Issue Date: September 11, 2009
Where To From Here in the Live Cattle Market?
The beef sector is faced with tight supplies of fed cattle moving into the fall/winter months. Also, this time of year typically sees an improvement in beef demand. The industry has been placing light numbers of cattle into the feed yards for months in response to a small calf crop and in response to consistent losses on close outs during the past twelve months. This has resulted in a tightening of fed cattle supplies over time. At one point this summer the USDA was reporting fed numbers at 10-year lows. An increase in placements during July has eased the tight supply situation slightly.
The cash steer market appears to have established a summer bottom at 81 cents/lb in early August. The most recent cash price was 85 cents/lb which has been paid over the previous two weeks. If supplies tighten further this fall at the same time that beef demand improves, we should experience additional strength in the cash steer market. Cash trading into the low 90’s is possible during this time frame.
By Dennis Smith
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Happy Feet!
Come on everybody, let’s gets happy! The economy is better and oil demand is rising. And you know that 787 billion dollar stimulus package we passed, according to the White House Council of Economic Advisors, probably created or saved 1 million jobs! That’s only about $787,000 per job! And they probably pay $8 or 10 bucks an hour! See life is good especially if you are an oil bull. It is time to get really happy! Just buy and close your eyes because if you decide to open them, you might not feel as happy or as bullish as you thought. The oil market moved on bullish momentum in part inspired by a strong stock market and the International Energy Agency’s upbeat outlook for global oil demand. For the second month in a row the International Energy Agency raised its global oil demand projection predicting an average global daily consumption of 85.7 million barrels of oil. That is an increase of 450,000 barrels a day more than their last report. The IEA cited better demand in the US but also better than expected demand in China.
By Phil Flynn
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Wheat Searches for a Bottom
Wheat continues to search for a support level as the marketplace grapples with very large Global supplies. It is not likely the USDA report, to be issued on Friday morning, is going to lend any support to the futures markets. Good progress has been made in the spring wheat harvest over the course of the last week, but rains early in the week have limited recent progress.
The average analysts’ estimates for the 09/10 domestic wheat carry out came in at 773 million bushels, which is an increase from the 743 million bushel estimate in August. I expect the increase to be predicated on the slow pace of export sales. Expect the USDA to make any revisions to wheat production based on the size of the spring wheat crop in the Sept 30th small grains summary. Regardless of where the actual comes in, this report is going to confirm that there are excessive supplies of wheat. This by itself is not going to generate a considerable amount of selling, since the market knows supplies are ample and demand is questionable at best. Soft red wheat needs to be competitive in the export market, but it also needs to fit into the domestic feed ration.
By Brian Henry
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