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January 28, 2020 | FBN Insights | Kevin McNew

US Agricultural Futures Steady/Weak

USDA’s January Cattle on Feed: Placements rise

USDA’s January Cattle on Feed: Placements Rise  

The USDA’s January Cattle on Feed report was in-line with pre-report estimates. Inventories and placements were slightly higher, and marketings were a touch lower.

Inventory: +2% YoY.  January 1 cattle on feed totaled 12 million head.  All key cattle feeding states except Nebraska saw a rise in numbers.    

Placements: +3% YoY.  Placements were above a year ago for all categories. Texas placements in the “under 700 pound” categories were above a year ago.

Marketings: +6% YoY. Steer and heifer slaughter was 5.8% above a year ago in December. Canadian imports of slaughter ready cows, steers and heifers were nearly double the import level in 2018.

FBN’s Take On What It Means: We believe that the current cattle inventory and placement numbers can be supportive for corn demand.  We also believe that drought continues to persist across much of Texas and the Four Corners area is responsible for boosting some of the lighter weight placements which can be a positive for local corn basis.                                                                               

Russian Wheat Export Prices Skyrocket 

Export prices of Russian wheat hit their highest level since late February 2019 due to a jump in global benchmarks and strong domestic prices.

Russian wheat with 12.5% protein content, loaded from Black Sea ports for delivery in February, rose by $5 to $231 per tonne on a free-on-board (FOB).

Russia is the world's largest wheat exporter. 

Russia has exported 25.3 million tonnes (MMT) of grain, including 21.8 MMT of wheat, between the start of the 2019/20 season on July 1 and Jan. 23.

Russia's winter weather remains abnormally warm and there is no snow in the majority of the central and southern regions.

FBN’s Take On What It Means:  Because U.S. Kansas City wheat is a natural substitute for Russian wheat, we believe that lost Russian export demand can be beneficial for the U.S. HRW producer.  We believe that the rise in Russian wheat export prices has the ability to lower the country’s export volume which can shift business back to the U.S.                                                                                                                                                  

 

The risk of trading futures, hedging, and speculating can be substantial. FBN BR LLC (NFA ID: 0508695)

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