feedlot performance

Iowa State University data from last winter indicates poor feedlot performance. Producers should be looking at any changes that will help them better manage cold stress and mud, says Extension specialist Dan Loy.

Corn closed the week 4 ½ cents higher. Private exporters announced sale of 1,600,200 metric tons to Mexico for 2019-20 and 110,744 tons to an unknown destination.

In the weekly crop progress report, corn harvest is 92% complete versus 94% expected, 89% last week, 100% last year and 100% average. North Dakota is 43% complete with Wisconsin and Michigan both 74% finished.

U.S. corn exports were weak again at 18.9 million bushels and were less than half of the roughly 38.1 million bushels per week corn exports will need to average through the end of August in order to reach the USDA’s 1.85 billion bushel export projection. Cumulative exports of 257 million bushels remain down 57% from last year's 595 million at this time. Corn stocks came in at 1.91 bb, unchanged from November. Corn production in Brazil is 101 million metric tons (mmts) and in Argentina, 50 mmts. World ending stocks for corn was estimated at 300.6 mmts up from last month's 296 mmts.

In the weekly Energy Information Administration report, the rebound in U.S. ethanol production continued, jumping to 1.072 million barrels per day from 1.06 million a week prior, marking the 11 consecutive weekly increase and hitting the highest level in 23 weeks. Ethanol stocks finally posted a solid increase last week, jumping to 916 million gallons from 867 million gallons the week prior. That reflects the largest single-week stocks increase in 23 weeks and the highest stocks in five weeks.

Strategy and outlook: The bullish weekly reversal should end the fund selling that drove prices near contract lows. The new trade agreement will limit the downside risk for prices with the markets slowly rallying as fresh demand becomes apparent.

SOYBEANS

Soybeans closed the week 17 3/4 cents higher. Private exporters announced sale of 585,000 mts to China and 140,000 mts of soybeans to an unknown destination.

In the weekly export inspections report; U.S. soybean exports, for the week that ended Dec. 5 were solid at 48.8 million bushels. Cumulative exports of 636 million bushels are now up 22% from last year’s 521 million, leaving exports needing to average roughly 28.5 million bushels per week through the end of August to reach the USDA’s 1.775 billion bushel export projection versus last year’s 30.4 million per week average from this point forward. Ending stocks were at 475 million bushels compared to November at 475 million bushels. Soybean production in Brazil is 123 mmts while Argentine soybean production is estimated at 53 mmts. Soybean stocks were at 96.4 mmts versus 95.4 mmts last month.

Strategy and outlook: Futures bounced off long term support with strong end user buying supporting values. Prices are likely to probe weekly resistance amid the new trade agreement. The timing of Chinese purchases will provide interesting and indicative of how the balance sheets will be affected.

WHEAT

Chicago wheat closed 9 cents higher, Kansas City wheat closed 12 1/2 cents higher and Minneapolis wheat 13 3/4 cents higher. Egypt bought 355,000 mts of Russian, Romanian, French and Ukrainian wheat.

U.S. wheat exports of 11.5 million bushels were the lowest in five weeks. Additionally, wheat exports were below last year's same-week shipments of 449,000 tonnes (16.5 million bushels) and well below the roughly 17 million bushels per week shipments will need to average in order to reach the USDA’s 950 million bushel export projection. Cumulative exports of 478 million bushels are still up 18% from last year’s 405 million.

The USDA nominally changed the wheat balance sheets, as ending stocks were lowered by 40 mb to 974 mb. The USDA increased exports from 950 mb to 975 mb and lowered imports by 15 mb to account for the changes in the balance sheets. The export increase saw hard red winter wheat raised 10 million bushels, hard red spring wheat up 5 million and durum up 10 million, while soft red winter and white wheat exports were left unchanged. Compared to a year ago, ending stocks are 105 mb less and helped wheat prices to firm during the session. World wheat stocks came in at 289.5 mmts versus 288.3 mmts in November.

Strategy and outlook: The huge world supplies of wheat mandates producers to sell out inventory and use options to manage risks on sharp rally attempts.

LIVE AND FEEDER CATTLE

Live cattle closed $2.67 higher while feeder cattle closed $4.70 higher. Fed cattle trade in the South was at $119 – steady with week prior. Trade in the North was mostly $119 live and $188 dressed, steady to $1 higher.

According to CattleFax, U.S. beef exports in October totaled 249 million pounds, down 9% from a year ago. Exports to Mexico, South Korea, Canada and Japan that are below year ago levels are the driver in the export slow down.

Tyson Fresh Meats has started processing cattle at Holcomb, Kansas, for the first time since the Aug. 9 plant fire. USDA slaughter estimates suggest the plant is running at about 33 to 50% of weekday capacity right now or 2,000 to 3,000 head per day.

The weekly Fed Cattle Exchange Auction reported a total of 1,068 head in seven lots. There were no sales. Four lots from Nebraska asked $119 to $119.50. Two lots from Kansas asked $119 and $119.50, and one lot from Texas asked $119.50.

The latest USDA steer carcass weights were steady with the prior week at 911, making them 12 pounds above last year. Net beef sales of 9,900 metric tons were reported for 2019. For 2020, net sales of 2,000 metric tons were reported.

Strategy and outlook: Seasonal strength should lift futures along with a new trade agreement between the U.S. and China. The agreement should allow for more U.S. beef exports to China.

LEAN HOGS

Lean hogs closed the week $1.87 higher. The latest Iowa and Minnesota weekly hog weights came in at 288.4 pounds versus 287 pounds the week prior and 284 pounds last year. Net pork sales of 29,200 metric tons were reported for 2019. For 2020, net sales of 15,600 metric tons were reported.

Strategy and outlook: Futures should rally off technical support and expectations of large Chinese purchases of U.S. pork products now that Phase 1 of the new trade agreement will become effective in January.

Brian Hoops is president and senior market analyst of Midwest Market Solutions Inc. The home office is in Springfield, Mo., with branch offices in Thief River Falls, Minn.; Verona, N.D.; Yankton, S.D.; Storm Lake, Iowa; and Springfield, Neb.