Thanksgiving is in the rearview mirror, but the selling and market caution is still lingering through most of the market complex.
In the equity complex there is limited selling, but traders are acting very cautious with poor economic data on Monday. That data included the Dallas Federal Reserves manufacturing production index coming in with a reading of -7.2 for November a sharp drop from +5.2 in October. This shows a contraction in the manufacturing side of the economy. The Dallas Fed business activity index continued to decline -19.9 in Nov. vs. -19.2 in Oct. Traders are also trying to game what the Fed will want to do when they meet in a few weeks.
In the grain complex wheat was under pressure and the leader to the downside for the complex. US wheat futures continue to struggle with global demand and cheap Black Sea wheat. It was recently announced that the European Union has pledged 50 million euros to rebuild port infrastructure damaged by Russian missile and drone attacks as it seeks to keep grain moving out of Ukraine. We also saw commitments from Ukraine for military escorts for grain carrying ships to ensure their safety. Ukraine has an agreement with Great Britain to subsidize insurance coverage for the ships, to go along with support from Bulgaria, Romania, and Turkey for keeping the grain corridor functioning.
Soybeans caught some early support with continued dryness in parts of Brazil. Forecasters continue to put in moisture chances, but they seem to be at best scattered thunderstorms that have done little to bring wide spread rain to most growing regions. The pressure from the weather is now starting to impact production estimates Private analysts have started to reduce their estimates for the Brazilian soybean crop with Safras & Mercado at 161.38 MMT and hEDGepoint at 160.1 MMT.
In the livestock complex there was some bottom picking and short covering on the opening bell following last Friday’s drastic selloff. Unfortunately the market could not hold the gains for long. Sellers once again came in and pushed the market sharply lower. Feeder cattle lead the charge with that large placement number still in the back of traders minds. Slaughter pace also seems to be slowing from year ago levels as packers try to navigate poor margins.
For the lean hog complex China’s planned sow herd reduction and state purchases of pork for reserves give little hope for a boost in export demand for US pork.
The fed cattle cash trade took place on Wednesday last week, with a little cleanup on Friday. Southern live deals had a range of $176 to $177, generally $1 to $2 lower than the prior week’s weighted averages. Northern dressed trade had a full range of $275 to $280, mostly $280, about $1 lower than the previous week’s weighted averages.
For the week ending November 18, 2023, Imported Beef Passed for Entry in the U.S. totaled 47,203, 105.53% of the previous week and 100.46% of the 4-week average.
Daily slaughter estimates Tuesday
125,000 hd today 126,000 hd wk ago 128,000 hd yr ago
484,000 hd today 486,000 hd wk ago 486,000 hd yr ago
Tuesday Midday Carcass Cutout
Choice dn 0.35 296.90
Select dn 0.08 267.72
C/S Spread 29.18
Carcass dn 3.79 84.96
Bellies dn 16.60 96.96
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 livestock market commentary with David Ericson of Ag Optimus
Closing grain market commentary with John Payne of Hedge Point Global Markets