[Mon]: Traders see solid export sales news and strong demand ahead from China, according to The Hightower Report. However, the market is absorbing the large supply of pork on the domestic market, and this has traders skeptical that pork cutout values will hold on to recent gains… [Fri]: National Daily Hog and Pork Summary / National carcass base up $2.88… Iowa-Minnesota carcass base up $2.28… USDA reported carcass cutout values this afternoon rose 86 cents… “With China demand being strong, traders are nervous that with China and the U.S. closing consulates, that demand may be impacted,” The Hightower Report said. They noted an active supply pace should continue which could pull some of the premium out of the market…
Farm Commodity Newsletter/Iowa Farmer Today
Mon 7/27/2020 8:25 AM
Lean Hogs - Traders see solid export sales news and strong demand ahead from China, according to The Hightower Report. However, the market is absorbing the large supply of pork on the domestic market, and this has traders skeptical that pork cutout values will hold on to recent gains.
Lean hog futures ended the Friday session mixed. The 2021 expiry contracts closed with 5- to 12-cent gains, but the 2020 expiry months were 27 to 87 cents lower, Brugler Marketing reported. The July 22 Lean Hog index from CME was $49.69, which was up another 27 cent bounce.
COVID pressures packers
Smithfield Foods said workers cannot be socially distant in all areas of its plants, in response to senators who pressed meatpackers on coronavirus outbreaks in slaughterhouses, Allendale said. Meatpackers are under mounting pressure to protect workers after more than 16,000 employees in 23 states have been infected with COVID-19 and 86 workers died in circumstances related to the respiratory disease, according to CDC data.
Commercial slaughter figures for June were released showing cattle slaughter 2.4% above last year, according to The Cattle Report. More heartening was the fact that the tonnage (6.6% increase) was successfully absorbed by the market without a major disruption. This was helped by gaps in the beef pipeline that were refilled. Pork slaughter also reported large numbers indicating both the impact of the backlog and the heavier weights.
Fri 7/24/2020 4:26 PM
In weighted average negotiated prices for barrows and gilts, USDA reported;
National carcass base up $2.88 to $37.87/cwt.
Iowa-Minnesota carcass base up $2.28 to $35.47
USDA reported carcass cutout values this afternoon rose 86 cents at $70.53/cwt.
“With China demand being strong, traders are nervous that with China and the U.S. closing consulates, that demand may be impacted,” The Hightower Report said. They noted an active supply pace should continue which could pull some of the premium out of the market.
“Until more is known about Chinese buying intentions via the Phase 1 trade deal, the market may remain defensive,” Sean Lusk of Walsh Trading said. “There is plenty of room to stock up ahead of a developing second wave of the virus that continues to keep supermarket pipelines for many items very tight.”
Cattle on feed sees slight decrease
The newest Cattle on Feed report came out this afternoon, with results “down slightly,” according to the USDA. The total cattle on feed decreased to 11.4 mln head, while placements increased by 2% from last year to 1.80 mln head and marketings were up 1% from last year to 1.97 mln head.
Slaughter this week came in steady for cattle this week, at 646,000 head (down 4,000 head from last week), while lean hogs saw a 71,000 head increase from last week at 2.589 mln head.
Outside factors drive trade
“Today was more about outside markets than it was about grain markets,” Ami L. Heesch of CHS Hedging said. The U.S. dollar hit “multi-year” lows, while gold is at a 9-year high.
“The battle of the countries appears to be on,” Heesch said. She noted the China/U.S. tensions rising with the U.S. ordered to close a consulate and the U.S. ordering China to close one of their own. “Energy and equity markets seem to be nervous about the fate of the U.S. and global economy with the U.S. and China at odds over several issues.”
David Mershon of Anderson’s Grain said the December contract “continues to be rangebound,” as the crop continues to progress in favorable weather. “We are making it to the timeframe where we see the dip in prices in August and September.”
“Crop conditions are expected to be steady or see improvement” on Monday, Ami L. Heesch of CHS Hedging said.
While corn is rangebound, beans “are a lot stronger,” supported by Chinese buying, David Mershon of Anderson’s Grain said. “We will have a very good opportunity moving forward to price beans for harvest.”
Demand has been good for U.S. soybeans lately, Ami L. Heesch of CHS Hedging said. “The weather looks a bit more promising as we move into the month of August.”
“There is rain in the forecast for Nebraska and the Dakotas that will slow the current harvest pace,” The Hightower Report said. That should continue supporting wheat harvest prices into the weekend.
With the weakness in the U.S. dollar, wheat surged today. “Prices drew additional support from production cuts in the U.S./EU/Argentina regions,” Ami L. Heesch of CHS Hedging said.