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Veteran Advisor

Floor Talk, May 6, 2020

At midsession:

At midsession, the July corn futures are 2 1/4¢ lower at $3.14 1/4. Dec. corn futures are 2 1/2¢ lower at $3.31 1/4.

July soybean futures are 4¢ lower at $8.35 1/2. November soybean futures are 4¢ lower at $8.42.

July wheat futures are 6 3/4¢ lower at $5.14 1/2.


July soymeal futures are $0.10 cents per short ton lower at $289.30.

 July soy oil futures are $0.41 cent lower at 25.90¢ per pound.



In the outside markets, the NYMEX crude oil market is $1.11 per barrel lower at $23.45 per barrel, the U.S. dollar is higher, and the Dow Jones Industrials are 55 points lower.

 

Mike

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At 8:48am:

In early trading, the July corn futures are 3/4¢ lower at $3.16 1/4. Dec. corn futures are 1 3/4¢ lower at $3.32 1/4.

July soybean futures are 2 3/4¢ lower at $8.36 1/2. November soybean futures are 3¢ lower at $8.43.

July wheat futures are 3¢ lower at $5.17 1/2.

July soymeal futures are unchanged at $289.40.

July soy oil futures are $0.32 cent lower at 25.99¢ per pound.



In the outside markets, the NYMEX crude oil market is $1.40 per barrel lower at $23.16 per barrel, the U.S. dollar is higher, and the Dow Jones Industrials are 156 points higher.

Al Kluis, Kluis Advisors, says that investors are watching the latest energy numbers to be released today.

"Today’s Energy Information Agency report will tell us if the inventories of crude oil and ethanol continue to increase as much as the trade is expecting. With the huge drop in the U.S. oil rig count, and the cutback in ethanol production, we could be getting close to a balance between supply and demand in the energy sector," Kluis told customers in a daily note.

Kluis added, "On Tuesday, the strong rally in crude oil helped pull corn and soybeans higher, while wheat closed lower. On Tuesday, the grain markets closed slightly higher as the crude oil and stock market closed sharply higher."

Cattle Market

Terry Roggensack, The Hightower Report, says that the short-term technical action in the cattle market is weak, and it suggests that a near term top is in place.
"However, the massive rally in beef prices has left traders reluctant to believing that the futures will remain at such a huge discount to the cash market," Roggensack stated in a note to customers.
The USDA boxed beef cutout was up $12.52 at mid-session, yesterday, and closed $18.77 higher at $428.82. This was up from $330.82 the previous week and was another new all-time high. The cutout has increased $206.48 since April 8, a 93% gain. June cattle closed sharply lower on the session yesterday and took out Monday's lows, according to The Hightower Report.
"Traders are concerned that the move to new all-time highs for beef prices in each of the last nine trading sessions could slow demand," Roggensack says.

The USDA estimated cattle slaughter came in at 80,000 head, yesterday. This brings the total for the week so far to 155,000, up from 149,000 last week at this time but down from 240,000 a year ago, according to The Hightower Report.
Cash live cattle traded at $95 in several regions yesterday, which is towards the middle/low end of last week's range. In Iowa/Minnesota 150 head were traded at that price, in Kansas 108 head, and in Nebraska 1,341 head. This leaves June cattle at a discount of $8.52 to the cash market, Roggensack's note stated.
"Packer profit margins are likely at record highs, and this may provide stability to the cash market," Roggensack says.

Roggensack added, "Beef prices have exploded to new record highs for nine sessions in a row and this should give slaughter plants incentive, along with the Defense Production Act, to get slaughter capacity back up closer to a normal level. June cattle support is at 85.05, with 90.92 as resistance."

 

Mike

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4 Replies
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Senior Contributor

Re: Floor Talk, May 6, 2020

Mike, can you tell someone to check and see why it is so hard to get to the login page.  I can't get an answer.  It's getting to be a pain. Tells me can't find that page.  Some times takes 6 or 7 tries,  Thanks.

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Veteran Advisor

Re: At first glance, ...

At first glance, the 155,000 kill vers. 240,000 last year and the exploded beef prices might look favorable but keep in mind, 30 million Americans are unemployed and even if they do go back to work sooner than later they have lost a lot of economic ground.

  Beef is relatively expensive food, fine in a thriving economy but not so good when things aren't going well.

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Honored Advisor

Re: Floor Talk, May 6, 2020

Beef is a strange commodity, it seems the futures are always a discount to cash (what I`ve seen anyway) I don`t know what good the live cattle futures really are other than pajama boys wanting to paper trade cattle and play cowboy.   Any rinky-dink salebarn sells good fat cattle in the ring $10-$20 above futures price. However, corn price on the board is $3.17 and you get $2.85 cash .   Corn was $7 and dropped to $3.50, so in half and now $2.75.  But cattle all time high was $160 or so and all through the commodity cash ($150 oil down to -$37/barrel ect)  cattle`s idea of a "crash" was going from $160 to trading live at $120 ...and now $100 cash or so, I`ll take that "crash" any day   Smiley Happy 

Grocery store meat counters will be empty for a time, like toilet paper shelves and "hamburger limit 1  and $8/lb!"  people will eat peanuts and eggs and chicken and all that demand will be runway behind us...some will discover the "impossible burger" and never go back to eating a protein source that "once had a face" again. 

We export 20% of our pork, I`m guessing Americans can outbid foreign demand to keep that domestic pork here and a baby gilt piglet born this morning in less than 18 months can herself give birth to what will be 10 market hogs going to market.  

Unemployment will get much better...everyone really needs a haircut, right?  We won`t get to 3% unemployment again, but it`ll get better. 

 

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Senior Contributor

Re: Floor Talk, May 6, 2020

it is time for expansion and it is time for conventionality and conventional wisdom to be thrown to the wind. Beef  anyway.

I have been buying cull cows for $800 for a few months , quarantining them for a month and then to the processors and doubling my money with the sale of burger. Direct to the consumer and cutting out middle men all along the process.  For a while now (years) those consumers have been clamoring for local product. I intend to meet that demand as much as possible.

Last month I inked a deal with two local grocery stores which are part of a very large chain based in the Midwest to provide them with burger and primal cuts. The chain is allowing them some autonomy and latitude to make deals like this for the betterment of their bottom line. There is some red tape to get through but for that extra jagging around I'm cutting out middle men and making myself a consistent market and better margins. The butchers at each location will then package and cut down the primals to the end product. They will  affix a small label to all the product I supply. So, their packaging with a cheap little label showing the local source. Worst part is they want to have life sized cutouts (pics of me) with a little blurb about me and my product situated by the product in the stores.  I would rather be anonymous. But gotta give a little to get a little  I suppose.  I'm working my son and daughter over to be the advertisement cutouts, they are younger and way better looking than me,  so...... money talks in all cases.