[Thurs]: There was no trade on the Fed Cattle Exchange online auction yesterday, Allendale said. Lots in Kansas/Texas had offers of $123, while live based trading last week occurred at $122… Cattle is still trading in long liquidation at the moment, The Hightower Report said, as open interest is down 15.2% over the last 10 trading sessions… [Weds]: Boxed beef cutout values this afternoon were steady to firm… Choice fell 21 cents… Select went up 43 cents… In negotiated cash sales in Iowa/Minnesota, the USDA reported 671 head sold dressed at $190-193, with 147 sold live at $121-122. In Nebraska, there were no reported sales… without any strength coming in the beef market, “it is difficult to assume higher cash trade this week,” despite packer profit margins being positive…
Farm Commodity Newsletter/Iowa Farmer Today
Thu 2/6/2020 8:35 AM
Cattle - Right now, the cattle market has no sign of a short-term low, according to The Hightower Report, and long liquidation will continue to be bearish on prices. “Traders remain fearful that coronavirus has already slowed travel and restaurant business and that the impact could be more significant if the virus continues to spread.”
There was no trade on the Fed Cattle Exchange online auction yesterday, Allendale said. Lots in Kansas/Texas had offers of $123, while live based trading last week occurred at $122.
Cattle outlook continues to be bearish
Cattle is still trading in long liquidation at the moment, The Hightower Report said, as open interest is down 15.2% over the last 10 trading sessions. “The China tariff news this morning is a positive longer-term factor for the market as China could eventually become a significant importer of U.S. beef,” they said, noting that that could take time to materialize.
For lean hogs, China is trying to take measures to put their lean hog markets back to normal levels by the end of 2020, The Hightower Report said. “This is a high goal, and if accomplished, it is a longer-term bearish force,” they said.
Wed 2/5/2020 4:54 PM
Boxed beef cutout values this afternoon were steady to firm on light to moderate demand offerings, USDA said.
Choice fell 21 cents to $210.72/cwt.
Select went up 43 cents to $207.94.
In negotiated cash sales in Iowa/Minnesota, the USDA reported 671 head sold dressed at $190-193, with 147 sold live at $121-122. In Nebraska, there were no reported sales.
Markets were lower today, especially in April’s live contract, as the cattle contracts hit their lowest points since early October. “The market remains in an oversold condition but the sloppy trade in the beef market, and fears of slowing demand short-term continued to spark some long liquidation selling pressure for cattle,” The Hightower Report said.
They added that without any strength coming in the beef market, “it is difficult to assume higher cash trade this week,” despite packer profit margins being positive.
Hogs give up early gains, cattle falling
There was optimism early in the lean hog trading, but selling emerged as the day went on, leaving many hog contracts lower today. The market is still “extremely oversold” according to Stewart-Peterson, but right now they noted there is “just not a sense of urgency for speculators to own hogs at this time.”
A positive for the currently falling cattle futures could be found in recent gains from the stock market, Stewart-Peterson said. A few gaining days in a row “could positively impact retail beef prices,” they said, despite the charts looking technically weak.
China reports helping soybeans
Reports that China has stepped up soybean purchases helped boost the market higher Wednesday. The Hightower Report says most of those originated in South America, however. The continued strength of the U.S. dollar is also impacting the bean market.
Good weather in South America is “overwhelming talk that the USDA could increase corn demand” for next week’s Supply and Demand report, says Stewart-Peterson. March corn prices were stopped yesterday at its 50-day moving average resistance level, and a test of that price failed this morning.
March corn closed down 1 ½ cents at $3.80 ¾, while May corn was down 1 ½ cents. Hightower says reports of progress in containing the coronavirus outbreak is positive news, but says reports China may release 2.96 MT of corn from state reserves is dampening some of the optimism.
Barchart.com says tighter ethanol stocks were reported for the week. The biggest reduction was recorded on the East Coast. Ethanol prices were 2.9 percent higher than a week ago, while gasoline prices were 2.2 percent lower than the previous week.
March soybeans were up ½ cent at $8.80, while May beans were up ½ cent at $8.93. Hightower says meal prices recorded a new contract low, but finished with moderate losses. Soybean oil prices continued their upward trend with a third consecutive sizable gain.
Stewart-Peterson says there are reports that China “will make food and feed availability a top priority moving forward.” This should bode well for U.S. beans, they said, although China continues to buy beans from South America.
March wheat closed up 4 ¾ cents to $5.62, just under two cents below the contract high. Hightower says tight near-term supplies remain “a source of support” for wheat prices. Additionally, the potential of Russian export restrictions “provided another boost to sentiment.”
A strong U.S. dollar seems to be dampening the enthusiasm of some traders, says Stewart-Peterson. They said “most traders still like the fundamental picture...with the most winter wheat plantings this year since 1909.