February 5, 2019
On Jan. 31, a number of contracts had a high-volume day in the cattle market. That day the markets failed miserably.
We should have another big day on Feb. 5 — four days after the contract volume high day. I am apprehensive that we could be putting a high in this market — especially the February and April live cattle futures and the March/April feeder cattle futures.
The chart for Jan. 31 looks to me as if a top was created.
This concerns me, along with a box meat situation where the Choice and the Selects are basically the same price. What we will need to do is start closing over the highs put in last Thursday. If we don’t, and start closing below the lows on Jan. 31, this market may be headed south.
Last week 22-day-and-up sales came in at 1,571 loads, NAFTA 115, and overseas exports 1,337. These are good figures.
Animal protein availability will be at an all-time high in the United States in 2019, but consumption needs to increase to maintain demand both here and abroad.
Beef box meat sales came in $3.39 higher yesterday (Feb. 4). This may be a signal that the market is going higher, but since it was on such a small number (85 loads), it could be an aberration.
We have not seen numbers on box meat movement for overseas due to the government shutdown, which leaves us in the dark.
The Chinese are closed down for the Lunar New Year holiday this week, and traders in general don’t want to stick their necks out too far because there are a lot of numbers still to come forth.
The next meeting between President Xi and President Trump occurs at the end of February in Vietnam. Even though we have made token bean sales to China, the tariffs remain in place. I still feel that we could be in a state of “buy the rumor/sell the news.”
The erratic weather has made it very difficult to make livestock sales in the Midwest and meat sales on the East Coast, plus all the other lingering disruptions caused by the 35-day-long government shutdown.
On the grain side, on Friday, Feb. 1, we made volume contract highs in some of the bean, meal and oil contracts, and we should have a big day on Wednesday, Feb. 6.
Here again the thinking is that the sales may not be adequate for the positions that the funds have taken.
The supply and demand report that was to be released in January will be out Feb. 8. This report is usually fairly significant. It has been known to report changes in yield, carryover and projected usage.
Even if the size of the crop is reduced — especially in soybeans — the important number will be usage from past production and export numbers. It is expected that there will be a huge carryover in beans and a more moderate carryover in corn.
Good luck and good marketing.
This weekly report is for informational purposes only and is not to be construed as an offer to sell or a solicitation to buy the commodities listed herein.