Afternoon Market Highlights
2/8/2019 4:10:16 PM
The highlight of the day was the USDA data dump on the market. A new round of trade talks with China begin again next week in China, although it sounds like the two presidents are not planning to get together ahead of the March 1 trade war deadline. Next Friday is the deadline for President Trump and the Democratic party to come together on the border wall. There could be another government shutdown effective Friday, if no agreement is made.
- The energy markets are mostly firmer with crude oil up 7 cents at $52.71.
- The US$ continues its trek to higher levels at 96.63, up 130.
- Wall Street is mixed with the DJIA weaker and the S&P higher.
- The focus is expected to shift back over to the SA weather and next week’s trade talks.
The corn market saw a brief uptick on a reduction to the corn yield and production numbers for 2018-19. The crop data failed to excite the corn market out of its rangebound trade for the past several sessions. The market focus will probably revert back to South America weather watching and the current presidential dealings with the US and China.
- Closes: March at $3.74 ¼, down 2 ¼ cents, July at $3.90, down 2 ¼ cents, December at $3.99 ¼, down 1 cent.
- The USDA lowered the corn yield 2.5 bushels per acre, imports 5 mb, feed & residual 125 mb, food, seed & industrial40 mb and ethanol usage 25 million bushels.
- With all that said the carryout was lowered 46 mb to 1.735 bb.
- Spreads: H/K 7 ¾ carry, N/U 3 ½ carry, Z/H 9 ½ carry, Z/N 19 ¼ carry.
The soybean market traded higher on the close from a lower US ending stocks number and fund short covering. There is a fair amount of uncertainty about the outcome of the ongoing trade war. The USDA data failed to inspire the market to higher levels despite a lower carryout.Planting intentions will be the next item for discussion as we move forward, and I am not sure that today’s data or board prices are enough incentive for famers to shift a significant number of acres from beans to corn.
- Closes: March at $9.14 ½, up 1 ¼ cents, July at $9.42 ½, up 1 ¼ cents and November at $9.57, up 1 ¼ cents. The products were slightly higher.
- The soybean yield and production were lowered but the Dec 1 grain stocks came in at a record level of 3.736 billion bushels.
- Crush was raised 10.0 mb and exports were only lowered 25.0 mb.The carryout was lowered 45.0 mb to 910 mb.
- Spreads: H/K 14 carry, K/N 13 ½ carry, X/F 9 ½ carry, X/N 26 carry.
The wheat market saw strength from a lower than expected winter wheat seeding number. Talk of dryness is starting to pop up in the Northern Plains area. Planted acres for this year will become the play as we go forward. The reduction in winter wheat acres has not made much of an impact on stocks to use ratios with HRW at 65%, DNS at 45%, SRW at 49%, white at 15.5% and HAD at 38%.
- March closes: Mpls at $5.69 ½, up 4 cents, KC at $4.94 ½, down 1 ¾ cents and Chicago at $5.17 ¼, up 4 cents.
- The 2019-20 winter wheat seedings were reported at 31.290 million acres. This compares to 32.535 million acres last year.
- The beat goes on that the US will catch a bid on world export demand from slowing wheat exports out of China.
- Egypt bought 300k tonnes of US, French and Ukrainian wheat from $260.00-$261.95/tonne for March.This makes the second tender without Russia and a first in a long time for the US to partake in.
- Kazakhstan, Russia and Iran are working out a deal for Russia and Kazakhstan to export wheat to Iran.
- Spreads: Mpls H/K snuck into a 1 ½ cent inverse before turning back to a 1 ¼ carry by the close.
The cattle market saw strength from fund buying with spread activity noted buying cattle/selling hogs. Cash markets were mostly steady. Many feed operators brace for another winter storm this weekend and into next week. Closes: March feeders at $144.10, up 1.02, April at $145.90, up 1.15, Feb lives at $127.37, up 1.15, April lives at $127.92, up 1.10 and June lives at $118.10, up 92 cents and testing resistance at 118.20.
- Today’s slaughter is estimated at 115k head.
- Packer margins were off a bit at $65.55.
- Cash market on a live basis is at $124 versus offers closer to $126.
- Boxed beef values backed off today after pushing higher levels the better part of the week.Choice was down 1.36 at $215.35 with resistance at $217.00 and again at $220.00.
The hog market took it in the shorts again today. The Money looks to be moving on out of the hog market lately. Cash markets were mixed, and key product values remain weak. Hearing that the African Swine Fever has moved into herds in Japan and there is no word out of China that they are getting the disease under wraps. Closes: Feb at $55.05, down 27 cents, April at $58.42, down 1.22 and June at $74.37, down 1.10.
- Today’s slaughter is estimated at 442k head.
- Packer margins fairly stable at $24.40.
- IA/MN cash hogs edged higher to a weighted average of $49.16. The WCB cash market was 20 cent weaker.
- Product values on 204 loads were mixed with the carcass cutout values down again to $64.82 and ribs down over 8 bucks at $118.03.