As midweek hits the banking crisis worries are calming and global trade as we know it today seems to be under continued fire. With that said coming into the end of the month and end of the first quarter the market seems to be more bullish than earlier in the month. With that being said it is also notable that being the end of the month and quarter, money managers could be taking profits from their bearish positions to only re-apply them after we get into April.
For the outside equities 3 top banking regulators have testified before the Senate and the House. None of the testimony sparked too much concern in the market, but some analysts do note that Congress now seems poised to push for more regulations on mid sized banks. Fed officials in their comments this week have also not caused any alarm with comments on continued hawkish rhetoric. From an economic data standpoint this week shows continued demand in the housing market. Home loan applications were up for the fourth week in a row last week, which is the longest streak in four years. The most recent week saw a 2.9% increase in loan applications, with a 4.8% rise in refinance applications and a 2% rise in new purchase applications.
On the global trade front Cargill and Viterra have both made announcements to the Russian Ag Ministry they will no longer be exporting grain at Russian ports. Reuters did clarify that Cargill has noted it will not ship from it’s terminals in Russia, but will still have Cargill ships carry Russian grain for the time being. Arlan Suderman commented on the move by Russia and Cargill, “Some of this is likely pressure from Russia, and some of it is pre-emptive in nature as problems with doing business with Russia continue to increase. Regardless, it puts more questions around Russia’s ability to export. Russian state exporters claim that they’ll be able to keep grain moving out at the same pace, but major speculative funds holding large short positions lack confidence in that currently, supporting the recent price recovery as they exit short position.”
In the grain complex the Russian headlines have supported the wheat market for the most part. From a demand perspective US wheat is still pretty expensive in the global market. Jordan had a tender out with 5 firms placing bids, but not news if any of the bids were accepted as of midday Wednesday.
US ethanol production for the week ending March 24, increased 0.6% to 1.003 million b/d. US ethanol production was 3.2% below the same week last year but 2.8% above the five-year average for the week. US ethanol stocks dropped 2.5% or about 700,000 barrels to 25.5 million barrels. Stocks were 3.8% lower than a year ago but 6.6% above the five-year average. Inventories thinned across all regions except the West Coast (PADD 5).
In the livestock complex hogs continue to be under pressure with the quarterly hogs and pigs report due out Thursday afternoon. There is also plenty of technical pressure with a long and heavy negative trend line on the charts for lean hogs. Meanwhile demand from China may not be as strong as it has been given reports of a sizeable hog herd in China at the moment with production uninterrupted.
For the cattle market hope seems to be back with a stronger fed cattle cash market this week. The boxed beef seems to be supportive of packer margins and we are getting closer to the start of the spring/summer grilling season.
In the country the fed cattle cash market has not yet developed so far this week. Asking prices in the South are $165-$167 live. So far there have been no major bids from the packers. Trade seems to be trying to hold off until late in the week and is fueling some optimism for another round of higher cash this week.
For the week ending March 18, 2023, Imported Beef Passed for Entry in the U.S. totaled 42,960, 99.10% of the previous week and 98.78% of the 4-week average.
Daily slaughter estimates Wednesday
127,000 hd today 126,000 hd wk ago 125,000 hd yr ago
477,000 hd today 478,000 hd wk ago 479,000 hd yr ago
Wednesday Midday Carcass Cutout
Choice up 0.46 281.09
Select dn 0.79 269.57
C/S Spread 11.52
Carcass up 1.16 81.16
Bellies up 13.54 97.18
Pre-opening grains with Mark Gold of Top Third Ag Marketing
Pre-opening livestock with Jerry Stowell of Country Futures
Midday market commentary with Mike Zuzolo of Global Commodity Analytics
Closing grain market commentary with John Payne of Hedge Point Global Markets NO AUDIO 3-29