[Mon]: Hog slaughter last week was 11% under last year’s mark, but saw a significant improvement from the previous two weeks… China appears to be “actively attempting” to boost pork supplies as well as grains and oilseeds, which figures to give some support… [Fri]: National Daily Hog and Pork Summary / National carcass base up 5 cents… Iowa-Minnesota carcass base up 47 cents… USDA reported carcass cutout values this afternoon fell $3.67… The Hightower Report said: “Traders see the increasing slaughter pace as a negative force, but with very high profit margins from packers, the cash market may stay firm…”
Farm Commodity Newsletter/Iowa Farmer Today
Mon 5/18/2020 8:32 AM
Lean hogs - Hog slaughter last week was 11% under last year’s mark, but saw a significant improvement from the previous two weeks. “Last week’s natural supply of hogs offered would have been 2.444 mln,” Allendale said. “This will add about 341,000 head to the 2.581 mln head backlog started in mid-March.”
“July hog support is at $57.85 and $55.82, with $63.12 as resistance,” The Hightower Report said. “If resistance is taken out, look for run to $70.27. A move over $69.57 will penetrate the downtrend channel and turns the charts bullish.”
Lean hogs in short-term downtrend
The lean hog market is in a “very short-term downtrend channel” after peaking in early May, The Hightower Report said. China appears to be “actively attempting” to boost pork supplies as well as grains and oilseeds, which figures to give some support. “Traders see the increasing slaughter pace as a negative force, but with the very high profit margins from packers, the cash market may stay firm.”
Markets this week will be looking at the Friday release of the Cattle on Feed report, Michaela White of CHS Hedging said.
Fri 5/15/2020 4:21 PM
In weighted average negotiated prices for barrows and gilts, USDA reported;
National carcass base up 5 cents to $37.11/cwt.
National live had no comparison, sitting at $26.27
Iowa-Minnesota carcass base up 47 cents to $36.88
USDA reported carcass cutout values this afternoon fell $3.67 at $110.12/cwt.
“With the bounce in the CME Lean Index this week, the discount of futures to the cash market may provide some underlying support,” The Hightower Report said. “Traders see the increasing slaughter pace as a negative force, but with very high profit margins from packers, the cash market may stay firm.”
The lean hog market was able to recover from Thursday’s new low, Anthony DiCostanzo said. “Slaughter levels have recovered and are well above last week’s low numbers. It has a long way to go, however, to catch up to last year’s numbers.”
Cattle close higher as slaughter increases
Cattle finished higher to close out the week in the June live contract as there is a huge discount to the cash market, The Hightower Report said. “Record type profit margins should hold the cash market firm.”
Slaughter estimates for the week showed cattle at 499,000 head, up 47,000 head from last week, but well below last year’s pace of 662,000 head. Lean hog slaughter is at 2.103 mln head, a 328,000 head increase from last week.
Quiet end to the week
The week continues to be quiet to close things out, Ami L. Heesch of CHS Hedging said. “Farmers are focused on field work ahead of possible rain events over the weekend and next weekend,” she said.
There continue to be discussions between the U.S. and China, “despite potentially cutting ties with them,” Heesch said.
David Mershon of The Andersons noted how Larry Kudlow, the White House advisor, tried to ease fears of COVID-19 impacts on U.S./China trade relations.
The corn market is mixed to end the week as there is deferred month pressure, Ami L. Heesch of CHS Hedging said. Ideas of big crop prospects for the year are creating that pressure. “The nearby was supported from decent weekly export sales last week, another positive in ethanol production and strength in the crude oil market,” she said.
There are ideas the nearly a third of Brazil’s second-crop corn lacking moisture for filling which is making production estimates get a bit smaller, David Mershon of The Andersons said. “Those estimates are still more than adequate for U.S. and world production today,” he said.
Today’s trade saw a few attempts at recovery moves, but none were able to fully sustain themselves, with the soybean market only seeing small gains, The Hightower Report said. “Recent purchases have raised hopes that China can fulfill their Phase One trade deal commitments which provided the soy complex with underlying support.”
Alex Breitinger of Paragon Investments said he is looking at the quick planting progress in both soybean and corn as something that will play a major factor moving forward. “Timely planting reduces the risk that plants mature in too-hot late summer weather,” he said. “As a result, crop watchers are revising this years expected harvest upwards on expectations for better crop yields.”
“The U.S. continues to be uncompetitive in the world export arena,” Ami L. Heesch of CHS Hedging said. “Overall spring wheat acres could be less than originally expected because of the ongoing cool/wet conditions in the North Dakota valley area.”
As world production continues to grow and eyes turn to Russian and European weather, “wheat continues to be under pressure, David Mershon of The Andersons said.