In the Tuesday overnight trade there is a glint of optimism the likes we haven’t seen in several weeks. The DOW Jones continues to it’s rally from Monday up over 700 points at the time of this writing. This is taking money flow away from the US Dollar and Treasuries. In the grains wheat is giving it’s gains from Monday back while there is a small gain in corn and soybeans. Energies are also on the move higher with differed WTI crude oil futures contracts back above $30/barrel. RBOB unleaded gas futures are also back above $0.70/gallon.
For the equities traders seem optimistic that there is a small light at the end of the Covid-19 tunnel. The US continues to see a possible peak or plateau in one of it’s hardest hit cities New York. Now there is economic data out today that could splash this rally including job openings and consumer credit. There are some rumors in the trade the US Government could be eyeing a fourth round of stimulus in the neighborhood of 1 trillion dollars to help replenish the funds currently being used to prop up the US economy.
As for the grains wheat actually improved 2% over the winter with the national rating coming out at 62% good to excellent. South Dakota looked to have the best in the nation at 83% good to excellent. That took a little of the wind out of the domestic supply bull. This Thursday’s WASDE report could shed light on the increased global demand for wheat. Stocks are also expected to rise in that report. India also looks to be on track for their fourth record wheat harvest at about 105 MMT compared to the 103.6 MMT last year. This according to the USDA ag attache in India. According to USDA’s export inspections on Monday corn had a big day, topping it’s previous week’s exports at 1.271 MMT or or about 50.1 million bushels. That was about 40 million bushels more than what the trade needed to meet USDA’s trade estimates. Soybean meal is coming around in the overnight trade and that is helping to bring soybeans up as well. Thursday’s WASDE could see USDA drop their estimate of Brazil’s soybean crop. The USDA estimate was previously 126 MMT, but several analysts groups have cut their estimates to 123-124 MMT.
Following a rally on Monday afternoon the pre-open bid ask looks to point just a few ticks higher for most livestock contracts. April and June live cattle contracts closed lower. All lean hog and feeder cattle contracts closed higher on Monday. There was plenty of technical oversold signals so the rally could be some profit taking. If it can gain momentum there could be a significant rally. Especially given the fact that equities have been able to move higher.
The latest USDA retail meat price report shows beef up a little last week. The 14-cut retail average was $5.42/lb last week compared to $5.18 the previous week. On a yearly comparison beef prices on the average are up only 3 cents a pound. As for individual cuts boneless rib eye roasts saw the biggest jump from $5.97/lb to $8.14/lb last week. Ground round and chuck were both up about 20 cents a pound last week. Ground round averaged $3.82/lb and ground chuck averaged $3.98/lb across the nation last week.
Pork’s 4 cut retail average dropped about 15 cents a pound to 3.32/lb. 1lb sliced bacon jumped about a nickel a pound to $5.32/lb.
Chicken’s 2 cut retail average fell from $1.99/lb to $1.63/lb.
Cash was very light last week with most of the trade on Wednesday around the Fed Cattle Exchange at $112-$113 live. $180 dressed. $7-$9 lower than the previous week’s weighted average for both live and dressed.
Monday the country was quiet. Bids and asking prices have yet to be established. Significant trade volume will likely be delayed until the second half of the week. New showlists appear to be mixed, higher in Texas, about steady in Nebraska/Colorado, and lower in Kansas.
The big question this week is how short bought are the packers? They did little cash business last week. Monday slaughter numbers still look to be steady, but packers could be looking to throttle plants back as they try to navigate the uncertain demand times. Covid-19 is also impacting packers as several plants have had employees test positive or not show up for work due to Covid-19 concerns.
Slaughter numbers Monday
115,000 hd today 122,000 hd wk ago 121,442 hd yr ago
482,000 hd today 494,000 hd wk ago 477,799 hd yr ago
Midday Carcass Value Monday
Choice dn 0.70 229.74
Select dn 3.05 212.79
C/S Spread 16.95
Carcass up 2.01 59.38
Bellies up 2.45 36.55
- Corn up 3 3/4 – 5 1/2
- Soybeans up 4 – 8 1/2
- Chicago Wht dn 4 – 7 1/2
- Kansas City Wht dn 2 1/4 – 5
- Live Cattle up 3.42 – 4.50
- Feeder Cattle up 4.50
- Lean Hogs up 0.57 – 3.00
- Class III Milk up 0.07 -0.75
Pre-Opening Market Broker Commentary
Mark Gold, Top Third Ag Marketing, discusses overnight grains and what the trade may see today. Gold see’s market fundamentals improving as the outside markets start to improve.
Jerry Stowell, Country Futures, looks at what may impact the livestock futures today. Equities are higher and that could mean a higher open for livestock.
Mike Zuzolo, Global Commodity Analytics, takes a look at the midday trade. Zuzolo looks at how traders may still be positioning ahead of Thursday’s WASDE report.
John Payne, Daniels Ag Marketing, looks at the grain settlements. Payne wants to be a bean bull, but feels the market is to battered at the moment. Wheat may have to rally on it’s own.
Jack Fenske, York Commodities, looks at the closing market numbers. Fenske see’s corn and hogs as similar in the sell off nature. For that reason he is cautious to get into either market.