[Fri]: … The “very active” slaughter pace plus record high weights are not a good combination to expect higher prices in the cash market over the near term, The Hightower Report said… [Thurs]: National carcass base up 45 cents… Iowa-Minnesota carcass base up 49 cents… USDA reported carcass cutout values this afternoon rose 9 cents… Selling emerged in the lean hog market, which hit its lowest levels since Dec. 10 today. “Sluggish cash markets and weakness import cutout values in the face of strong demand for pork from China is seen as a bearish development,” The Hightower Report said…
Farm Commodity Newsletter/Iowa Farmer Today
Fri 1/10/2020 8:45 AM
Lean hogs - The market collapsed to trade sharply lower yesterday, The Hightower Report said. “Traders had long been hopeful that strong demand from China would push cash prices higher, but this has not occurred, The Report said.
The “very active” slaughter pace plus record high weights are not a good combination to expect higher prices in the cash market over the near term, The Hightower Report said. Yesterday February hogs closed the lowest they had been since Dec. 10.
ASF threat nearing new areas
The World Organization for Animal Health for animal health reported 55 findings of African swine fever (ASF) in Poland near the border with Germany last month. “This is further evidence that ASF is nearing a major EU producer/exporter. The closest finding was 18.6 miles from the German border, Allendale said.
Meanwhile China, a country still reeling from ASF, announced the country would continue to release pork from government stocks both before and after the Chinese New Year. Since December 12 the government has released 130,000 metric tons into the domestic market. That’s just a “small portion of their needs”, Allendale said.
According to the Hightower Report, for longer term beef prices, the bulls are counting on supportive forces namely “hope” that China will eventually be a strong buyer of U.S. beef and eventually Australian beef supplies will tighten. China currently buys little U.S. beef, and Australia is in liquidation mode in the short-term, The Hightower Report said.
Thu 1/9/2020 4:24 PM
In weighted average negotiated prices for barrows and gilts, USDA reported;
National carcass base up 45 cents to $51.12/cwt.
National live rose 15 cents to $38.28
Iowa-Minnesota carcass base up 49 cents to $51.70
USDA reported carcass cutout values this afternoon rose 9 cents at $72.83/cwt.
The market is seeing some selling step in, taking out this week’s lows today, Oliver Sloup of Blue Line Futures said. “$65.40 is the November and December low, if we take that out, I wouldn’t be surprised to see a retest of contract lows.”
Scott Shellady noted that the funds in the lean hog market are long, so “they aren’t going to ask your permission to sell before they do,” and it has the makings of a flush if there is a reason to sell, he said.
Cash markets impacting futures
Selling emerged in the lean hog market, which hit its lowest levels since Dec. 10 today. “Sluggish cash markets and weakness import cutout values in the face of strong demand for pork from China is seen as a bearish development,” The Hightower Report said.
April cattle is dealing with some choppy and two-sided trade in the market, as it closed higher today. “Traders await cash market news as futures continue to hold a premium to last week’s cash market,” The Hightower Report said.
China phase 2 may wait until November
The market continued to prepare for the upcoming USDA release tomorrow morning, Ami L. Heesch of CHS Hedging said.
With Phase 1 of the China/U.S. deal expected to be signed next week, Reuters reported today that a Phase 2 deal may not be finished until November. President Trump indicated waiting until after the November elections, he may be able to make a better deal.
“We are trending a little bit lower going into tomorrow’s USDA report,” Oliver Sloup of Blue Line Futures said. “$3.77-$3.80 is a must hold for the bull camp.” Sloup said a friendly report might spur some short covering.
Selling pressure continued as there is a lack of supportive news ahead of tomorrow, Ami L. Heesch of CHS Hedging said. “Brazil’s key state of Rio Grande Do Sul is expected to see some much needed moisture in the next few days,” she added.
“We like soybeans,” Oliver Sloup of Blue Line Futures said, but said people don’t have to be a buyer right now. “If we are to break lower here, that could lead to a low of $9.20-9.25, at that point I think there’s value in soybeans.”
Buying wheat and selling beans became a bigger trend as the day progressed, Stewart-Peterson said. They noted that was largely because soybeans may not see much support from tomorrow’s report. “The market appears to be content to consolidate and will likely take direction after major news events over the next week.”
“There was active selling against today’s rally in the wheat market,” Ami L. Heesch of CHS Hedging said. The market saw renewed buying interest on ideas of a reduction in U.S. winter wheat seedings and higher global prices.
“Tomorrow’s report will provide some expectation for winter wheat acres as not only will quarterly grain stocks and supply and demand estimated, but also winter wheat seedings,” Stewart-Peterson said. “KC wheat continues to pick up ground on generally dry conditions in the western Plains and a stronger technical picture after today with prices holding the 10-day moving average.”