The CME and Total Farm Marketing offices will be closed Friday, April 7, 2023, in observance of Good Friday

MARKET SUMMARY 04-05-2023

The cash cattle trade is pushing to its highest levels since 2014. Last week, cash cattle prices pushed the $170 level as packers are still trying to source fat cattle. Cash trade this week is still undeveloped, but the expectations are for trade to remain steady to slightly higher. The lack of cattle numbers has been the base for strong cash prices, but retail values holding strong historical value allow the packer margins to keep bids firm. Choice carcasses have jumped over $7.00 higher this week with midday bids and are pushing $10.00 higher than last week’s low closing trade on Thursday. The strength in the retail market is likely tied to retailers starting to shift focus away from the Easter holiday demand and starting to think about the summer grilling season. The cash market will still be the driver in the cattle futures market going into the summer months.

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CORN HIGHLIGHTS: 

• Old crop May futures lost 1-0 cents to close at 6.52-3/4. December new crop gained 0-3/4 cents as rain delays field work. May futures found support at the 10-day moving average at 6.47.
• An announced export sale of 125,000 mt (4.925 mb) corn was supportive, albeit a small figure.
• Ethanol weekly grind of 101 million bushels is slightly below the weekly pace needed to meet the USDA projection of 5.250 bb. Yet ethanol margins of late show improvement, suggesting USDA is not likely to make changes on the April WASDE report due out next week Tuesday, April 11.
• The weather forecast is wet this week. The 6-10 day outlook has the entire Midwest warmer and drier than normal, suggesting a pattern change and advancement of fieldwork late next week.
• Snow melting in the north will likely affect river-bottoms planting progress further south.
• While concerning, it is too early to suggest significant planting delays or prevent plant acres. This concern increases if the northern states turn wet again in the third week of April. Heavy snowpack will take time to melt.
• Little news out of Brazil suggests the second corn crop, despite some dry concern, is progressing well.
• A stronger basis level and a price recovery in May of over 50 cents have encouraged farmer selling.

SOYBEAN HIGHLIGHTS:

• May soybeans closed lower by 6-1/2 cents to 15.11 and Nov lost 4 cents to 13.16.
• Argentina implemented a third soy dollar program that will pay farmers nearly a third more for their soybeans if they are sold within the next 30 days.
• There was a flash sale reported by the USDA of 10.1 mb of old crop soybeans sold to unknown destinations during the 22/23 marketing year.
• Both bean oil and meal closed lower today and continue to lower crush margins bringing them to the least profitable levels since 2021.
• Bean oil was down despite the US Energy Department saying that supplies of ultra-low sulfur diesel fell by 2.7 million barrels to 104.4 mb, the lowest in 9 years.
• The US Dollar moved higher today, which pressured crude oil, and prices have been hovering just above 80 dollars a barrel since the jump higher.
• The USDA’s WASDE report will be released next week on April 11 and is expected to show a tight bean carryout.

WHEAT HIGHLIGHTS:

• May Chi lost 9-1/2 cents, closing at 6.82 and July down 9-1/4 at 6.94-3/4.
• May KC lost 11 cents, closing at 8.61-1/2 and July down 14-3/4 at 8.43.
• The western areas of the southern plains are still dry and have been experiencing high winds with low humidity.
• The GFS weather model forecasts some rains for the southern plains region, but the European model puts those rains just in the eastern part of the region.
• Spring wheat planting could be delayed as that area has recently received heavy snow, and warming temperatures next week could cause flooding problems.
• The USDA is projecting 10.57 million acres of spring wheat to be planted – this is the lowest number since 1972.
• Several news outlets suggest that Malaysia and China will try to end dependence on the US Dollar. Additionally, the Chinese Yuan has become the most traded currency in Russia.

CATTLE HIGHLIGHTS: 

• Cattle markets saw mixed trade with buying support in the live cattle futures as retail prices have surged higher this week, and the market is anticipating cash trade developing. Feeders consolidated holding support at the 10-day moving average under April futures. April live cattle gained 0.800 to 168.400 and June added 0.075 to 160.300. Feeders were softer as April lost 0.125 to 197.825.
• Cash cattle trade is still undeveloped on the week, but early Southern bids were at $168 against $170+ asking prices. The majority of cash trade with likely take place on Thursday.
• The Fed Cattle Exchange Auction held today reported 7 lots (all 7 lots were in TX), totaling 892 head of cattle. Opening prices were at $166, high bids were at $166 to $167.50, but no trade occurred, failing to meet reserve prices of $169 to $170.
• Retail values have surged higher this week as Choice carcasses at midday are $7.00 higher than Friday’s afternoon close. Today, Choice carcasses gained 1.18 to 289.12 and Select was 0.77 higher to 278.77 at midday. The load count was light at 71 loads.

LEAN HOG HIGHLIGHTS: 

• Lean hog futures saw mixed trade as the Apr contract was supported by the discount to cash, but weak fundamentals pressured deferred futures. Apr hogs gained 1.175 to 73.400 but Jun futures traded 1.200 lower to 88.37575. May and Jun futures posted new intraday contract lows during the session.
• The money flow stays negative in the hog markets as fund traders are willing to push the large short position in the hog market even larger this week. Last week’s commitment of traders saw funds short 16,000+ lean hog contracts, which was a historically large, short position.
• The cash market stays disappointing. Midday saw direct trade was 0.76 lower to 71.25. The Lean Hog Cash Index lost another 0.52 to 74.68. The index is trading at a premium to the Apr futures but is still currently nearly $14.00 under the Jun futures, which keeps the deferred contracts limited.
• Estimated slaughter on Wednesday was 477,000 head, slightly above last week, but 25,000 head larger than last year. Slaughter runs have stayed heavy, and the large supply picture keeps the cash market limited and weighs on the futures prices.
• Hog retail values were firmer at midday as carcasses were 0.88 higher to 77.83. The load count was light at 175 loads. Hog retail values are trading at their lowest price since December 2022.

DAIRY HIGHLIGHTS: 

• After seeing Tuesday’s Global Dairy Trade Index fall 4.70%, US dairy sellers pushed cheese, whey, butter, and powder prices all lower on Wednesday.
• Class IV milk futures saw the brunt of the selling in milk futures, with contracts down as many as 39c. Second month Class IV was down 33c to $17.60.
• The selling pressure in Class IV milk took the May contract to a new contract low of $17.60/cwt.
• Spot powder fell another 3c to $1.13/lb on 2 loads traded. This is a new low for the year and its lowest price since February 2021.
• Spot cheese has closed lower in six out of the past seven sessions as sellers got aggressive the past couple weeks after the rally over $2.00/lb.

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Author

Brandon Doherty