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Jan. 8, 2019

Last Friday we sold our spring calves at Dunlap, Iowa. The check netted $5 more per calf than last year, which I felt very good about, plus the hedges helped out.

This calf market, which started out pretty poor a couple months ago, has come back in the Midwest because the yards have straightened up a little here, and Midwest cattle feeders are filling them.

Because of the government shutdown, we are not getting a lot of data. This is holding a lot of people away from trading the market and has rendered a number of markets stagnant. People have a fear of being short when they do not have the facts and this prevents them from well-informed marketing decisions.

We traded fat cattle steady last week and moved a good percent of the show list. In the cattle market, chart-wise, we made a high back on Oct. 3 in October cattle and made another high on Jan. 3. We could be going 90 days from high to high.

The weather has turned better. The weather premium in the February cattle may not be needed. We need to keep current on marketings. The packers have been lining up cattle, and I personally believe that they have already sold the meat from the cattle they are buying. We need to keep up overseas exports and domestic usage.

If we do have a setback in cattle, I think it could last until the middle of March on the board.

Again, it is crucial that we keep current on marketings. The Kansas State break-evens that I watch were at the point a couple weeks ago where the margin of loss was narrowing. Now it is starting to widen out again. The packer margin around the first of June 2018 was $308.95. On Jan. 7 it came in at $48.25.

Composite box meat 22-day-and-up sales came in at 404 loads, NAFTA at 86 and overseas at 321. Hopefully this figure was down because of the holidays.

The weekly feeder cattle and fat cattle charts look as if they have topped out for a while. If this is right and we do not have any big winter storms in cattle feeding areas, we may have topped the cattle market on the board.

It is dry in Brazil, and that is giving the grain market a little pep. The soybean market has come up — basis still remains weak, but with the money we received from the government and this bounce, it could bring us closer to $10 on beans. We could move cash beans at any time because money needs to be generated, and you may not be the only one who has added up the government payments plus the cash price of grain.

We need to break out of these trading ranges, but we are having a hard time doing so.

A lot of weather is going to occur between now and planting time and into harvest, both in the United States and South America. I would not get too pessimistic on new crop corn, but would look to start hedging the 2019 bean crop in the January beans of 2020 at $9.80 to $9.90.

The energy market is falling hard, partly because of overproduction and partly due to uneasiness on what’s happening to trade and how it will affect the different economies. For production agriculture, fuel always is one of our bigger inputs, and I would be either locking it in or watching it closely.

We sent a letter to our clients with our thoughts on the next 90 days. If you would like one, give us a call.

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.