MARKET SUMMARY 8-16-2021
Surging retail beef prices are providing support under the cattle market. As retail beef prices are possibly looking to challenge the highs for the year, the live cattle market added some strength to start the week. Last week, Choice beef carcass values gained over $25.00 and Select added $16.00, as prices are climbing steadily higher. Choice carcasses closed just under $325 on Friday, and added another $2.59 today at midday, bringing Choice carcass value to $327.47. The high for the year is within range at $340.00, established earlier this spring. Packers have been keeping slaughter pace low, around the 120,000 head/day market, due to labor shortages, this has tightened the product available for retailers. In addition, beef demand has stayed very strong, and the recent surge of the Delta-COVID variant may have added some buying urgency in case of restrictions at plants were to arise again. The scenario will likely be handled much more effectively than in 2020 since the market has experienced those issue before. The concern for the market will be the carry of the price of beef to the consumer, possibly hurting the longer-term overall demand picture. Even though the cattle market has pushed to challenge new highs on the futures markets to start the week, the strong retail demand has not bolstered the cash market. This is concerning to the cattle market because any softness seen in the retail market could quickly be pulled out of the live cattle market, sending prices off these current historically strong levels.
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CORN HIGHLIGHTS: Corn futures finished mixed to lower to start the week, as the front months saw selling pressure. Sep corn lost 3-1/2 cents to 564-3/4, and Dec dropped 4-1/4 cents to 568-3/4. Despite a bullish WASDE report last week, the corn trade has been underwhelming since, and price action has been less than impressive. The rally off last week’s report was met with heavy producer selling, limiting the upside. And as prices drift lower, selling slows and prices may be working into a new price range. The Weekly Export Inspections report had corn inspections at 29.7mb, with total inspections at 2.533bb (88.9% of the USDA’s 2.850bb estimate). The marketing year is winding down, and the weekly totals will be closely watched. This week, the market will be watching the Pro Farmer Crop Tour as it begins today and runs through Thursday. Daily yield totals will give the market a picture of the variation that is likely out there from west to east. On the weather front, Tropical Storm Fred is forecasted to bring cooler temperatures and rainfall into the Corn Belt by the weekend. For some areas, it will likely be too little too late but in others, the cooler temperatures could help add some weight to the finishing crop.
SOYBEAN HIGHLIGHTS: Soybean futures traded just up slightly for most of the trade today, with September posting a 3 cent gain, closing at 13.76 and new crop November up 3 1/4 at 13.68 1/4. Typically, when the veg oil markets have a good day, that can easily spill over into the soybean sector, but that just didn’t really come to fruition today. According to NOPA, the US crushed 155.1 mb of soybeans in July, up 2.7 mb from June, but under the trade expectation. Today’s Export Inspections report has soybean inspections at 10.2mb, with total inspections at 2.155bb (94.9% of the USDA’s 2.270bb estimate). Since the 5th of August, the USDA has announced 1.3 mmt of soybeans sold to China and unknown. Last week, the funds bought 13,052 contracts, making them net long 33,132 contracts. There was heat and dryness over the weekend in the western and northern Corn Belt, but there is a chance for rain later this week. The rain won’t undo the damage that has been done, but may preserve the yield numbers. For seven consecutive days, there have been soybean purchased reported by the USDA to China and unknown.
WHEAT HIGHLIGHTS: Sept Chi down 1 3/4 cents, closing at 7.601/2 & Dec up 3/4 cents, closing 7.75. Sept KC wheat down 5 3/4 cents at 7.36 1/2 & Dec down 5 3/4 cents, closing at 7.49 1/4. After putting in contract highs last week, reeling off of the USDA’s bullish report, wheat had a minor sell-off today. Today does not erase the fact that USDA projected Russian & Canadian production much lower than anticipated, and ending stocks at their lowest levels in 14 years for the top eight major wheat exporters. Triple digit temperatures are expected in northwestern Plains for the first half of the week, with rain anticipated for the Midwest/west Thursday & Friday. Weather was optimal for harvest last week and spring wheat harvest is now at 58%, well ahead of 36% average, and conditions are unchanged with 11% rated good/excellent – very poor to poor conditions actually increased by 2% to 63%.
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Author
John Heinberg