[Weds]: … The rally in the cash market is impressive, given the recent supply, The Hightower Report says. “However, the upside seems limited unless there is significant weather disruption over the near term”… [Tues]: Boxed beef cutout values this afternoon were steady... Choice fell 9 cents... Select went up 2 cents... In negotiated cash sales in Iowa/Minnesota, the USDA reported 38 head sold dressed at $197, with 200 sold live at $124-125. There were no reported sales in Nebraska... “Cash market strength has been noted and the premium structure of futures to cash has reverted more in line with historical norms,” Stewart-Peterson said. “Beef values are beginning to rebound higher as well”...
Farm Commodity Newsletter/Iowa Farmer Today
Wed 1/8/2020 8:51 AM
Cattle - The technical action in cattle is bullish this week, but the sluggish beef trade has caused packer margins to tighten considerably and this could ease packer demand for live inventory, The Hightower Report said.
The cattle market is giving back some of its Monday gains, Brugler Marketing said. “Live cattle futures saw come profit taking on Turnaround Tuesday, settling 47 to 75 cents lower. Feeder cattle futures also gave back a portion of Monday’s near limit gains, as futures closed with losses ranging from $0.92 to $1.52,” Brugler Marketing said this morning.
The rally in the cash market is impressive, given the recent supply, The Hightower Report says. “However, the upside seems limited unless there is significant weather disruption over the near term.”
China pork demand high, beef packer demand lower
China will release 20,000 metric tons of frozen pork from its state reserves on Jan. 9, said the China Merchandise Reserve Management Center. This release comes in the run-up to the Lunar New Year holiday at the end of January, China's peak period for pork consumption, Allendale said. China has already released more than 100,000 metric tons of frozen pork from state reserves since last month.
The Hightower Report says, there is a little less demand from beef packers because their margins are currently lower.
Tue 1/7/2020 4:35 PM
Boxed beef cutout values this afternoon were steady on moderate demand and heavy offerings, USDA said.
Choice fell 9 cents to $209.56/cwt.
Select went up 2 cents to $206.82.
In negotiated cash sales in Iowa/Minnesota, the USDA reported 38 head sold dressed at $197, with 200 sold live at $124-125. There were no reported sales in Nebraska.
“Pundits have been predicting a top for a long time, but every time the market looks like it’s ready to roll over and die, it doesn’t,” William Moore of Price Futures Group said. He noted the market “can’t seem to make up its mind,” and fundamentals continue to lean toward a top.
“Cash market strength has been noted and the premium structure of futures to cash has reverted more in line with historical norms,” Stewart-Peterson said. “Beef values are beginning to rebound higher as well.”
Cattle unable to build on Monday
Today’s trade saw “no follow-through to the upside” after yesterday’s strong day in cattle, The Hightower Report said. That run came as cash cattle was up $2 last week, but a “steady flow of cattle moving to the market” limited any further rally.
The Hightower Report said that the hog market is still relying on hopes of China being a more aggressive buyer of U.S. pork in the months ahead, which is supporting the market today.
Quiet day ahead of reports
Today marked a quiet day in the grain markets as most eased lower. Ami L. Heesch of CHS Hedging said China is not expected to increase their lower import tariff quotas on corn, wheat and rice, “despite indications of stepping up their overall purchases of U.S. ag goods.”
Only a couple of days left before Friday’s big USDA report and early estimates are coming out. Mike Zuzolo of Global Commodity Analytics said he expects the reports to be “all about the corn” in seeing if we can get a flat price rally.
His guess for corn ending stocks number to be below 1.5 bln bushels, which would be well below the 1.75 bln average trade guess. He guesses that soybeans will have an ending stocks number around 415 mln bushels, and wheat at 901 mln bushels.
Increased tensions from the Middle East and a stronger dollar put corn on the “defensive,” CHS Hedging said. “Favorable weather conditions across Brazil and Argentina provided additional pressure.”
Today’s losses came on the heels of weakness in energy prices as well, ADM Investor Services said. However, today finished with a “minimal loss” on the March contract on an inside trading day, they noted.
In his AgMaster report, William Moore of the Price Futures Group said South American weather is a factor on the market as “timely rains” have fallen which might bring a forecast for a record Brazil bean crop. “Believe it or not, bean prices are the same level as they were in 2009,” he said.
“Expectations for tightening ending stocks do not appear to be providing much in the way of support, while weakness in the energy markets plus a jump in the US dollar were seen as negative factors,” ADM Investor Services said.
Weakness is being found on the strong dollar, but short-covering helped the market recover near the close, Ami L. Heesch of CHS Hedging said.
“The Iran Crisis introduced serious supply/demand concerns, as Iraq is a large U.S. wheat customer,” William Moore of Price Futures Group said. The market was also overbought before the recent fall, but a China deal could help factors.