[Mon]: Friday’s rally in the midst of the “collapsing” negotiations with China is a positive, The Hightower Report said. They noted that a bearish sign for demand news did not spark more selling, and the market could be primed for a bounce… [Fri]: Boxed beef cutout values this afternoon were lower… Choice fell $1.36… Select went up 38 cents… In negotiated cash sales in Nebraska, the USDA reported 318 head sold live at $118, with 1,557 head sold dressed at $185-188. In Iowa-Minnesota, 597 head were sold live at $118-120, while 862 head sold dressed at $185-190… “The better weather forecast for next week may boost retail demand,” Stewart-Peterson said. They noted that the Supply and Demand, while a grain focused report, showed there are expectations for higher beef production and lower beef exports in 2019…
Farm Commodity Newsletter/Iowa Farmer Today
Mon 5/13/2019 8:41 AM
Cattle - Friday’s rally in the midst of the “collapsing” negotiations with China is a positive, The Hightower Report said. They noted that a bearish sign for demand news did not spark more selling, and the market could be primed for a bounce.
The August cattle contract may be “turning up” from being extremely oversold, The Hightower Report said, despite open interest dropping sharply. “Aggressive short-term traders might consider selling August $105.00 puts near 225,” they said, with support near $107.57.
Cattle rally may continue this week
A rally late in the week helped cattle futures “but it was just shy of a positive weekly close,” Blue Line Futures said, marking the third week in a row for a weekly close down. They said the market had a similar sell off last year, and the market is “4 points more oversold this year” based on the RSI. Due to that, they expect to see some relief, they said.
With African swine fever still spreading, China still has a “significant” pork need, The Hightower Report said. “The last of a trade deal could keep demand for U.S. pork slow for now,” they said, however, “We are entering a very strong seasonal period for cash and pork product prices and this may help the market forge a near-term low.”
Fri 5/10/2019 4:34 PM
Boxed beef cutout values this afternoon were lower on Choice and firm on Select on light to moderate demand and moderate offerings, USDA said.
Choice fell $1.36 to $221.11/cwt.
Select went up 38 cents to $207.46.
In negotiated cash sales in Nebraska, the USDA reported 318 head sold live at $118, with 1,557 head sold dressed at $185-188. In Iowa-Minnesota, 597 head were sold live at $118-120, while 862 head sold dressed at $185-190.
Cattle saw a rally after mixed trade today, Virginia McGathey, of McGathey Commodities, said. She attributed the good day in live cattle to steady exports. She said the low is in for now, but follow-through buying is needed. She noted that feeders are also bouncing back with help from bargain buyers. She said fundamentals for fed cattle are “bullish.”
“The better weather forecast for next week may boost retail demand,” Stewart-Peterson said. They noted that the Supply and Demand, while a grain focused report, showed there are expectations for higher beef production and lower beef exports in 2019.
Cattle bounce back to end week
Cattle saw a bounce today after the sell-off that has been seemingly endless since the end of April. Short-covering and talk of the oversold condition sparked the rally at the end of the day, and “traders are waiting to see if there is any sign of a pop in the beef market at this time of the year,” The Hightower Report said.
This week’s slaughter estimates came in at 599,000 head for cattle and 2.332 mln head for hogs.
The cattle number is down 5,000 head from last week and matches the number set last year for the same period. Hogs were 22,000 under last week, but still 65,000 head over last year’s amount.
Trade news quiet while supply stays high
With trade questions still looming heading into Friday afternoon and the weekend, President Trump said there is “no rush” to reach a deal with China, according to a Reuters report.
Reuters also said that with the uncertainties in trade, U.S. Agriculture Secretary Sonny Perdue is saying Trump is working on a plan to help farmers deal with the impact of the trade war.
Today’s Supply and Demand report came in at the top of the expected ranges. U.S. corn ending stocks for 2019/20 were at 2.485 bln bushels, with 2018/19 stocks pegged at 2.095 bln. Soybean ending stocks were at 970 mln bushels for 19/20, while the 18/19 stocks were at 995 and wheat’s 19/20 ending stocks were put at 1.141 bln bushels, with 1.127 for 18/19.
“While a lot of these numbers below probably have been factored-in, this is not a report that scares the shorts,” Mike Zuzolo of Global Commodity Analytics said. “Our best situation now is that we have the planting weather bring some sense of equilibrium to the market.”
The USDA’s projection of increased corn carryout was higher than expected, and Steve Freed of ADM Investor Services, said it may be due to lower ethanol use. Overall, Freed called the report “bearish,” with the higher numbers, saying the “USDA numbers and delay in U.S. and China trade deal will put pressure on US farm gate prices.”
Aside from the bearish report, weather is proving to be a factor in the corn market, as the forecasts appear to be improving for planting, Michaela White of CHS Hedging said.
WASDE: World carryover for corn came in with estimates of 325.9 mmt this year, and 314.0 for the 2019/20 year.
After the Supply and Demand numbers came out this morning, Mike Zuzolo said the soybeans may find the most support of these numbers. “I am fearful that this is just short-term spreading of beans over corn given the size of the new-crop corn by USDA,” Zuzolo said.
Despite an overall bearish report, “the market may have priced in much of the bearishness,” The Hightower Report said, noting the oversold nature of soybeans at the moment.
WASDE: World soybean carryover for the 2018/19 year is expected to come in at 113.2 mmt, with the 2019/20 estimate pegged at 113.0 mmt.
The forecast for U.S. winter wheat production is being estimated at 1.27 bln bushels, with fields averaging 50.3 bpa, Michaela White of CHS Hedging said.
A “bearish sentiment” is weighing on futures right now, Virginia McGathey, of McGathey Commodities, said. “Next week, maybe we can get some footing,” she said, hoping that bargain hunters might move in to help support possibly oversold products.
WASDE: World wheat carryover is estimated at 293.0 mmt for 2019/20, versus 275.0 for 2018/19.