plains, but “that producers were holding out for more helped to drive the market sharply higher on Friday,” The Hightower Report said.
Fri 2/8/2019 5:06 PM
In weighted average negotiated prices for barrows and gilts, USDA reported:
National carcass base was 13 cents lower to $49.43/cwt. (last week: $50.38)
National live was down $1.07 to $38.50 (last week: $39.80)
Iowa-Minnesota was 34 cents higher to $49.16 (last week: $50.25)
USDA reported carcass cutout values this afternoon fell 29 cents to $64.82/cwt. (last week: $66.99).
“The market is trading sharply lower on the session as traders see a continued flow of record high slaughter ahead,” the Hightower Report said. “Weakness in pork is pulling the cash market lower as the market searches for a low enough price to clear the short-term supply. Pork values collapsed this week and are down to the lowest level since late August.”
The big U.S. pork supply continues to be a challenge for hog markets in the short-term outlook. “For the shorter-term contracts, heavy domestic pork supply is keeping the pressure on prices,” Stewart-Peterson said.
Trade concerns, supply challenge pork
Analysts are concerned for hog markets if no trade deal happens.
“If a deal is not signed by March 1, the U.S. is scheduled to increase tariffs on Chinese goods and this would damage trade progress significantly,” Stewart-Peterson said.
Beef export numbers from last November provided somewhat mixed information about the trends.
“U.S. beef exports for the month of November were reported at 266.5 mln pounds which is down from 272.1 pounds in October but up from 260.6 pounds in November 2017,” the Hightower Report said.
Slaughter estimates this week were estimated at 585,000 head for cattle and 2.299 mln head for hogs. The cattle number is up 18,000 from last week and up 11,000 from a year ago. The hog number is up 223,000 from last week.
No 'whopper' number in USDA reports
Today’s USDA report was positive for beans, but nothing dramatic.
“Today soybeans firmed up on the USDA report,” said Virginia McGathey, of McGathey Commodities. “It was bullish today. It seems that the market had already digested that positive report. … We had hoped for a big whopper of a number to inject something positive into the market, but it wasn’t to be.”
It was the first USDA report since the federal government shutdown.
Markets are also watching the approaching tariff deadline in the U.S.-China trade issue. “President Trump is also unlikely at this point to meet with Chinese President Xi before the March 1 trade deadline,” Stewart-Peterson said. “At this point, the U.S. is scheduled to raise tariffs on March 1 if no deal has been signed.”
Corn received less positive news in today’s USDA report. The markets had an initial spike, but came back somewhat after the report.
“Corn was a little bit higher today, and we had a bearish USDA report,” said Virginia McGathey, with McGathey Commodities. “… Once they got the news that was somewhat of a bearish report on the stocks, we moved it lower.”
“Trade will now be watching world economy, U.S. economy and any news from Washington especially on trade and 2019 weather,” according to Steve Freed, vice president of grain research for ADM Investor Services. “Talk of higher world 2019 corn supply could limit upside and could encourage a slow trend lower, unless there is a good China trade deal that includes more U.S. farm imports.”
The report modified several bean numbers.
“USDA lowered U.S. 2018 soybean crop 56 mln bushels,” said Steve Freed with ADM Investor Services. “Yield was 51.6 vs. 52.1 previous. USDA then lowered exports 25 mln bushels and raised the crush 10 mln bushels. The net was a drop of 45 mln bushels in the carryout to 910. This is not the 1,000 mln bushels feared, but still a record.”
The numbers were bullish, but traders still had reasons to be cautious. Exports and carryout numbers remain a concern.
“On paper, these numbers would seem bullish, but the trade still doubts the export number and a 910 mln bushel carry out is double 2017-18’s 438 mln,” the Hightower Report said.
In today’s USDA report, the department announced lower winter wheat acres and wheat carryout.
“USDA estimated U.S. 2019 winter wheat acres near 31.3 mln vs. 32.1 expected and 32.5 last year,” said Steve Freed with ADM Investor Services. “USDA lowered world wheat carryout to 267.5 mmt vs. 268.1 previous and 280.0 last year.”
Analysts are watching the 2019 wheat supply and export news going forward.
“Talk of higher world 2019 wheat supply could limit the upside and could encourage a slow trend lower, unless there is a good China trade deal that includes more U.S. farm imports,” Freed said. “News that Egypt bought U.S. SRW helped Chicago futures.”