[Thurs]: Lean hog supply typically tapers off this time of year, The Hightower report said, but “there is still the possibility of very strong sales to China”… [Weds]: National carcass base up 69 cents… Iowa-Minnesota carcass up 99 cents… USDA reported carcass cutout values this afternoon were up 48 cents... Stewart-Peterson says the industry is entering a time of year when domestic pork production typically pulls back, which supports prices… The Hightower Report says traders will closely monitor hog weights to see if numbers are backing up in the country. Recent price hikes for pork should boost packer margins higher. Momentum studies are rising from mid-range, which could push prices higher…
Farm Commodity Newsletter/Iowa Farmer Today
Thu 3/19/2020 8:56 AM
Lean hogs - Overall open interest in lean hogs “has collapsed in the last few weeks” as it hits levels not seen since February 2019, The Hightower Report said. “If export demand stays strong, the market may be in position to trend higher in the weeks ahead as production shifts down to a lower level.”
Hightower also mentioned a few other bearish forces for the market, including a higher U.S. dollar, lows for the Brazilian currency and “record total meat production” in anticipation of big exports to China.
Cattle supply "more than enough" for worries
Short-term demand has given the cattle market “a strong pull,” The Hightower Report said. However, the concern is there is more than enough beef to meet these needs. “Once the pipeline is full, moving the extra beef could be difficult.”
Lean hog supply typically tapers off this time of year, The Hightower report said, but “there is still the possibility of very strong sales to China.”
Wed 3/18/2020 4:45 PM
In weighted average negotiated prices for barrows and gilts, USDA reported;
National carcass base up 69 cents to $56.23/cwt.
National live up 29 cents to $42.53/cwt.
Iowa-Minnesota carcass up 99 cents to $56.91/cwt.
USDA reported carcass cutout values this afternoon were up 48 cents to $74.90/cwt.
April lean hogs closed down down 32 cents at $58.15. This is $4.65 off the contract high. “The continued up trend in the cash market and a surge higher in pork cutout values over the last few sessions has helped trigger strong buying for the discounted April futures,” says Hightower.
Stewart-Peterson says the industry is entering a time of year when domestic pork production typically pulls back, which supports prices. However, weights are increasing counter-seasonally, and this would only increase if packing plants were to shut down.
Beef prices rise, futures fall
Beef values have rocketed higher in recent sessions, currently trading at their highest levels since mid-November. Stewart-Peterson says this is likely due to grocery stores getting their hands on all the beef they possibly can in case the supply chain shuts off due to the spread of coronavirus. However, those prices weren't able to be seen in the futures market, as cattle turned lower again.
The Hightower Report says traders will closely monitor hog weights to see if numbers are backing up in the country. Recent price hikes for pork should boost packer margins higher. Momentum studies are rising from mid-range, which could push prices higher.
Ethanol margins continue to drop
The drop in energy prices has also dropped US ethanol margins, says ADM Ag Market View. “The margins are so in the red that there is talk that US plants could soon close and take down time. Ethanol plants have also either dropped basis or have no bids,” they said.
Hightower says soybean meal prices were strong Wednesday, with traders thinking sharply lower ethanol demand will reduce the supply of distillers grains. This would likely increase demand for soybean meal. Soybean momentum studies are declining, but have fallen to oversold levels, says Hightower.
May corn finished down 8 ¾ cents at $3.35 ¼, while July corn closed down 8 ¼ cents at $3.41 ¾. Hightower says corn prices reached a new contract low today, adding a sell-off in energy markets continues to be a major source of pressure on corn. Analysts expected ethanol demand to weaken.
Weekly US corn export sales are estimated near 600-1,000 mt. ADM Ag Market view says prices are attractive but there is no sense that Crude oil prices area near a bottom of the spread of the virus is over. US corn export prices are competitive to Argentina.
May soybeans closed up 1 ¼ cents at $8.25 ½, while July beans were up 1 ¾ cents at $832 ¾. Hightower says the market saw sizable gains early in the session, but gave most of that back by the end of the day. Bean oil prices were down modestly today.
Stewart-Peterson says even though the U.S. dollar is sharply higher today and the Brazilian real continues to collapse, U.S. soybean prices are beginning to become more and more competitive with Brazilian prices.
May wheat closed up 9 cents at $5.08 ¼, while July wheat closed up 8 ½ cents at $5.08 ½. Hightower says “wheat prices have been able to overcome sluggish global risk sentiment.” Kansas City wheat reached a one-week high, while Minneapolis wheat remained nearly unchanged.
ADM Ag Market View says wheat futures traded higher and were “supported by talk that China may be interested in a few cargoes of US HRW wheat.” Wheat futures, like most commodities, have been trending lower due to the spread of the coronavirus.