Market Analysis – April 19, 2022

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Market analysis April 19, 2022

Drew Haynen, Van Zee Commodities LLC

 

Cattle:

In the last two weeks, the cattle market has been higher, gaining a couple of dollars. The cash market last week has finally caught some fire with most trade in the north happening from $142/cwt-$145/cwt. This was up $2-$5/cwt for the week. The south traded from $138/cwt-$140/cwt which was also a nice jump. I am hoping that we can have widespread $145/cwt in the north this week and maybe even higher money by the end of the week. Packers are still making a lot of money and the demand seems to be picking up as grilling season starts. Food inflation also has traders worried about the meat markets.  With chicken close to all-time highs and beef and pork also high, some people are wondering if the government will step in and try to curb food inflation and if so, how that will affect the producer, packer, or both.

The feeder cattle market has been lower the past couple of weeks. In my opinion, the corn market is the main reason for the fall. I think feeder cattle are going to get scarce for a couple of months and hopefully, we will see a nice appreciation in value. I am hoping $10-$15/cwt dollars are put back on the feeder board in the next couple of months.

Grains:

Grains have been higher again. With so much uncertainty, big traders just put more and more premium into the markets. All this uncertainty is coming from a few different problems. The war in Ukraine is still the biggest problem that I see right now. Ports are closed and are not looking like they will be reopening soon. Fertilizer prices are high and fertilizer, in general, is expensive and very hard to get with all the sanctions on Russia. Although, I did hear that Brazil has 4 cargo ships of fertilizer getting shipped from Russia even with the sanctions. This is a good thing for grain prices but probably does not help the war a lot. The other two things that are starting to get concerning in the USA are weather patterns and planting rates. It is dry and cold in much of the western part of the corn belt. It seems like planting could be late and we could use some good timely rains again this year to get a trendline yield that we need to keep some of our grain prices at least a little bit at bay. The USDA is starting to raise the export numbers for our grains with the war persisting longer than many had thought it would. Ukraine farmers are in the field planting through the war though which is a good sign. Hopefully, they can still produce 75% of their usual crop.

Cattle and Grain Markets for April 19, 2022
Month $/cwt
Cattle April 141.32
June 136.62
Feeders April 156.50
May 160.75
Corn May     8.03
July     7.98
Soybeans May   17.18
July   16.93

 

If you have any more questions or concerns or just want to discuss the specifics or potential risks and reward for different futures strategies, please call Drew Heynen at 712-722-3888.

 

The risk of loss in trading futures and options on futures can be substantial and may not be suitable for everyone.  This material has been prepared by a trading employee of Van Zee Commodities LLC and is, or is in the nature of, a solicitation. All sources used are believed to be reliable; however, any decisions made to buy, sell or hold a futures or options of futures position should not be solely based on this research and should not in any way be deemed to be endorsed by Van Zee Commodities LLC.  Van Zee Commodities LLC is registered with the Commodity Futures Trading Commission as an introducing broker and is a member of National Futures Association. 

 

Sheep and hay data compiled by Ross Bronson, Ag Risk Consultant, Redd Summit Advisors

Sheep:

Markets were Lower this week as easter demand drops off. San Angelo is $20-$30 lower for lambs compared to last week. Fredericksburg was $10-$20 lower, along with Hamilton and Goldthwaite this week. New Holland, PA bucked the mold and sold steady this week. The USDA estimated domestic lamb and mutton meat production for the week ending April 9th totaled 2.45 million pounds. Unchanged from the previous week. Imported lamb and mutton meat for the week ending April 2nd totaled approximately 4.85 million pounds which equates to 197 percent of the domestic production for the same period. 

Sheep markets for week ending April 1st, 2022
  Current Week Prior Week Percent Change Prior Year Percent Change
Feeder Lamb Prices, Medium and Large 1-2, 60-90 lbs, Wtd Avg, $/cwt.
           
Ft Collins, CO $307.23 NQ NA $270.70 13.5%
Newell, SD NQ NQ NA $221.00 NA
Sioux Falls, SD $280.37 $290.41 -3.5% NQ NA
Billings, MT NQ NQ NA NQ NA
           
Light Weight Slaughter Lamb Prices, Choice & Prime 1-3, 60-90 lbs, Wtd Avg, $/cwt.
           
San Angelo, TX $289.63 $312.20 -7.2% $281.43 2.9%
New Holland, PA $388.56 $400.00 -2.9% $339.99 14.3%
           
Slaughter Lamb Prices, Wtd Avg, $/cwt.
           
Neg. Pur. Live $222.75 $216.63 2.8% $184.44 20.8%
Form. Pur. Carcass Base NQ NQ NA NQ NA
Comp.-Form. & Neg.Carcass Base NQ NQ NA NQ NA

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** Not Applicable

 

Hay:

The big change in the hay market is more trading in areas where new hay is being baled. Dairies still have strong demand but are hesitant to buy at record high prices. However, a drop in prices does not seem to be in the immediate future unless summer precipitation comes in different than forecast. New crop contracts are being reported, but often include some concessions on terms. The story is still leaning toward high prices this summer. 

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