[Thurs]: Global meat production may fall for the first time in 20 years, the United Nations said. The impact of African swine fever in China has been widespread, with nearly 10,000 slaughter houses in the country beginning to test fully for the disease on July 1, Steve Wagner of CHS Hedging said. Cattle is “extremely oversold,” The Hightower Report said… [Weds]: Boxed beef cutout values today were lower… Choice down 86 cents… Select down $4.34… In negotiated cash sales in Nebraska, the USDA reported live sales of 14,442 head at $120.66, with dressed sales of 4,894 head at $191.27. In Iowa, live sales of 1,853 head were reported at $120.71. Dressed sales of 2,072 head sold for $191.35. Stewart-Peterson says cash trade early in the week is running $2 below last week, with beef values also taking heavy losses recently…
Farm Commodity Newsletter/Iowa Farmer Today
Thu 5/9/2019 8:52 AM
Cattle - “Live and Feeder Cattle continue their slide as the market experienced liquidation of a record amount of long positions by funds,” Marc Nemenoff of the Price Futures Group said. “We have taken profits from long put spreads and I am now looking to the long side of the market.”
The feeder cattle chart “continues to look like a decaying skunk on the side of the road,” Blue Line Futures said. They noted the market is “extremely oversold,” as traders are trying to find technical support in uncharted territory. “In order for the market to find its footing, the bulls need to achieve consecutive closes above $146.45-147.80,” they said.
Meat production down globally
Global meat production may fall for the first time in 20 years, the United Nations said. The impact of African swine fever in China has been widespread, with nearly 10,000 slaughter houses in the country beginning to test fully for the disease on July 1, Steve Wagner of CHS Hedging said.
Cattle is “extremely oversold,” The Hightower Report said, however the short-term supply flow remains active. “Open interest is down sharply in the past few weeks and the market is probing for a short-term low,” they said.
Wed 5/8/2019 4:43 PM
Boxed beef cutout values today were lower on Choice and sharply lower on Select on light demand and heavy offerings, USDA said.
Choice down 86 cents to $223.01/cwt.
Select down $4.34 to $207.49/cwt.
In negotiated cash sales in Nebraska, the USDA reported live sales of 14,442 head at $120.66, with dressed sales of 4,894 head at $191.27. In Iowa, live sales of 1,853 head were reported at $120.71. Dressed sales of 2,072 head sold for $191.35.
Stewart-Peterson says cash trade early in the week is running $2 below last week, with beef values also taking heavy losses recently. “Given the cheap price of cattle, production has been running at an extremely fast pace,” they said. Despite that, prices remain oversold.
Hightower says cash prices were lower in Kansas and Texas, and traders remain concerned over a large supply of cattle going to market in the coming months. “The weakness in beef prices in a time frame of seasonal strength has added to the bearish tone,” they said.
Fed cattle fall hard today
August fed cattle prices closed sharply today – the lowest closing price since June 28, says The Hightower Report. An early rally disappeared as buying dried up near yesterday’s highs and the market experienced more long liquidation selling. Cash prices traded $2 below yesterday.
According to Stewart-Peterson, “trade negotiations between the U.S. and China will be watched very closely this week as the market tries to price in future exports.” Seasonal demand for pork is also expected to increase soon.
Corn holds ground, tariffs loom
July corn futures held firm just above contract lows, says ADM Ag Market View. The news that President Trump will set additional tariffs on China’s exports if trade negotiations don’t progress raised concerns about corn prices and export demand. No trade deal could send July corn below $3.50.
Stewart-Peterson says a price gap remains on the November chart between $8.62 ½ and $8.58. They say “given the oversold status of prices right now, a bounce to fill the gap is not out of the question.”
The corn market retreated Wednesday from drier forecasts next week in the Midwest, says Hightower. According to the National Weather Service, May 13-21 is supposed to be relatively dry. July corn settled down 2 ¼ cents at $3.64 ¼ after pushing down to a low of $3.61 ½.
Stewart-Peterson says a major Argentine crop scout increased corn production there to 49 mmt, and raised Brazilian estimates to 97 mmt. While expectations that reaching a trade deal this week have diminished, many are still hoping to see some progress prior to the weekend.
Large South American supplies of beans could prompt China to cancel all U.S. orders if trade talks fail this week, says Hightower. The China National Grains and Oils Information Center sees expanding feed needs for the year beginning in October, and expects bean exports to be slightly higher than a year ago.
Barchart says old stock beans are expected to be up 25 mbu in Friday’s USDA monthly report. Futures were down 2 to 3 ½ cents Wednesday, with meal futures higher and oil future prices lower in trading.
Weekly export sales are estimated near 75 to 250 mt, as compared to 122 last week, says ADM Ag Market View. USDA’s goal is 945 versus 901 last year. Above normal rains could slow maturation of the wheat crop, in addition to raising concerns about wheat quality.
Stewart-Peterson says “momentum studies are pointing higher for the wheat markets after making near term lows over the past week or so.” They add given the low price of wheat compared to corn, near term upside can be expected.