Good morning everyone again! Here we are on a hump day, usually a sale day for me, but since we went to every other week, that is not the case.
I am sure you all have heard about the Defense Protection Act, that was used by Pres. Trump, in an attempt to make sure the processing facilities stay open. Of course, this order is getting met with resistance from the union labor leaders, and others that think it is unsafe.
Just wow. What a situation. Especially a situation when you are the leader of the Free world. The kind of decisions that our President has to make on an hourly basis, blows my mind. He has been carrying pressure from every side, and at the same time, fighting an unknown enemy. I think we can all empathize with the man, and his job
Now, the market news about the DPA being used on processing plants was released during market trading hours yesterday. I only saw it about 20 min before close, so not all the market had time to adjust in my opinion. It caught a bid just shortly after the news, but settled down on the close. This news hit most news outlets yesterday afternoon/this morning. I would think we could catch a bid here this morning.
The hog market has recovered pretty nicely in here the past few days. Even with all the news of hogs having to be euthanized, to make room for new feeders. I think most of the move with hogs was due to the amount of dollars they had fallen behind beef. That spread has moderated the last couple of days. There will be charts below just showing the daily closes of the June cattle, hogs, and the June-June Cattle/hog spread.
Sorry for this being too long. Thanks for taking the time to read. Check out the charts below.
Chart 1- Snap shot of world equity futures as of 619 am mst.
Chart 2- Daily close of Chart of June Hogs
Chart 3-Daily close chart of June Cattle
Chart 4- Daily close of June Cattle-Hog Spread
New week, new everything, but all still the same.
We are starting this week here at a pleasant tone. The S&P futures are trading about 26 higher at 2856 as 4:00 am mtn time. Oil isn't fairing as well overnight. It is down $2 a barrel to $14. The Wheat market, which has been the best one of all the commodities, is trading a lower tone, down 4 cents overnight.
The lockdown is starting to ease. People are starting to move more freely. Some of the hardest hit states are even looking at reopening, at least a little, by 5/15. Other countries are starting to do the same. If anything at all, at least a little moral boost for the people.
There are worries of course, like always, of what will happen when we reopen. That is left to be seen. Too many variables still lay in the weeds to be comfortable making a call either way.
Live Cattle and Feeder cattle futures, should, and I say should, not will, but should open higher. The Cattle on Feed report was bullish, or at least a relief that it wasn't bearish. The Daily Slaughter numbers will be the biggest market mover. Boxed Beef Prices will be watched closely as well. We are nearing $300 on the blended, and just wow is all I have to say about that.
I just wanted to leave you with a group of charts. These charts represent mainly products of the energy industry. Look at what these inventories did the last couple weeks. Crazy spikes. Lots and lots of backup. The second chart is just a chart of on road diesel fuel prices.
Thanks for reading, have a great week. Check back daily for updates!
Well we survived another week. The week that started out with a massive destruction to the oil market, and ended without much drama. The stock market was down about 60 on the week, basis the S&P, while oil ended down about $7 a barrel from the week before.
The cattle futures were volatile, but ended the week only $3-$4 lower than they started, basis the June and Aug live cattle futures. The feeder cattle futures on the other hand were actually $.90 higher on the week in April, $2 lower in May, and $1.90 lower in Oct. So for all the motion we ended the week relatively unchanged.
The big news on the end of the week was the Cattle on Feed report. Placements were 77% of a year ago, while Marketings where 113% of a year ago. This placement number is the lowest in the USDA dataset, to go along with a marketings number that is second highest in the US dataset. The placements and marketing numbers leave cattle on feed at 11.297 hd of cattle in large feedlots, (1000+ hd). That is down 5.5% from a year before.
Steers placed were down 361,000 hd,(-4.5%), while heifers were down 295,000 hd,(-29.5%). A lot of heifers just ended up getting turned out to green grass, the debate will be, is this the next start of herd expansion, or will these heifers come to town eventually as market animals, when the market, or weather conditions change.
This week has also been a week of really light direct cash cattle trade, from feedlot to packer. Friday there was some in Texas at $95, that is about $10 lower than last week's averages. Earlier in the week there were trades as high as $100.
Boxed beef closed what they would call, "sharply higher," $9 higher on the choice, and the select gained another $6. Choice-Select Spread is sitting at $14.35 to end the week. Estimated cattle slaughter is 80,000 for Friday, down 4000 on the week, and 31,000 lower on the year. The estimated number for Saturday Kill is 47,000 hd, up 12,000 for the week, and down 4000 for the year. That brings total Steer and heifer slaughter for the week to 354,000, 26,000 hd lower than last week, and 158,000 hd lower than last year. Non- Fed slaughter was down 7,000 hd on the week, and 10,000 hd on the year.
All in all it wasn't a bad week. Daily slaughter levels will be once again the most important news of the week next week. Nobody really knows what that is going to look like, we have some plants that are just going into temporary closedowns, and some, like JBS Greeley just coming out. Greeley is a big one, they can carry a lot of weight, so it would be nice to see them back up and running.
Get ready for our sale on 5/6/2020. We are featuring back to grass type of cattle. Also, check me out of a new weekly market report that I am doing with the Burning Daylight Podcasts.
I'm starting this post about 530 am, on my second cup of good black oil.
The stock market, and oil are both lower overnight. June Crude oil futures are currently down 4.6 a barrel at 15.76 dollars per barrel this morning. This (oil) will be the main story today, and for awhile. What does cheap oil mean? Different things for different people. I hear a lot of people talking about how cheap gas will be, which is true. Cheap gas, better for the consumer, cheaper for the farmer, and the rancher. Cheap gas/diesel, and other inputs that are most likely going to be cheaper. This other inputs include hay, which is another big one. Cheap inputs will help profit margin. The flip side usually is, cheap inputs are fed to cheap cattle, cheap hogs, etc. So what to we do? We Raise the genetically superior cattle, that convert feed in pounds efficiently. To book end this rambling, I just want to say, prices don't dictate profit margin. Have a nice morning, and tune into Burning daylight for the newest market report!
So here we sit on a Wednesday. No sale today for Loma Live, but we are getting ready for our next sale coming up Wed. 4/22/20.
The markets did open sharply lower on Monday morning, limit offer, like most thought. Tuesday was a different story. The pre-market showed a limit down move on open, well that never happened, the open was lower, and from then on we were higher. This time, the experts were fooled....by the way that reminds me, do you know an analyst telling a cattle producer what to do, is a lot like a steer telling a bull what to do.....
Daily Slaughter has held up rather well in my mind. I will post a chart below for reference. I want you to look at the daily slaughter levels. I have pulled this chart out to Max, meaning quarters. Just look at the 2013-2014 time frame as compared to now.
Ground beef looks to go on a tear again. Look at this chart of the 81's. goes back all the way to 2000's. All time high
Here I am again, quarantined, listening to a Grateful Dead concert on YouTube. Just thinking about all the craziness in the world right now. Too many variables, so we can just break it down to the one thing that matters most to us right now, the cattle market.
Let's get to the plant closure aspect of this deal. JBS Greeley is planning a shut down Monday for extra deep cleaning. Now, JBS has since come out with a statement saying that has been a planned shutdown for awhile. They say the plant should be up and running Wednesday, or Thursday. The labor union wants the plant to stay closed all week for deep cleaning. Obviously the earlier the plant opens the better. There are many hog processing plants that are closing for as much as 2 weeks as well. One, a Smithfield owned processor in Sioux Falls, SD, that kill 22k head of hogs a day. Just a little side note to remember. A Chines company owns Smithfield. As you can imagine, this leads to some uncertainty in the markets next week. The Monday Morning livestock open will be dreaded among many. I think consensus is the market to be limit offer. I will say it is not always good to follow the crowd, everybody was certain we were going to 130, maybe 140 this January. With that said we will not be able to take out contact lows in the June live cattle futures on Monday due to limit restrictions. As funny as it sounds, that is a good thing.
How about this cull cow and bull market?????
So the prices inflated rapidly, and then, in quick work, deflated, leaving our cull cow and bull market towards the lower end of a long term range. The panic ground beef buying that drove the demand for our cull cows and bulls higher, was fiercely met by huge supply of Dairy cows hitting the market, at the same time the restaurants were going offline. It was a meat backup nightmare.
Looking forward, this next week should see the most of the dairy liquidation. We will see how everyone has handled the backup of these Dairy cows. I know I heard at one plant, there were as many as 2000 hd of cows waiting to be worked that day. Big numbers. With these big supply numbers, bringing the price down to the point where it takes a high yielding cow to bring in the mid 40's, I do not see very many mountain cows coming to town. The pasture conditions are still pretty good around our region. I do believe the cows who aren't carrying a calf, will be turned out to green grass anyways. Buy a little time as they say.
I have a feeling I might be writing these posts a little more often these days. As far as for the Sale barn, my schedule is every other week from now on. Our next sale is 4/22/20. That is a pair, and late bred special. We also will have some good turn out feeder cattle. Ready for grass. After that is our 5/6/20 back to grass feeder special. Following the back to grass special will be the Loma Livestock featuring Diamond Peak female and bull sale. We will have yearling heifer, ready to breed, as well as pairs, yearling bulls, and some 2 year old bulls as well.
This is the Sioux Falls, SD Smithfield Shutdown.