Cattle futures collapsed earlier this month in reaction to a fire at Tyson’s Holcomb, Kan., beef plant. The plant processed roughly 6,000 head a day, which accounts for 25% of Kansas’ production and more than 5% of production nationwide. The market has stabilized somewhat, finding support this week from the monthly Cattle on Feed report, which pegged the August 1 inventory at 100.2% of the year ago total, which was at the low end of expectations. October is struggling to hold above $100, but does have support at the contract low of $97.77 ½. December is currently holding above support at $103.25. Cash markets have been fairly quiet this week, with reports of asking prices around $108 for live cattle in the southern Plains. Packer margins have decreased only slightly since the fire, and are still estimated to be over $400 as consumer demand has ramped up due to holiday buying.
October hogs set a new low last week at $59.30 on news that China will retaliate with an additional 10% tariff on U.S. pork. Seasonal increases in hog supplies are pressuring the cash market. Production numbers are up over year-ago totals, and that increase is resulting in lower wholesale prices.
The rice crop has just about caught up to last year, despite the slow start to the season. Nationwide the crop is 96% headed, compared with 98% a year ago. Across the country, we were 15% harvested as of Sunday, compared with 19% in 2018. However, the current weather forecast with highs in the 80s and lows in the 60s could slow down the maturation of the crop in the mid-south. Crop conditions improved slightly this week, with 69% of the crop rated good to excellent, but in Arkansas that total is 59%. Futures have staged an impressive rally this week, with November in position to test resistance at $12. Surprisingly robust export sales last week gave the market an additional boost on Thursday when USDA reported that 128,000 metric tons were sold last week, with Mexico, Haiti, and Iraq all booking at least 30,000 metric tons.
Cotton set a new contract low on Monday as the market continues to worry about China. In Thursday’s export report, China was not a buyer, but only modest cancellations were reported, so the report was more bullish than expected. Still, sales of 146,000 bales were considered lackluster at best. The recent low of 56.59 cents is the first level of support for December, while resistance begins at 60 cents.
Soybeans saw renewed weakness early in the week as China announced additional tariffs. The market response was somewhat muted by the fact that China hasn’t been buying any U.S. soybeans for some time, so the tariffs can’t really hurt us more than we already have been. The potential for new U.S./China meetings in September has given the market a bit of a boost. The Progressive Farmer crop tour reported last week that pod counts in Indiana are down approximately 30% and down 25% in Illinois. Smaller reductions were seen in other states.