[Tues]: Hogs are remaining at the higher end of recent price action, Mike Lung of Allendale said this morning, but they may be reaching the top end of the market… Pork imports for the first nine months of the year reached 3.29 million tons, up 132.2% from last year. “In the long run, pork imports are likely to push lower as China pork production expands rapidly,” The Hightower Report said this morning… [Mon]: National Daily Hog and Pork Summary / National carcass base fell 60 cents… Iowa-Minnesota carcass base dropped 93 cents… USDA reported carcass cutout values this afternoon fell 49 cents… "Overall, the hog market saw bear spreading with weakness in the front months versus the deferred contracts,” Stewart-Peterson said…
Farm Commodity Newsletter/Iowa Farmer Today
Tue 10/13/2020 9:01 AM
Lean hogs - On the early rally yesterday, December hogs failed to take out last week's highs and the market found pressure from the steep selloff in cattle, The Hightower Report said this morning.
Hogs are remaining at the higher end of recent price action, Mike Lung of Allendale said this morning, but they may be reaching the top end of the market, according to Mike Lung of Allendale. “It’s too early to tell,” Lung said.
With the stiff discount of futures to the cash market, buyers could be more active on breaks, The Hightower Report said this morning.
Seasonal demand likely lower
According to The Hightower Report this morning, “We are entering what would normally be a strong demand period when restauranteurs and caterers begin to make advance purchases for the holidays, but this year that kind of business is expected to be down sharply because of Covid19.”
Pork imports for the first nine months of the year reached 3.29 million tons, up 132.2% from last year. “In the long run, pork imports are likely to push lower as China pork production expands rapidly,” The Hightower Report said this morning.
Mon 10/12/2020 4:49 PM
In weighted average negotiated prices for barrows and gilts, USDA reported;
National carcass base fell 60 cents to $63.99
National live had no comparison and sits at $53.04
Iowa-Minnesota carcass base dropped 93 cents to $64.85
USDA reported carcass cutout values this afternoon fell 49 cents to $94.31
"Overall, the hog market saw bear spreading with weakness in the front months versus the deferred contracts,” Stewart-Peterson said. “The CME Lean Hog Index maintained its strength… With the last trading day for Oct lean hogs is on October 14, December hogs are running at a discount to the index, and as demand stays supportive will likely work higher into that discount.”
Despite the down day, there were some reasons for optimism. “However, export demand to China remains strong, which has been a key supportive factor,” the Hightower Report said. “The USDA pork cutout was up $2.68 this morning at $97.48. December hogs left a gap last week down at 64.57-65.22, which could be a near term target.”
Lower trade hits livestock
Cattle markets were lower, with concerns about how Covid-19 will impact holiday demand. “December cattle closed sharply lower on Monday after trading to their lowest level since September 23,” the Hightower Report said. “The boxed beef cutout was $1.15 higher in the morning, but this was after it ended Friday at its lowest level since August 13.”
Hogs moved lower as well to start the week. “December hogs closed lower on Monday after failing to take out last week's highs,” the Hightower Report said. “The market is likely found pressure from the steep selloff in cattle. It is short term overbought, leaving it vulnerable for a correction.”
Grains drop to open week
Crop prices moved lower on harvest progress and mostly favorable weather. “The row crops were weaker on decent harvest activity over the weekend,” Ami Heesch, with CHS Hedging, said. “Funds are said to be long in wheat, KC wheat, corn and soybeans. Today was a USDA holiday so there were no news flashes of goods sold to China or other destinations.”
“(Soybean) Export inspections were not released today in observance of Columbus Day,” Stewart-Peterson said. “Today’s high price on futures contracts did not exceed Fridays, so while the market finished with sharp losses, there were no reversals posted leaving the trade with just a down day. November futures closed at its lowest level in four sessions.”
“Corn prices followed the soybean market lower on favorable harvest weather conditions,” Ami Heesch, with CHS Hedging, said. “There were no inspections numbers out this morning, or crop progress number this afternoon. The corn harvest is on big time and the moisture levels are mostly below 15%.”
“Corn traded lower,” Steve Freed, with ADM Investor Services, said. “Fact USDA was closed today due to holiday limited new news for the bulls. Most look for US corn harvest to be near 45-50 pct done. CZ had an inside day and erased all of Fridays USDA report gains. Tighter US 2020/21 supply and demand outlook and uncertain Argentina weather could still offer support.”
“Soybeans trade sharply lower,” Steve Freed, with ADM Investor Services, said. “…Some feel uncertainty over South America weather and record US Oct-Jan soybean exports could keep SX in a 10.10-10.80 range. US 2020/21 soybean supply and demand has tightened to the point South America and US will need good crop to satisfy demand.”
“Soybean prices stepped back on lack of fund buying after a heavy harvest weekend and decent farmer selling,” Ami Heesch, with CHS Hedging, said. “Prices appeared to be victims of profit taking. There was some disappointment that there were no sales flashes announced this morning with the USDA on holiday. Prices drew additional pressure from weakness in energy markets.”
Wheat markets did manage to go higher on concerns about the global crop. “Wheat prices bucked the trend and traded higher on world crop concerns,” Ami Heesch, with CHS Hedging, said. “Dryness continues in the Black Sea Region and the US Southern Plains. Algeria is in for optional origin wheat with Russia being allowed in the game.”
“All the supportive news for the bulls is still in play – Russia is still too dry with no rain on the horizon this week,” Stewart-Peterson said. “Same story goes for the U.S. plains with the expectation of conditions worsening. We’ll see tomorrow where planting progress is, but one would assume with the dry weather it should be significantly higher than last week.”