Weekly Ag Report: Feb. 28

Cash feedlot trade last week was mostly at $128 live, down $2 from the week previous and $203 to $205 on a dressed basis in the North, which was steady to $2 lower.

Weekly export sales data in the meats were negative in beef and very friendly for pork. Net beef sales were 9,400 metric tons (MT), a marketing year low, down 10 percent from last week. Pork net sales were outstanding at 40,400 MT, a new marketing year high, almost double a week ago. Actual exports were 26,300 MT and also a marketing year high.

Cattle on Feed after the close last Friday was neutral to slightly negative. Cattle On Feed as of Feb. 1 was at 108 percent vs. 107 percent average estimate and 108 percent last month. January placements were at 104 percent vs. 100 percent average and 101 percent last month. January marketings were at 106 percent, right at the pre-report average estimate, compared to 99 percent last month.

Compared to last week, steers and heifers sold uneven from $2 lower to $3 higher. Regular volume buyers were in attendance at sales this week as a winter storm dumped rain and ice across a good chunk of drought-stricken Oklahoma, Missouri and Iowa. Ranchers are more prepared to deal with snow and rain, but when ice comes, that is a whole new beast. 

For the week, Friday, Feb. 16 through Friday, Feb. 23, February live cattle were down $2.10, April was down $2.80, June was down $1.87, March feeder cattle were down $3.72, April was down $3.90, August was down $2.92, April lean hogs were up $3.22 and May was up $2.67. Boxed Beef-Choice was up $8.49 at $218.37 and Select was up $7.70 at $212.82.

Cattle slaughter last week was estimated at 572,000 head, down 24,000 from the week previous and down 2,000 from last year. Beef production for the week was at 472.1 million pounds, down 4.1 percent from the week previous with year to date at 3.915 billion pounds and up 2.9 percent compared to last year.

Hog slaughter last week was at 2,372,000 head, down 9,000 from the week previous but up 107,000 from last year. Pork production for the week was at 507.2 million pounds, down 0.5 percent from last week. The year-to-date total was 4.028 billion pounds, up 2.5 percent compared to last year.

Livestock Futures Settlements

Monday, Feb. 26

• February live cattle down $.60 at $127.40, April down $.85 at $124.00, June down $.60 at $116.20.

• March feeder cattle down $.45 at $145.55, April down $.55 at $147.95, August down $.17 at $152.25.

• April lean hogs down $1.42 at $69.95, May down $1.15 at $76.45.

The sharp selloff last week for both live and feeder cattle futures looks pretty ugly on the charts. February live cattle dove below the 10-day moving average for the first time in more than a month. The contract expires this week, so for now we should hold near the $128 level.

The April contract is below the 10 and 20-day moving averages and below the trendline support. A break below $122 would cause a lot of concern moving forward. March feeders are below all moving average and the higher trend that was in place since mid-December. A move below $144.50 would be another bearish signal. 

Export sales were bearish for beans, down four million bushels (MBU) total last week for old crop due to Chinese cancellations. Argentina’s production estimates continue to get reduced while Brazil’s are expanding but struggling to get them out with excessively wet conditions.

Corn export sales topped one million metric tons (MMT) again this past week, now at eight of the last 10 weeks. Funds were buyers again with the weekly CFTC report showing 32,000 contracts long as of Feb. 20 and are estimated to be close to 50,000 long as of Friday. Wheat futures pulled back some this past week in choppy trade and moisture finally entered the Southern Plains.

For the week, Friday, Feb. 16 through Friday, Feb. 23, March corn was down $.01¼, December was up $.00¼, March soybeans were up $.14¾, November was up $.06, March Kansas City wheat was down $.09½, July was down $.07¾, March Chicago wheat was down $.05½, July was down $.07½, March Minneapolis wheat was down $.04½ and March soybean meal was up $2.20 per ton.

Some scattered rains fell over Argentina this past weekend, but some areas are still bone dry. Forecasts are turning hot and dry again with Brazil still expected to see scattered rains this week.

USDA announced a private sale of 125,000 metric tons, or 4.9 million bushels, of corn sold for unknown destinations. They also announced a private sale of 132,000 metric tons, or 4.85 million bushels, of soybeans sold to China for this marketing year. I guess they cancelled too much last week.

Rain continues for the Southeast and Midwest over the next seven days. Flooding is still a concern in the Midwest. The latest six-to-10-day outlook shows above normal precipitation for the Northern Plains and Western Corn Belt with below-normal for the Southwest and East Coast. Temperatures are forecasted below normal west and above normal in the Northeast.

Grain Futures Settlements

Monday, Feb. 26

• March corn up $.02¼ at $3.68½, December up $.01¾ at $3.99.

• March soybeans down $.02 at $10.34¼, November up $.02½ at $10.30½.

• March Kansas City wheat up $.08¾ at $4.77¾, July up $.09 at $5.11¾.

• March Chicago wheat up $.07¼ at $4.59½, July up $.08½ at $4.87½.

• March Minneapolis wheat down $.04¾ at $5.96, March Soybean Meal up $1.70 at $377.20 per ton. 

March corn is still holding the higher trend since mid-January and is still unable to break the $3.70 resistance, back above the 10-day moving average and taking another run at $3.70 this week. March soybeans are into a new high, taking out the $10.39½ resistance formed last week with the contract high up at $10.50½, but closed on its low Monday.

March Kansas City wheat is back above the 10-day and 20-day moving averages with support at $4.54 and resistance up near $4.85. March Chicago wheat has the support at $4.40, with resistance at $4.67, then $4.82.

Note: There is risk of loss in trading commodity futures and options. Matt Hines is a licensed commodity broker for Loewen and Associates Inc. of Manhattan, specializing in grain and livestock operations as well as commercial consulting clients since 2004.