[Tues]: The lean hog market has been staying in a downtrend as traders wait for Chinese demand and sales to be realized in the price structure. One item the Hightower Report is keeping an eye on Is a “sustained rally” in pork cutout values, which would support cash markets. They said the market “will need help from pork cutout values to form a low”… [Mon]: National carcass base was 13 cents higher… Iowa-Minnesota carcass base was up $1.58… USDA reported carcass cutout values this afternoon were up $1.74… “China pig prices are up over 7% for the month so far, and coming into the Lunar New Year holiday, most are expecting Chinese purchases to increase,” Stewart-Peterson said. “Still, near-record production due to heavy weights and high slaughter is keeping domestic supply extremely heavy”…

 

Farm Commodity Newsletter/Iowa Farmer Today

 

Tue 1/14/2020 9:21 AM

 

Lean hogs - Based on Chinese customs data, China imported 375,000 tonnes of pork in December, compared to 95,384 tonnes in December 2018. That rise in pork exports in December 2019 and November 2019 (229,707 tonnes) are the highest levels since May 2018.

 

Despite the technical action looking bearish, The Hightower Report seems optimistic. “It is difficult to sell the market ahead of the trade deal and just when China is really cranking up imports,” they said.

 

Cash important for a pork rally

 

The lean hog market has been staying in a downtrend as traders wait for Chinese demand and sales to be realized in the price structure. One item the Hightower Report is keeping an eye on Is a “sustained rally” in pork cutout values, which would support cash markets. They said the market “will need help from pork cutout values to form a low.”

 

Meanwhile, the cattle market remains in a consolidation phase, The Hightower Report said, and some weakness in the beef market will be needed “in order to expect lower cash trade ahead.”

 

Mon 1/13/2020 4:46 PM

 

In weighted average negotiated prices for barrows and gilts, USDA reported;

 

National carcass base was 13 cents higher to $50.55/cwt.

National live was 14 cents lower to $39.66

Iowa-Minnesota carcass base was up $1.58 to $50.81

 

USDA reported carcass cutout values this afternoon were up $1.74 to $74.24/cwt.

 

“China pig prices are up over 7% for the month so far, and coming into the Lunar New Year holiday, most are expecting Chinese purchases to increase,” Stewart-Peterson said. “Still, near-record production due to heavy weights and high slaughter is keeping domestic supply extremely heavy.”

 

Current conditions in pork markets continue to contribute to a long-term selling trend. “The premium of futures to the cash market is adding to the long liquidation selling trend,” the Hightower Report said. “Pork cut-out values at midsession came in at $74.50, up $2.00 on the day.”

 

Cattle, hogs down to open week

 

It was a fairly quiet day for cattle, with traders watching for more cash market activity. “April cattle closed lower with a relatively quiet range and an inside trading day,” the Hightower Report said. “Traders are still waiting for more activity in the cash market, but the small amount of trade late last week was done at mostly steady prices.”

 

“February hogs opened slightly lower and closed sharply lower on the day and to the lowest close since Aug. 6,” the Hightower Report said. “The market continues to find pressure from higher than expected short-term supply, and less than expected impact on pork cut-out values for the increased export activity.”

 

Markets digesting reports to open week

 

Markets on Monday were still sorting out Friday’s USDA report and lower world ending stocks. “Friday’s USDA Supply and Demand report was considered mostly neutral, with higher ending stocks than anticipated, but world ending stocks were shown to be down 7% from last year,” Stewart-Peterson said.

 

“The U.S. and China are expected to sign the Phase One deal on Wednesday which is keeping prices supported even though China is not a major buyer of U.S. corn at this time,” Stewart-Peterson said. “The March contract opened directly at its 10, 20, and 100-day moving average levels today after failing to break above on Friday.”

 

Corn

 

“Corn traded higher today as the market disregards Friday’s report where the USDA raised the U.S. corn production,” Michaela White, with CHS Hedging, said. “Strength in corn is likely related to fund short covering. March closed above the 100-day moving average at $3.86 ½.”

 

Some analysts are thinking exports could be higher than estimated by the USDA, based on a few factors. “A few are still holding out hope that final U.S. exports may be higher than USDA estimate,” Steve Freed, with ADM Investor Services, said. “Key could be China demand and competition from South America and Black Sea.”

 

Soybeans

 

There were a variety of factors working against soybean markets Monday, including the lack of supportive news in the recent USDA report and the weather in Brazil. "Lack of bullish USDA news offered resistance,” Steve Freed, with ADM Investor Services, said. “Good weekend rains in Brazil also offered resistance.”

 

“Soybeans traded lower today, with March closing just below its 20-day moving average of $9.43,” Michaela White, with CHS Hedging, said. “Weakness in soybeans could be attributed to a falling Brazilian Real, which traded to its weakest point in a month. Additional pressure stems from South American weather that is favorable for their growing crop.”

 

Wheat

 

“Wheat futures traded lower giving back most of Fridays gains,” Steve Freed, with ADM Investor Services, said. “Tight US, EU and Russia supplies has helped rally wheat futures esp versus corn. Some spread liquidation today is helping corn but weighing on wheat. Open interest in Chicago wheat futures has been going up since November.”

 

“Weekly US wheat exports were near 17 mln bu vs 20 last year,” Steve Freed, with ADM Investor Services, said. “Season to date exports are near 565 mln bu vs 495 last year. USDA left their estimate of US exports on Friday at 975 mln bu versus 936 last year. Key could be competition from EU and Black Sea.”

 

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