Friday Closing Livestock Market Update - Contracts Catch a Break and Close Higher

GENERAL COMMENTS:

Support infiltrated the livestock complex ahead of closing, but next week the markets are expecting to see renewed pressure. Hog prices closed lower on the Daily Direct Afternoon Hog Report, down $2.51 with a weighted average of $117.08 on 2,919 head. December corn is up 1 cent per bushel and December soybean meal is down $0.50. The Dow Jones Industrial Average is up 315.50 points.

From Friday to Friday, Livestock Futures scored the following changes: August live cattle down $0.93, October live cattle down $0.78; August feeder cattle down $2.97, September feeder cattle down $2.92; August lean hogs up $1.95, October lean hogs up $0.90; September corn up $0.52, December corn up $0.56.

LIVE CATTLE:

After a week of mostly lower trading, the live cattle complex championed a higher close by Friday's end with the help of higher boxed beef prices. August live cattle closed $0.27 higher at $136.45, October live cattle closed $0.40 higher at $142.22 and December live cattle closed $0.37 higher at $148.15. It was another week that packers dominated not only the cash market, but also the futures market as a depressed morale was the market's tone. Until packers get caught short-handed and need cattle, the cash cattle market will likely be thinly tested and at steady to lower prices, which could go on for at least another week or two. Throughout the week, the week Northern dressed cattle traded for $225, which was $2.00 lower than last week's weighted average in Nebraska, and Southern live cattle traded for $135, which was $1.00 lower than last week's weighted average.

Friday's slaughter is estimated at 124,000 head, 5,000 head more than a week ago and 8,000 head more than a year ago. Saturday's slaughter is projected to be around 50,000 head. This week's slaughter is estimated at 669,000 head, 4,000 head more than a week ago and 23,000 head more than a year ago.

Friday's Imported Meat Passed for Entry into the U.S. by country shared that the week's fresh beef imports totaled 20,692 metric tons, with Canada, Mexico and New Zealand being the biggest importers. Thus far in 2022, year-to-date fresh beef imports total 697,995 metric tons, which is 14% greater than compared to a year ago.

Boxed beef prices closed higher: choice up $1.47 ($269.24) and select up $1.44 ($242.25) with a movement of 74 loads (42.23 loads of choice, 12.76 loads of select, 7.79 loads of trim and 11.40 loads of ground beef). Throughout the week choice cuts averaged $268.45 (down $1.26 from a week ago) and select cuts averaged $242.75 (up $0.42 from a week ago) and the week's total movement of cuts, grinds and trim only totaled 523 loads.

MONDAY'S CASH CATTLE CALL: Lower. Until packers run thin of forward-bought cattle, and supplies of market-ready cattle wane, a lower tone is likely for the cash cattle market.

FEEDER CATTLE:

The feeder cattle market was pressured throughout the week by higher corn prices and a nervous futures complex. However, Friday's trade was significant for the market as the contracts drifted to the market's breakout plane but shot back higher before closing. If the complex would have tested the breakout plane and closed beneath its threshold, more pressure would have been added to the complex. However, ahead of closing, traders remembered the market's long-term trajectory and soberly viewed how strong feeder cattle sales were throughout the week and elevated the market ahead of its final bell for the week. August feeders closed $1.15 higher at $178.57, September feeders closed $1.35 higher at $181.55 and October feeders closed $1.00 higher at $183.72. Oklahoma's Weekly Cattle Auction Summary shared that throughout the week feeder steers and heifers traded $4.00 to $6.00 higher. With hotter weather, it was evident that cattle were moving off grass this past week and it seemed as though the market was nearing the end of the summer feeder run. Steer calves under 500 pounds traded $6.00 to $10.00 higher, heifer calves under 500 pounds traded $5.00 to $15.00 higher. Steer and heifer calves over 500 pounds sold $2.00 to $6.00 stronger. Slaughter cows sold steady to $5.00 higher while slaughter bulls sold unevenly steady. The CME Feeder Cattle Index for July 28: down $0.24, $172.31.

LEAN HOGS:

The lean hog complex rallied ahead of the week's close, and although pork cutout prices weren't supportive in the afternoon's data, the market still sailed higher into the weekend. August lean hogs closed $1.52 higher a $120.65, October lean hogs closed $0.90 higher at $97.22, and December lean hogs closed $0.92 higher at $87.85. Given that the market is again nearing long-term resistance, traders will likely look to the fundamental side of the market for direction. Pork cutout values will be highly sought-after next week, and the cash market is expected to perform with its usual one to two days of substantially higher trade while the other three to four days go largely untouched. Pork cutouts totaled 226.12 loads with 206.19 loads of pork cuts and 19.93 loads of trim. Pork cutout values: down $1.45, $127.34. Friday's slaughter is estimated at 437,000 head, 2,000 head more than a week ago and 13,000 head more than a year ago. Saturday's slaughter is projected to be around 9,000 head. The CME Lean Hog Index for July 27: up $0.85, $120.58.

MONDAY'S CASH HOG CALL: Lower. Given that packers have been religious about supporting the cash market only one to two days out of the week, and that time frame usually spans between Tuesday and Thursday, it's unlikely that Monday's market sees much support.

Friday Midday Livestock Market Update - Live Cattle and Lean Hogs Find Late-Week Support

GENERAL COMMENTS:

As the market looks to the final hours of the week, the live cattle and lean hog contracts have come into some technical support. Meanwhile, the feeder cattle complex continues to be fixated on the corn market's rally and continues to trade lower. December corn is up 9 3/4 cents per bushel and December soybean meal is up $7.30. The Dow Jones Industrial Average is up 116.69 points.

LIVE CATTLE:

The live cattle contracts have turned green after trading lower every day this week, besides Monday. The market's higher tone comes as boxed beef prices are showing support in the day's midday report and as the market finds technical support at the 100-day moving average. Still, the market's slight attempt at a rally seems to come too late and be too little as the market regressed throughout most of the week and again cash cattle traded lower. August live cattle are up $0.17 at $136.35, October live cattle are up $0.20 at $142.02 and December live cattle are up $0.20 at $147.97. With no new cash cattle trade to report, it's likely that the bulk of this week's business is done with. So far this week, a light trade has taken place in most areas with Northern dressed deals marked at mostly $225, $2 lower than last week's weighted average basis Nebraska. Southern live business has been marked at mostly $135, $1 lower than last week's weighted averages.

Boxed beef prices are higher: choice up $2.00 ($269.77) and select up $1.71 ($242.52) with a movement of 50 loads (29.23 loads of choice cuts, 5.91 loads of select, 6.03 loads of trim and 8.49 loads of ground beef).

FEEDER CATTLE:

The corn market had a stellar week as it traded higher throughout the week, but the grain market's rally did put a wrinkle in the feeder cattle contracts move. The same conclusions are being drawn for Friday's market as once again the nearby corn contracts are rallying $0.09 to $0.10 higher and while the feeder cattle contracts attempted at pushing a late week rally, the market is trending most lower. August feeders are down $0.02 at $177.40, September feeders are up $0.07 at $180.27 and October feeders are down $0.017 at $182.55.

LEAN HOGS:

After being under pressure in Thursday's market, the lean hog complex is back to rallying as not only are the futures contracts trading higher but again pork cutout values are finding support. August lean hogs are up $1.65 at $120.77, October lean hogs are up $0.90 at $97.22 and December lean hogs are up $0.82 at $87.75. Given that the market is seeing widespread support ahead of the noon hour, without any attention being given to the cash market, the market could keep this momentum through closing. If pork cutout values do indeed close higher on the afternoon's report, then next week's market stands a chance at rolling into the week supported as traders and packers alike find confidence in seeing that consumer are still hungry to pork, especially in the form of bacon.

The projected lean hog index for July 28 is up $0.84 at $121.42, and the actual index for July 27 is up $0.85 at $120.58. Hog prices are not reported on the Daily Direct Morning Hog Report because of confidentiality; however, we can that 2,136 head have traded and that the market's five-day rolling average now sits at $124.33 which is $0.73 higher than Thursday's midday average. Pork cutouts total 152.84 loads with 137.79 loads of pork cuts and 15.04 loads of trim. Pork cutout values: down $0.22, $128.57.

Friday Morning Livestock Market Update - Complex May See Further Pressure

GENERAL COMMENTS:

Cattle are having a difficult time overcoming the seasonal slump with packers taking advantage of the need of some to move cattle due to drought and the lack of feed or due to high-priced feed. Northern cattle traded $2.00 lower while Southern cattle traded $1.00 lower. Packers have been able to purchase cattle for immediate needs as well as deferred delivery. That will not last indefinitely as supply will eventually tighten. However, fears over a recession and its impacts weigh on the market as the U.S. economy shrank for the second consecutive quarter as the GDP fell at a 0.9% annual rate for the second quarter. Boxed beef prices showed weakness with choice down $0.22 and select down $1.00. Weekly exports sales were good at 25,300 metric tons (mt), up 6% from the previous week.

Hog traders were in a quandary Thursday, seeing strength in cutouts but also a huge decline in cash. Cutouts closed $2.00 higher, supporting the August contract, while the weakness of cash took futures off their highs, moving October and later contracts into the red by the close. The National Direct Afternoon Hog report showed cash down $10.86. Weekly export sales were good at 21,600 mt, up 5% from last week. China continues to purchase on a weekly basis, shown in the list of buyers. Saturday slaughter is estimated at 21,000 head.

	BULL SIDE		BEAR SIDE
1)	Reduced cattle numbers point to tighter supplies over time. This should provide support to the market.	1)	Higher feed prices and lower demand continue to impact cash prices. Packers have not had to be aggressive and can still purchase the cattle they need.
2)	Technically, cattle futures are still in an uptrend even though they have faced some recent headwinds.	2)	Cattle futures may be under some pressure again Friday as further strength unfolds in the grain markets.
3)	Pork cutouts continue to advance, indicating strong consumer demand. Pork may be the red meat of choice due to its value during this period of inflation and high food prices.	3)	Traders may sell into the hog market Friday in response to the large decline of cash Thursday.
4)	Front-month August moved to the highest level since April and may challenge the contract high before it ends trading in about two weeks if current support holds.	4)	The market anticipates a large decline of prices by the time October rolls around. A possible recession could impact demand further.

Thursday Closing Livestock Market Update - Long, Hot Summer Days Pressure the Contracts

GENERAL COMMENTS:

It was another dull and unimpressive day for the livestock complex as the contracts rounded out the day mostly lower. Heading into Friday's market, it's likely that the same doggish tone is kept as traders seem unwilling to pay much attention to the livestock complex. Hog prices closed lower on the Daily Direct Afternoon Hog Report, down $10.86 with a weighted average of $119.59 on 4,816 head. December corn is up 16 cents per bushel and December soybean meal is down $7.10. The Dow Jones Industrial Average is up 313.89 points.

LIVE CATTLE:

With traders diving out of the live cattle market to the point where open interest sits at its lowest point since 2016, as you can imagine the nearby live cattle contracts continue to dig lower. August live cattle closed $0.62 lower at $136.17, October live cattle closed $0.50 lower at $141.82 and December live cattle closed $0.40 lower at $147.77. As the market trudges through the dog days of summer, it's tough to spout much of an optimistic story for the immediate future as boxed beef prices are under pressure and packers are playing the strongest hand of cards any poker dealer has ever seen. Until supplies become thinner, and packers get caught needing cattle, they'll likely continue to refuse to support the cash market through other arrangements. A few clean-up sales were reported throughout the countryside but largely the cash cattle market is done trading for the week. So far this week, a light trade has taken place in most areas with Northern dressed deals marked at mostly $225, $2 lower than last week's weighted average basis Nebraska. Southern live business has been marked at mostly $135, $1 lower than last week's weighted averages. Thursday's slaughter is estimated at 121,000 head, 2,000 head less than a week ago and 1,000 head more than a year ago.

Thursday's actual slaughter data shared that for the week ending 7/16/2022 steers averaged 889 pounds, which was down 1 pound from a week ago but was 1 pound heavier than a year ago. Heifers for the same week averaged 815 pounds, which is 1 pound more than a week ago but 2 pounds less than a year ago.

Beef net sales of 25,300 mt for 2022 were up 6% from the previous week and 66% from the prior four-week average. The three largest buyers were South Korea (7,900 mt), Japan (7,000 mt) and China (3,100 mt).

Boxed beef prices closed lower: choice down $0.22 ($267.77) and select down $1.00 ($240.81) with a movement of 99 loads (63.68 loads of choice, 15.08 loads of select, 10.50 loads of trim and 9.28 loads of ground beef).

FRIDAY'S CASH CATTLE CALL: Steady. Given that the week's business is appearing to be done with, it's unlikely that prices do anything but trade steady with the week's trend.

FEEDER CATTLE:

The corn market rounded out Thursday's trade fully higher, ranging anywhere from $0.14 to $0.16 stronger in its nearby contracts, which kept the feeder cattle contracts from developing any support technically. Even though feeder cattle demand continues to burn hot in sales scattered throughout the nation (as evidenced by the strong close in the feeder cattle index), the board doesn't seem to care as its only focus appears to be corn market's resurgence. August feeders closed $1.67 lower at $177.42, September feeders closed $1.65 lower at $180.20 and October feeders closed $1.75 lower at $182.72. At Winter Livestock Auction in Pratt, Kansas, compared to last week, feeder steers weighing 800 to 900 pounds sold $4.00 to $7.00 higher and feeder heifers weighing 800 to 950 pounds sold $3.00 to $5.00 higher. The CME Feeder Cattle Index for July 27: up $1.91, $172.55.

LEAN HOGS:

The lean hog market ended up closing mostly lower Thursday, with only the August contract able to close slightly higher. The cash market took a beating as it dropped $10.86 lower from Wednesday's close and only sold 4,816 head in the cash market, but given the drastic nature of the cash market, these type of weekly price swings have become the new normal. Nevertheless, the futures market closed lower even though pork cutout values were able to prove once again that consumer support is alive and well throughout the marketplace. Bellies once again led the pork cutout report with the biggest gain, jumping $7.19 higher from Thursday, but then was followed by a $4.68 gain in the loin. Pork cutouts total 223.14 loads with 196.84 loads of por cuts and 26.30 loads of trim. Pork cutout values: up $2.00, $128.79. Thursday's slaughter is estimated at 460,000 head, 19,000 head more than a week ago and 10,000 head less than a year ago. The CME Lean Hog Index for July 26: up $0.25, $119.73.

Thursday's actual slaughter data shared that for the week ending July 16, live weights averaged 284 (down 1 pound from the previous week) and dressed weights averaged 212 pounds (down 1 pound from the week before).

Pork net sales of 21,600 mt for 2022 were up 5% from the previous week, but down 16% from the prior four-week average. The three largest buyers were Mexico (13,100 mt), Japan (3,500 mt) and Canada (1,300 mt).

­­­­­FRIDAY'S CASH HOG CALL: Lower. Given that packers showed little to no interest in Thursday's cash hog market, it's very unlikely that they do on Friday either, as it appears that they've bought up their needs for the week.

Thursday Midday Livestock Market Summary - Weaker Tones Sweep Across Markets

GENERAL COMMENTS:

Even with relatively supportive export news, the livestock complex is having a tough time rallying even slightly higher. With the cash cattle market not seeing any support and boxed beef prices lower, the live cattle market is struggling and the feeder cattle market isn't doing much better with corn pushing a minor rally. December corn is up 14 1/4 cents per bushel and December soybean meal is down $7.90. The Dow Jones Industrial Average is up 232.35 points.

LIVE CATTLE:

The live cattle market is having a lackluster day as the market looks at a weakened futures complex, lower boxed beef prices and a thinly traded cash market. August live cattle are down $0.57 at $136.22, October live cattle are down $0.52 at $141.80 and December live cattle are down $0.40 at $147.77. Until the cash cattle market can possess more of the market's leverage when supplies become thin, the market could continue to see this type of doggish attitude. The countryside hasn't seen any renewed support and it's looking like packers aren't going to buy very many cattle again this week. With their ability to avoid buying cattle through the cash market with formula deals and alternative marketing agreements, it's hard for the cash cattle market to gain any momentum when supplies are plentiful. So far this week, a light trade has taken place in most areas with Northern dressed deals marked at mostly $225, $2 lower than last week's weighted average basis Nebraska. Southern live business has been marked at mostly $135, $1 lower than last week's weighted averages.

Beef net sales of 25,300 mt for 2022 were up 6% from the previous week and 66% from the prior four-week average. The three largest buyers were South Korea (7,900 mt), Japan (7,000 mt) and China (3,100 mt).

Boxed beef prices are lower: choice down $0.42 ($267.57) and select down $1.34 ($240.47) with a movement of 48 loads (36.50 loads of choice, 8.79 loads of select, zero loads of trim and 2.98 loads of ground beef).

FEEDER CATTLE:

Throughout Wednesday's market, when the corn market was only pushing a mild rally, the feeder cattle complex felt strong enough to overlook its slight uptick in price. However, as the corn market rallies $0.11 to $0.12 higher into Thursday's afternoon, the feeder cattle market has again fallen lower to the pressure. August feeder cattle are down $1.62 at $177.47, September feeders are down $1.42 at $180.42 and October feeders are down $1.40 at $183.07. With the live cattle market lending no support and the corn complex unlikely to weaken ahead of the day's close -- feeders will likely round out the day lower and could be pressured come Friday despite the market still seeing excellent support in sales throughout the countryside.

LEAN HOGS:

The lean hog complex is seeing modest support for its nearby contracts while the rest of the market drifts slightly lower. August lean hogs are up $0.85 at $119.42, October lean hogs are up $0.15 at $96.60 and December lean hogs are down $0.17 at $87.20. With pork cutout values holding strong and consumer demand helping keep the market elevated, the nearby contracts aren't worried about the cash market's drastic cut back given that the nature of the cash market has become so volatile. China wasn't listed as one of the more aggressive buyers in this week's export report, as they only bought 800 mt of pork, but given that China has been able to rebuild their domestic hog herd, it's expected that their need of U.S. won't be as great, but Mexico has been an aggressive buyer for U.S. pork this past year.

The projected lean hog index for July 27 is up $0.85 at $120.58, and the actual index for July 26 is up $0.25 at $119.73. Hog prices are lower on the Daily Direct Morning Hog Report, down $11.20 with a weighted average of $117.86, ranging from $115.00 to $130.00 on 3,901 head and a five-day rolling average of $123.60. Pork cutouts totaled 89.49 loads wit 68.70 loads of pork cuts and 20.79 loads of trim. Pork cutout values: up $2.16, $128.95.

Pork net sales of 21,600 mt for 2022 were up 5% from the previous week, but down 16% from the prior four-week average. The three largest buyers were Mexico (13,100 mt), Japan (3,500 mt) and Canada (1,300 mt).

Thursday Morning Livestock Market Update - Cattle Search for Direction

GENERAL COMMENTS:

Traders did not have much to hang their hat on in the live cattle market. Cash trade Wednesday averaged $1.00 lower in the South and $2.00 lower in the North, marking another week of disappointment. However, even with lower cash, futures remain higher than they were a week ago. There seems to be more of a bullish sentiment building in the market as further liquidation of the cow herd takes place. Slaughter rates continue to remain higher, likely due to lighter weights requiring more animals to achieve the desired tonnage. Boxed beef prices were lower with choice down $1.12 and select down $2.07. Feeder cattle gained even though corn moved higher. Much of the day showed corn struggling, which gave traders the confidence to buy feeder cattle futures. However, the stronger close and strength of corn overnight may renew some pressure Thursday.

Hogs did an about face Wednesday, reacting to the very strong cash on Tuesday and again yesterday. The National Direct Afternoon Hog report showed cash up $5.70. This moves the weighted average price to $130.45. Packers have limited their aggressive buying to two days out of the week and they have been consistent on those days with weekly prices continuing to advance. The expectation is for cash to be lower Thursday. Cutouts were only $0.02 higher -- but higher, nevertheless. Weekly export sales may have some influence on trading for a while Thursday, Saturday slaughter is estimated at 21,000 head.

	BULL SIDE		BEAR SIDE
1)	More cattle coming to the market now should be bullish in the long term as cattle supplies dwindle.	1)	Packers continue to purchase sufficient cattle for immediate needs as well as for the next few weeks, leaving them less aggressive from week to week.
2)	Slaughter pace remains above year earlier levels, indicating demand remains strong as packers need to fill that demand.	2)	Boxed beef price continues to struggle, indicating lower prices are needed to stimulate demand for higher end cuts.
3)	Cash hogs have been advancing from week to week with no sign of slowing down. Demand is good and hog supplies are tightening.	3)	Hogs have had their two strong days of cash with packers likely being less willing to pay up for more hogs Thursday. This may put some pressure on futures.
4)	The large discount of October should narrow as it moves closer to becoming the lead month in about two weeks.	4)	Slaughter in general has been running below a year ago, which continues to be a concern for the market.

Wednesday Closing Livestock Market Update - Lean Hogs and Feeder Cattle Charge Higher

GENERAL COMMENTS:

Wednesday's market ended up treating both the lean hog and feeder cattle contracts favorably, and even though the spot and nearby contract in the live cattle complex closed lower, the rest of the market trended higher as a bullish outlook is on the horizon thanks to a smaller cow herd. Hog prices closed higher on the Daily Direct Afternoon Hog Report, up $5.70 with a weighted average of $130.45 on 31,317 head. December corn is up 2 1/4 cents per bushel and December soybean meal is up $8.30. The Dow Jones Industrial Average is up 436.05 points.

LIVE CATTLE:

With open interest now at the lowest point it's been since 2016, the live cattle market's environment is changing as a bullish future is on the horizon and everyone can see it. The August and October 2022 contracts rounded out the day lower as weaker cash prices feel like another expected, but stinging kick to the chops while packers strategically continue to work the cash market lower. The deferred contracts continue to realize the optimism that lies in the later 2022 and 2023 contracts and had no problem closing higher amid the day's slight pressure of a weak cash market and lower boxed beef prices. August live cattle closed $0.07 lower at $136.80, October live cattle closed $0.05 lower at $142.32 and December live cattle closed $0.12 higher at $148.17. Southern deals continue to trade at $135, which is $1.00 lower than last week's weighted average, and Northern deals are developing at $225, which is $2.00 lower than last week's weighted average.

Wednesday's slaughter is estimated at 125,000 head, 1,000 head more than a week ago and 5,000 head more than a year ago.

Boxed beef prices closed lower: choice down $1.12 ($267.99) and select down $2.07 ($241.81) with a movement of 146 loads (88.45 loads of choice, 28.91 loads of select, 9.46 loads of trim and 18.92 loads of ground beef).

THURSDAY'S CASH CATTLE CALL: Steady. Given that cattle have traded in both regions, and that packers possess the largest portion of leverage right now in the market, it's unlikely that prices get any stronger come Thursday.

FEEDER CATTLE:

The feeder cattle complex looked at the corn market's mild $0.02 to $0.03 rally that it pushed throughout the day, and with a shrug of shoulder and without a care in the world, the market opted to take charge and traded higher. With sound fundamental support from continued buying in the countryside, the feeder cattle market felt comfortable trading higher and pushed all its nearby contracts well over a $1.00 higher before the day's end. August feeder cattle closed $1.67 higher at $179.10, September feeders closed $1.42 higher at $181.85 and October feeders closed $1.25 higher at $184.47. At OKC West Livestock Auction in El Reno, Oklahoma, compared to last week, feeder steers traded $3.00 to $7.00 higher and feeder heifers traded steady to $2.00 higher. Steer and heifer calves sold $5.00 to $10.00 higher. The CME Feeder Cattle Index for July 26: up $0.73, $170.64.

LEAN HOGS:

Cash prices rounded out the day substantially higher and on a big movement, the futures market charged higher through Wednesday's close and pork cutout values closed higher by the skin on their teeth. The recent norm of strong cash hog trade two days out of the week has become a standard that the market is seeming to expect as supplies of market-ready hogs remains thin and favor seller's position. Thankfully, the cash hog rally helped propel the futures market higher after trading lower earlier this week, and even though pork cutout values didn't do enough good to amount to anything, a higher close is a higher close. August lean hogs closed $1.62 higher at $118.60, October lean hogs closed $2.80 higher at $96.45 and December lean hogs closed $1.40 higher at $87.37. Pork cutouts total 218.41 loads with 204.63 loads of pork cuts and 13.77 loads of trim. Pork cutout values: up $0.02, $126.79. Wednesday's slaughter is estimated at 468,000 head, up 9,000 head from a week ago and up 1,000 head from a year ago. The CME Lean Hog Index for July 25: up $0.35, $119.48.

­­­­­THURSDAY'S CASH HOG CALL: Steady to somewhat lower. Given that today's trade of hogs was big, Thursday's business could be anything. Trade could be strong again on Thursday as production speeds have maintained a swift pace this week. Then again, packers may be more reluctant to chase the cash hog market on Thursday after Wednesday's big bite.

Wednesday Midday Livestock Market Summary - Stronger Tones Trickle Back Into the Complex

GENERAL COMMENTS:

The livestock complex has regained an upbeat tone after Tuesday's doggish trade. The live cattle market is still trending mixed with its nearby contracts suffering while the late 2022 and early 2023 contracts rally. Meanwhile, both the lean hog and feeder cattle contracts are rallying into Wednesday's afternoon as traders help propel the markets higher after seeing strong fundamental demand. December corn is up 3 1/4 cents per bushel and December soybean meal is up $7.50. The Dow Jones Industrial Average is up 133.60 points.

LIVE CATTLE:

It comes as no surprise that, as we wade through the dog days of summer, both the nearby August and October contracts are trading lower as the cash market trends $1.00 to $2.00 lower from last week's weighted average. The deferred months of December 2022 through June 2023 are enjoying a mild rally while the rest of the market heads lower as it's undeniable that supplies will be significantly thinner during that time span and that cash cattle prices should see higher price points to allow packers to keep up with consumer demand. August live cattle are down $0.12 at $136.75, October live cattle are down $0.12 at $142.25 and December live cattle are up $0.10 at $148.15. There's been a light movement of trade that's developed Wednesday morning in Kansas and Nebraska. Southern deals continue to trade at $135, which is $1.00 lower than last week's weighted average, and Northern deals are developing at $225 which is $2.00 lower than last week's weighted average. Not helping feedlots this week is the onset of slight push back in boxed beef prices.

The Fed Cattle Exchange Auction held Wednesday reported 12 lots, totaling 1,422 head of cattle, none of which sold.

Boxed beef prices are lower: choice down $0.65 ($268.46) and select down $0.61 ($243.27) with a movement of 82 loads (54.52 loads of choice, 11.24 loads of select, 7.14 loads of trim, 9.40 loads of ground beef).

FEEDER CATTLE:

Even with the corn market pushing mild $0.02 to $0.04 rally, the feeder cattle contracts are cranking higher Tuesday morning as traders seem willing to be back in the game. August feeders are up $1.32 at $178.75, September feeders are up $1.22 at $181.65 and October feeders are up $1.00 at $184.22. Sale barns have seen continued support and unwavering interest in both feeders and calves this week, which is helping give traders the confidence they need in order to justify a higher move in the complex. The live cattle market isn't lending any support as it's trading mixed technically and as cash cattle continue to trend lower, but given that the market is wading through the dog days of summer, the feeder cattle market isn't expecting any help from its fellow cattle contracts.

LEAN HOGS:

Pork cutout values may be lower at midday, but that's not stopping the futures market nor the cash market from rallying. August lean hogs are up $1.72 at $118.70, October lean hogs are up $2.62 at $96.27 and December lean hogs are up $1.47 at $87.45. After trading lower on both Monday and Tuesday of this week, the market has shot higher and is aiming at regaining technical ground as the cash market gives the market the support it was lacking. Given how significant the rally the has been in the cash market, it's unlikely that the market will lose its momentum ahead of closing.

The projected lean hog index for July 26 is up $0.25 at $119.73, and the actual index for July 25 is up $0.40 at $119.48. Hog prices are higher on the Daily Direct Morning Hog Report, up $13.01 with a weighted average of $129.06, ranging from $114.00 to $134.00 on 18,555 head and a five-day rolling average of $123.76. Pork cutouts total 134.57 loads with 125.59 loads of pork cuts ad 8.98 loads of trim. Pork cutout values: down $1.19, $125.58.

Cattle and beef markets 2022: The second half

• Derrell S. Peel - Livestock Marketing Specialist  Oklahoma State University Extension

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The first half of 2022 is in the books. The general direction of cattle and beef market forecasts for this year has not changed, but annual forecasts have been modified by the way the first half of the year has played out, with implications for a significantly different second half of the year.

If the forecasts are to be realized, several factors will be significantly different in the third and fourth quarters compared to the first half of the year.

Beef production is projected to decrease year over year in 2022 from last year’s record level. The magnitude of that decrease has been trimmed back compared to earlier forecasts, with current estimates for beef production to decrease roughly 1% in 2022. Beef production in the first half of 2022 is up about 1%, meaning that production in the second half of the year is projected to drop more sharply and is forecast to decrease nearly 4% year over year for the remainder of the year.

Lower beef production going forward implies that cattle slaughter will decrease as well. Cattle slaughter is currently forecast to decrease by 1% for the year. In the first half of the year, total cattle slaughter has been up by 1.4% year over year. The increase is due to more female slaughter, with total cow plus heifer slaughter up 4.5% in the first half of the year. Thus far, increased female slaughter more than offsets the 1.6% year-over-year decrease in steer plus bull slaughter. Total cow slaughter is up 6.1% so far this year, with decreased dairy cow slaughter down 3.1% year over year so far, partially offsetting the 14.6% year-over-year increase in beef cow slaughter. For the remainder of the year, total beef cow slaughter is likely to remain higher year over year by double digits, and total cow slaughter is likely to increase by 5% to 6% year over year. This means that reduced cattle slaughter will be realized by less steer and heifer slaughter. 

Reduced fed slaughter for the remainder of the year implies reduced feedlot marketing rates. Feedlots, as of June 1, had record inventories of cattle on feed which seems to be at odds with the idea of reduced marketings in the coming months. However, feedlots have been placing larger numbers of lightweight cattle, which leads to more days on feed and slower turnover rates … in other words, slower marketing rates. Feedlots will work through current inventories in the second half of the year. May placements were down by the largest year-over-year monthly decrease since last September. Smaller placements in the coming months will lead to lower feedlot inventories by the end of the year unless drought forces even larger numbers of cattle into feedlots.

Exactly how continuing drought, reduced forage production and high feed prices will impact cattle and beef markets in the coming months remains uncertain. Nevertheless, the second half of 2022 is shaping up to look significantly different than the first half of the year.  

Wednesday Morning Livestock Market Update - Higher Cash Hogs Expected

GENERAL COMMENTS:

There was anticipation cash might struggle again this week and early indication is that assessment may be correct. There was some light trade which took place in the South $1.00 lower than last week. Early trade generally sets the stage for the week. Dressed cattle could trade differently as more cash activity surfaces Wednesday. Even though slaughter pace continues to run strong, packers may not need to be very aggressive again this week. Boxed beef prices were mixed with choice up $1.00 and select down $1.12. Feeder cattle gapped lower on the open Tuesday with August and September contracts unable to close the gaps. Higher corn prices put pressure on the market.

Hog traders are assessing how strong demand will remain as the interest rate will be raised again. Demand has been holding well with strong cutouts. Futures indicate traders feel it will not continue as there is a discount of $23.32 for October compared to August. That is a large spread with the current market situation suggesting the market may not be that weak. Cutouts were down $1.05. Packers were true to form Tuesday with aggressive buying, which may continue again Wednesday. The National Direct Afternoon Hog report showed a jump in cash of $7.56. That is expected to influence the trade Wednesday.

	BULL SIDE		BEAR SIDE
1)	Cattle weights have been declining, requiring packers to purchase more animals. This keeps slaughter pace brisk and cattle moving.	1)	A few cattle trading lower Tuesday likely sets the stage for lower cash again this week.
2)	The recent uptrend remains intact. With the Cattle on Feed report past and the inventory report indicating tighter number in the future, prices may continue to move higher.	2)	Live cattle futures have not been able to hold above technical price resistance which was penetrated Monday. Traders are not yet confident about higher prices.
3)	The large jump of cash Tuesday may influence the trade Wednesday. Packers need hogs and are willing to pay up for them. Cutouts were lower Tuesday but have been trending higher.	3)	Slaughter pace continues to run below a year ago, which may indicate demand is not as strong as anticipated.
4)	The large discount of October to August is unlikely to be maintained. October may slowly move higher to reduce the price spread.	4)	Hog futures still have chart gaps below the market that may be filled at some point.

Tuesday Closing Livestock Market Update - Uneasy Tones Overcome the Complex

GENERAL COMMENTS:

It was a dull and doggish day for the livestock complex as the market saw little fundamental support and traders kept a safe distance from the livestock contracts. It's likely that this lower/anxious tone keeps with the market until it's known exactly how much higher interest rates are going to go for this next period. Hog prices closed higher on the Daily Direct Afternoon Hog Report, up $7.56 with a weighted average of $124.75 on 15,441 head. December corn is up 17 cents per bushel and December soybean meal is up $18.70. The Dow Jones Industrial Average is down 228.50 points.

LIVE CATTLE:

The live cattle complex stood little chance at trading higher as the cash cattle market began to trade cattle in the South for $1.00 lower than last week's weighted average and while the rest of the livestock contracts sailed lower into the day's end. August live cattle closed $0.87 lower at $136.87, October live cattle closed $0.97 lower at $142.37 and December live cattle closed $0.57 lower at $148.05. A handful of cattle sold in Texas for $135, but otherwise the cash cattle market remained untested. More trade will likely develop on Wednesday, but lower tones are expected. It's not unexpected to see boxed beef prices showing some exhaustion, but given how used to higher/stronger prices the market has become, packers could get even tougher to deal with if boxed beef prices start to show midsummer weakness. 

Tuesday's slaughter is estimated at 125,000 head, steady with a week ago and 6,000 head more than a year ago.

Boxed beef prices closed mixed: choice up $1.00 ($269.11) and select down $1.12 ($243.88) with a movement of 115 loads (65.71 loads of choice, 27.76 loads of select, 8.97 loads of trim and 12.08 loads of ground beef).

WEDNESDAY'S CASH CATTLE CALL: Lower. Given that the marketplace is uneasy with an interest rate announcement set to be released on Wednesday, the cash market is more likely than not to trade lower. The bigger question is: how many cattle are going to trade this week?

FEEDER CATTLE:

The feeder cattle complex didn't stand much of a chance at trading higher with the corn contracts rallying $0.15 to $0.17 higher through closing. Until the corn market settles down and until the market can see officially how much higher interest rates are going to be come Wednesday afternoon's announcement, the market could then stand a chance at trading higher as demand is still exceptionally strong throughout the countryside, but so much of the market's fate lies at the mercy of the corn market. August feeders closed $1.87 lower at $177.42, September feeders closed $2.25 lower at $180.42 and October feeders closed $2.02 lower at $183.22. At OKC West Livestock Auction in El Reno, Oklahoma, at their midsession point, compared to last week, steers and heifer calves were selling $5.00 to $10.00 higher as cooler weather and chances of rain throughout the week is helping increase buyer excitement. The CME Feeder Cattle Index for July 25: up $0.89, $169.91.

LEAN HOGS:

Even with a snappy jump in the cash hog market, the lean hog complex rounded out the day lower along with the rest of the livestock contracts. Unfortunately, even though the cash market saw a significant jump in prices and on a sizeable volume (up $7.56 on 15,441 head), the market could entice traders to jump in the game as everyone's keeping a safe distance from the market until it's better understood how the commodity market will react to the interest rate hike. August lean hogs closed $0.25 lower at $116.97, October lean hogs closed $0.47 lower at $93.65 and December lean hogs closed $0.27 lower at $85.97. Pork cutouts total 299.26 loads with 282.59 loads of pork cuts and 16.67 loads of trim. Pork cutout values: down $1.05, $126.77. Tuesday's slaughter is estimated at 467,000 head, 7,000 head more than a week ago and 5,000 head less than a year ago. The CME Lean Hog Index for July 22: up $0.91, $119.13.

­­­­­WEDNESDAY'S CASH HOG CALL: Steady to somewhat higher. It's likely that Wednesday's volume of cash hogs traded is big again, but whether or not prices will remain steady or creep higher is the real question.

Tuesday Midday Livestock Market Summary - Lower Tones Overcome Complex

GENERAL COMMENTS:

The livestock complex is off to rough Tuesday as the contracts are trending mostly lower. The feeder cattle complex is still battling the onset of higher corn price that has sent its market lower. Meanwhile, the live cattle and lean hog contracts are actively searching for fundamental support to help traders feel more confident in potentially trading higher. December corn is up 11 cents per bushel and December soybean meal is up $13.00. The Dow Jones Industrial Average is down 154.26 points.

LIVE CATTLE:

The live cattle market has bounced around in Tuesday's market, showing that it's inconclusive as to where prices should go. Unfortunately, immediate fundamental support is shaky as boxed beef prices printed mixed at midday and the cash cattle market has had little luck at getting any sizeable interest from packers over the last month. However, it is important to remember where we sit in the year, and that this time has historically been referred to as the dog days of summer for a reason. From a long-term sense, the market still sits ripe for a rally as numbers will be drastically thinner. August live cattle are down $0.67 at $137.07, October live cattle are down $1.00 at $142.35 and December live cattle are down $0.62 at $148.00. Packers still haven't shown much interest in this week's cash cattle market and it's likely that business holds off until Wednesday or later. Asking prices in the South are noted at $138, and the North has yet to disclose their initial asking prices for the week.

Boxed beef prices are mixed: choice up $1.66 ($269.77) and select down $0.30 ($244.70) with a movement of 67 loads (40.82 loads of choice, 17.66 loads of select, zero loads of trim and 8.36 loads of ground beef).

FEEDER CATTLE:

The feeder cattle market hasn't been given any relief from the rallying corn prices and continues to trend lower into Tuesday's afternoon. August feeders are down $1.32 at $177.97, September feeders are down $1.45 at $181.22 and October feeders are down $1.30 at $183.95. The market gapped lower at Tuesday's start, but the market is in no immediate pressure of trading below its breakout trend line of $176.00. The market is still seeing substantial support from buyers in the countryside as they all recognize that the number of feeder cattle available this year is going to be significantly smaller than years past.

LEAN HOGS:

The lean hog market has had a tough go come Tuesday, but if the market's fundamentals can grow stronger into the afternoon, the futures market may find modest support for Wednesday's market. Thus far, packers haven't had much interest in the cash market, but given how thin supplies are, we can assume they'll need to get more aggressive at some point this week. August lean hogs are down $0.72 at $116.50, October lean hogs are down $1.52 at $92.60 and December lean hogs are down $1.10 at $85.15. If both cash prices and pork cutout values can round out Tuesday's close with higher prices, the lean hog market may stand a chance at turning its direction around and trading higher come Wednesday.

The projected lean hog index for July 25 is up $0.40 at $119.48 and the actual index for July 22 is up $0.92 at $119.08. Hog prices are higher on the Daily Direct Morning Hog Report, up $1.73 with a weighted average of $116.05, ranging from $113.50 to $130.00 on 3,545 head and a five-day rolling average of $120.15. Pork cutouts total 167.31 loads with 157.44 loads of pork cuts and 9.87 loads of trim. Pork cutout values: down $0.93, $126.89.

U.S. Cattle Inventory Down Two Percent

The Cattle Report from the USDA’s National Agricultural Statistics Service says U.S. farms contained 98.8 million head of cattle and calves as of July 1. Of the 98.8 million head of inventory, all cows and heifers that have calved total 39.8 million. There were 30.4 million beef cows in the U.S. as of July 1, two percent lower than 2021. The number of U.S. milk cows dropped to 94.5 million. The U.S. calf crop was estimated at 34.6 million head, one percent lower than in 2021. The number of U.S. Cattle on Feed is slightly higher than last year. The cattle and calves on feed for the slaughter market in the U.S. for feedlots with a capacity of 1,000 or more head totaled 11.3 million on July 1. That inventory level was slightly higher than July 1, 2021. The inventory included 6.9 million steers and steer calves, down one percent from last year.

Tuesday Morning Livestock Market Update - Mixed Trading Activity Expected

GENERAL COMMENTS:

Cattle opened substantially lower Monday in reaction to the bearish placement number on the Cattle on Feed report. However, after the initial knee-jerk reaction was finished, futures came roaring back as the friendly cattle inventory report seemed to take the stage, becoming the focus of traders. Futures contracts through April closed higher despite higher corn futures and the potential for steady to lower cash again this week. No cash business was done Monday with packers less likely to be aggressive due to an amount of cattle already booked for the week. Boxed beef prices were higher with choice up $0.99 and select up $2.250. Feeder cattle were under pressure from higher corn futures and eliminated much of the gain on Friday. Feeders will likely be under pressure again Tuesday due to strong corn futures overnight.

Hogs clearly showed the unwinding of spreads that were established last week. August and October suffered triple-digit losses, putting August right in line with cash. The National Direct Afternoon Hog report showed cash down $1.29. This was offset to some extent by cutouts increasing $1.85. If the pattern of packer buying holds, they should be more aggressive Tuesday as they look to procure the hogs they need. Cash has generally been strong on Tuesdays and with cutouts indicating good demand over the weekend, this pattern could be seen today.

	BULL SIDE		BEAR SIDE
1)	Live cattle might see further support as traders have digested the Cattle on Feed report and seem focused on the potential for tighter supplies over time.	1)	Rising corn prices will put pressure on the cattle complex.
2)	Feeder cattle buyers remain aggressive at auctions, indicating supplies of calves and feeder cattle are tighter and feedlots want them.	2)	There is anticipation of steady to lower cash again this week as packers may not need to be aggressive due to their ability to continue to purchase some cattle for differed delivery.
3)	Packers are expected to bid more aggressively for hogs today as that has been the pattern.	3)	Spread unwinding in hog futures could continue Tuesday, resulting in further pressure on nearby contracts.
4)	Pork cutouts continue to exhibit strength. This indicates continued strong demand.	4)	Hog slaughter continues to run at a slower pace than a year ago, which leaves sufficient hogs available to the market and packers less aggressive.

Monday Closing Livestock Market Update - Live Cattle Higher Despite a Shaky Cash Market

GENERAL COMMENTS:

The live cattle market rounded out the day with a slightly higher close with the feeder cattle and lean hog contracts remaining pressured through closing. It's likely that the hog complex sees more support in Tuesday's market as packers will likely show interest in the cash market, but the feeder cattle market's fate largely depends on what the corn market does. Hog prices closed lower on the Daily Direct Afternoon Hog Report, down $1.29 with a weighted average of $117.19 on 4,915 head. December corn is up 19 1/2 cents per bushel and December soybean meal is up $17.10. The Dow Jones Industrial Average is up 90.75 points.

LIVE CATTLE:

Despite corn being higher and total open interest taking a royal beating, the live cattle contracts managed to defend a slightly higher close by Monday's end. August live cattle closed $0.37 higher at $137.75, October live cattle closed $0.35 higher at $143.35 and December live cattle closed $0.45 higher at $148.62. Even with the futures market charging higher and close to prices not seen since early June, it's unlikely that the cash cattle market performs well this week as packers have supplies committed to them for this time. New showlists appear to be mixed, higher in Kansas, somewhat lower in Texas and lower in Nebraska/Colorado. 

Monday' slaughter is estimated at 124,000 head, 1,000 head less than a week ago and 6,000 head more than a year ago.

Throughout last week, Southern live deals were marked at mostly $136, roughly $0.50 lower than last week's weighted averages. While Northern dressed business came in at mostly $227, $2 lower than last week's weighted average basis Nebraska. Last week's negotiated cash cattle trade totaled 69,032 head. Of that, 65% (45,034 head) were committed for the nearby delivery, while the remaining 35% (23,998 head) were committed for the deferred delivery.

Boxed beef prices closed higher: choice up $0.99 ($268.11) and select up $2.50 ($245.00) with a movement of 90 loads (47.81 loads of choice, 16.53 loads of select, 15.90 loads of trim and 9.80 loads of ground beef).

TUESDAY'S CASH CATTLE CALL: Lower. Given that packers still possess most of the market's leverage and that they've strategically padded themselves with supplies for this time, the cash market will likely be lower again this week.

FEEDER CATTLE:

The grain market's power throughout Monday's trade helped propel the corn market higher, which deemed a lower close for feeder cattle. August feeders closed $2.25 lower at $179.30, September feeders closed $1.80 lower at $182.67 and October feeders closed $1.75 lower at $185.25. With Friday's higher close, the Monday's retraction didn't amount to much more than given away some of what Friday claimed. The market is still far from testing its breakout plane, which remains at $176. If the market only had to shake the bearish news of Friday's Cattle on Feed report, then it could potentially begin to trade higher on Tuesday or Wednesday depending on what the corn market does, but with interest rates expected to be raised again on Wednesday, pressure may still exist. At Joplin Regional Stockyard in Carthage, Missouri at their midsession point compared to last week feeder steers were trading $2.00 to $6.00 higher and feeder heifers were trending $4.00 to $7.00 higher. The CME Feeder Cattle Index for July 22: down $1.99, $171.01.

LEAN HOGS:

The lean hog complex was able to pull itself out of the lower trend that settled into the market before noon in its nearby contracts, but the market's deferred contracts didn't have any problems closing $0.65 to $1.15 higher by the day's end. It's supportive to see that pork cutout prices rounded out the day higher, which should give Tuesday a batting chance at higher trade. It's likely that the cash market sees better interest from packers on Tuesday and Wednesday as they've been consistently buying hogs two days out of the week. August lean hogs closed $1.47 lower at $117.22, October lean hogs closed $2.20 lower at $94.12 and December lean hogs closed $0.27 lower at $86.25. Pork cutouts total 289.47 loads with 252.68 loads of pork cuts and 36.79 loads of trim. Pork cutout values: up $1.85, $127.82. Monday's slaughter is estimated at 450,000 head, 1,000 head more than a week ago and 17,000 head less than a year ago. The CME Lean Hog Index for July 21: up $1.18, $118.22.

­­­­­TUESDAY'S CASH HOG CALL: Higher. It's likely that Tuesday's cash hog market is higher given how few market-ready hogs there are, but how much higher remains the wild-card question of the week.

Monday Midday Livestock Market Summary - Mixed Bag for the Livestock Complex

GENERAL COMMENTS:

The livestock complex is a mixed bag to start the week, as the feeder cattle and lean hog contracts are seeing pushback, feeders wrestle with Friday's lousy Cattle on Feed report and hogs look for continued demand. Meanwhile, the live cattle market is trending higher as boxed beef prices are stronger to start the day off and Friday's Cattle Inventory Report was supportive. December corn is up 11 1/4 cents per bushel and December soybean meal is up $15.80. The Dow Jones Industrial Average is up 26.01 points.

LIVE CATTLE:

The live cattle contracts head-faked Monday's market to start. First, lower red print was seen throughout the market, but as time has progressed and the market nears the noon hour, the market is trending mildly higher. August live cattle are up $0.22 at $137.60, October live cattle are up $0.30 at $143.30 and December live cattle are up $0.27 at $148.45. The live cattle market was pleased to see Friday's Cattle Inventory report as well as the aggressive marketings throughout June. While the placement data was troublesome for the market, if packers continue to move cattle as vigorously as they have through recent months through the plants, then the placements will soon be worked through, and thinner supplies are still unavoidable for late 2022 and through 2023. Last week's negotiated cash cattle market was disappointing with only 69,000 head trading. As packers continue to master the markets with their ability to manage their needs of cattle through alternative marketing arrangements, forward contracts and formula deals, the cash cattle market is paying the cost.

Throughout last week, Southern live deals were marked at mostly $136, roughly $0.50 lower than last week's weighted averages. While Northern dressed business came in at mostly $227, $2 lower than last week's weighted average basis Nebraska.

Last week's negotiated cash cattle trade totaled 69,032 head. Of that 65% (45,034 head) were committed for the nearby delivery, while the remaining 35% (23,998 head) were committed for the deferred delivery.

Boxed beef prices are higher: choice up $1.38 ($268.50) and select up $1.02 ($243.52) with a movement of 28 loads (18.94 loads of choice, 7.20 loads of select, zero loads of trim and 2.10 loads of ground beef).

FEEDER CATTLE:

With the ongoing, unsettled war in Ukraine, the grain market hasn't gotten any easier to pinpoint amid back-and-forth news stories and ongoing land blasts. On Friday, the world was hopeful that Ukraine was going to be able to export some of their grain, but those dreams were short-lived as Russia attacked the port of Odesa on Saturday. Nevertheless, our corn market has found modest support in Monday's market which has pressured the feeder cattle contract to move lower in combination of Friday's bearish Cattle on Feed report. We assumed that Friday's bearish COF report would steal the early part of the week's trade, but long-term speaking, one still can't deny the supportive nature of the market's July Cattle Inventory report. August feeders are down $1.72 at $179.82, September feeders are down $1.25 at $183.22 and October feeders are down $1.15 at $185.85.

LEAN HOGS:

The lean hog market has taken a turn for lower prices in its nearby contracts as most of the livestock complex battles pressure. The deferred contracts haven't been pressured with the same doggish energy that's seemed to have taken ahold of the livestock complex, but if pork demand can stay supported through closing, then the market may stand a chance at trading higher come Tuesday especially if packers start to fan interest toward the cash market. August lean hogs are down $2.00 at $116.70, October lean hogs are down $1.50 at $94.80 and December lean hogs are down $0.50 at $86.02.

The projected lean hog index for July 22 is up $0.92 at $119.08 and the actual index for July 21 is up $1.12 at $118.16. Hog prices are lower on the Daily Direct Morning Hog Report, down $3.67 with a weighted average of $114.32, ranging from $113.50 to $126.00 on 3,304 head and a five-day rolling average of $120.03. Pork cutouts total 147.09 loads with 117.89 loads of pork cuts and 29.20 loads of trim. Pork cutout values: up $1.99, $127.96.

Monday Morning Livestock Market Update - Higher Placements May Have a Negative Influence

GENERAL COMMENTS:

Live cattle were higher due to positioning ahead of the reports Friday. There was anticipation at least one of the reports would be friendly and short-covering pushed futures higher. Traders did see friendly numbers on the Bi-annual Cattle Inventory report with total inventory down 2%. Beef heifers over 500 pounds were down 3% with beef calves under 500 pounds down 3%. This was about as expected, so no real surprises there. The surprise was on the Cattle on Feed report. Placements during the month of June were at 98% of a year ago compared to the trade estimate of 94.7%. Even though on feed numbers and marketings were in line with estimates, higher placements are likely to push futures lower Monday as traders react to the actual versus expectations. Feeder cattle may go along for the ride as they follow the lead of live cattle as well as some negative influence from higher corn futures.

August hogs were the focus of the day as the index continues to increase and cutouts showed strong gains. Cutouts were up $1.84 with the lean hog index up $0.67 at $117.40. Traders may not be quite as exuberant Monday as they wait to see how pork movement was over the weekend. Packers are not expected to be aggressive for the same reason. Cash on the National Direct Afternoon Hog report showed a decline of $6.23 Friday. There are sufficient hogs around to keep packers satisfied. However, weights continue to decrease with a decline of 1 1/2 pounds compared to the previous week. The average weight for the week ended 7/16 was 277.5 pounds compared to 278.1 pounds the previous week. August hogs are riddled with chart gaps; it may be tough to close them in the current market environment.

	BULL SIDE		BEAR SIDE
1)	The Cattle Inventory report was friendly to the market and may provide some support.	1)	Higher placements than expected on the Cattle on Feed report may pressure cattle futures Monday, possibly eliminating the gains of Friday.
2)	Beef inventory for June showed a decline of 9.9 million pounds from May, indicating demand has remained strong.	2)	Total beef inventory is 29% higher than a year ago. This leaves plentiful supplies available to the market.
3)	Once hog futures penetrated overhead resistance, there was little to hold them back.	3)	Total pork in inventory is 22% above a year ago with belly stocks 46% higher.
4)	October hogs carry a huge discount to cash and may begin to make up some of the difference over the next few weeks.	4)	The sharp drop in cash hogs Friday may have a negative influence on futures trading Monday.

Friday Closing Livestock Market Update - Contracts Rally Ahead of USDA Reports

GENERAL COMMENTS:

Heading into Monday's market, the big question will be: which USDA report are the cattle contracts going to focus on? The Cattle on Feed report was somewhat bearish with its larger-than-expected placements, but the Cattle Inventory report was bullish with the market possessing the fewest beef cows it's had since 2014. Hog prices closed lower on the Daily Direct Afternoon Hog Report, down $6.23 with a weighted average of $118.48 on 4,266 head. December corn is down 9 1/4 cents per bushel and December soybean meal is down $3.20. The Dow Jones Industrial Average is down 137.61 points.

From Friday to Friday livestock futures scored the following changes: August live cattle up $2.45, October live cattle up $3.45; August feeder cattle up $5.20, September feeders up $4.80; August lean hogs up $8.88, October lean hogs up $3.73; September corn down $0.40, December corn down $0.40.

LIVE CATTLE:

The live cattle contracts rallied ahead of the day's close as the market anxiously awaited the two big USDA reports. The Cattle on Feed report was a disappointment as showed greater numbers than expected, but the Cattle Inventory report came in supportive of a stronger cattle market as the nation's beef cow herd numbers are the lowest they've been since 2014. The markets could be finicky come Monday as it's a coin toss on which report traders will focus on. However, long term, the market remains bullish. August live cattle closed $1.65 higher at $137.37, October live cattle closed $2.02 higher at $143.00 and December live cattle closed $1.85 higher at $148.17. The cash cattle market didn't see much support through Friday's market and, unfortunately, this week serves as the third consecutive week when packers have been able to push prices lower and only buy thin volumes throughout the cash market. With packers having the ability to buy and commit cattle months in advance through alternative marketing arrangements and formula deals, their need to support the cash market when cattle are abundant is thin to none. Nevertheless, throughout the week Southern live deals were marked at mostly $136, roughly $0.50 lower than last week's weighted averages. While Northern dressed business came in at mostly $227, $2 lower than last week's weighted average basis Nebraska.

Friday's slaughter is estimated at 119,000 head, 1,000 head less than a week ago and 7,000 head more than a year ago. Saturday's slaughter is projected at 49,000 head. This week's slaughter is estimated at 665,000 head, 9,000 head less than a week ago and 10,000 head more than a year ago.

Friday's Cold Storage report shared that total red meat supplies in freezer were down 1% from the previous month but up 24% from last year. Total pounds of beef in freezers were down 2% from last month but up 29% from a year ago.

Boxed beef prices closed mixed: choice down $0.64 ($267.12) and select up $1.97 ($242.50) with a movement of 95 loads (56.07 loads of choice, 14.39 loads of select, 12.54 loads of trim and 11.91 loads of ground beef). Throughout the week choice cuts averaged $269.70 (up $1.43 from last week) and select cuts averaged $242.33 (up $0.31 from last week) with the week's total movement of cuts, grinds and trim totaling 517 loads.

MONDAY'S CASH CATTLE CALL: Lower. Given that packers have ample supplies of cattle committed to them through other arrangements, their need to support the cash market right now is thin with supplies of cattle abundant.

FEEDER CATTLE:

The feeder cattle complex rounded out Friday's market on a substantially higher note as the market anticipated a supportive Cattle on Feed and Cattle Inventory report. The Cattle Inventory report was supportive as it showed fewer beef cows in the market, fewer replacement heifers in the market and a smaller calf crop for the year, but Friday's goodness stopped there as the Cattle on Feed Report stung like a bee. When analyzing these USDA reports it's important to remember that the market will react hastily if the USDA actual figures vary much from analysts' average estimate, which is where the problem with Friday's COF report stems from. Analysts projected that placements would be down around 94.3% of a year ago, but Friday's data depicted that placements were actually 98% of a year ago. Unfortunately, this unexpected hike in placements will likely suck some of the wind out of the feeder cattle market's sail, but it won't erode all the market's bullish energy as it's stemming from multiple sources. Thankfully, feeder cattle demand throughout the countryside remains incredible as buyers continue to realize that the market is going to be thin on supplies in the months to come. Additionally, it helps that trader are helping push this bullish move as Friday's market closed above the market's recent high and is equivalent to prices not last seen since late March. Nevertheless, there's a chance that the market fixates its attention on the unexpected jump in placements, but, long term, the market's outlook is still bullish. August feeders closed $3.27 higher at $181.55, September feeders closed $3.17 higher at $184.47 and October feeders closed $2.77 higher at $187.00. The CME Feeder Cattle Index for July 21: up $0.34, $171.01.

LEAN HOGS:

The lean hog market rounded out Friday's close with a stronger tone as the market accelerated technically and even captured higher pork cutout prices ahead of the weekend. August lean hogs closed $2.40 higher at $118.70, October lean hogs closed $0.55 higher at $96.32 and December lean hogs closed $0.30 higher at $86.52. Heading into next week's trade, the market will again rely on and look for follow-through support from consumers to sustain the complex. If interest holds and demand continues to keep pork prices at least steady, the market could continue to trend at these levels. However, if packers sense that demand is waning, the market likely won't see aggressive interest and the futures market could show hesitancy. Pork cutouts total 239.50 loads with 212.01 loads of pork cuts and 27.50 loads of trim. Pork cutout values: up $1.84, $125.74. Friday's slaughter is estimated at 435,000 head, 1,000 head less than a week ago and 5,000 head more than a year ago. Saturday's slaughter is projected to be around 41,000 head. Thursday's slaughter was revised to 441,000 head, 13,000 head more than what was originally stated. August lean hogs closed $2.40 higher at $118.70, October lean hogs closed $0.55 higher at $96.32 and December lean hogs closed $0.30 higher at $86.52. The CME Lean Hog Index for July 20: up $0.67, $117.04.

Friday's Cold Storage Report shared that frozen pork supplies were down 1% from last month, but up 22% from last year. Stocks of pork bellies were down 6% from last month but up 46% from last year.

­­­­­MONDAY'S CASH HOG CALL: Steady. Packers won't likely be aggressive buyers in Monday's market as they'll feel the market out to see how demand interest seems before jumping into the cash market, which will likely demand strong prices again next week.

Friday Midday Livestock Market Update - Complex Turns Higher

GENERAL COMMENTS:

The livestock complex is running into Friday's afternoon fully higher as the market absorbs ample support from traders and the likelihood of bullish USDA reports coming Friday afternoon. From the latest Cold Storage report to the midyear Cattle Inventory and monthly Cattle on Feed reports -- Friday afternoon will have everyone staring at their computer screens. December corn is down 2 3/4 cents per bushel and December soybean meal is down $0.70. The Dow Jones Industrial Average is down 62.66 points.

LIVE CATTLE:

The live cattle market is higher and is rallying up to the market's average one-month high for many of the contracts. August live cattle are up $1.27 at $137.00, October live cattle are up $1.72 at $142.70, and December live cattle are up $1.50 at $147.85. The market's excitement likely stems from the anticipated bullish USDA reports that are going to be unveiled Friday afternoon -- the monthly Cattle on Feed report and the midyear Cattle Inventory report. The cash cattle market hasn't seen any renewed interest thus far and it's most likely that the week's business is done with. Thus far throughout the week, Southern live trade has been marked at $136, roughly $0.50 to $1 lower than last week's weighted average. Dressed deals in the North have been marked at mostly $227, $2 lower than last week's weighted averages.

Boxed beef prices are higher: choice up $0.45 ($268.21) and select up $1.91 ($242.44) with a movement of 53 loads (28.08 loads of choice, 5.69 loads of select, 11.97 loads of trim and 7.05 loads of ground beef).

FEEDER CATTLE:

The feeder cattle contracts are higher Friday afternoon as the market is poised for Friday afternoon's reports. Both the Cattle on Feed and Cattle Inventory reports are expected to bode well for the cattle complex, and as traders push the feeder cattle contracts close to the market's recent high, everyone is watching the minutes pass until the reports become available. Friday afternoon's trade will likely keep with its strong tone through closing unless the corn market has a change of heart and for some reason shoots higher. It's not Friday's market that will likely see the benefits of these reports, but mostly Monday's market if they are indeed as supportive as assumed. August feeders are up $1.90 at $180.17, September feeders are up $2.27 at $183.57 and October feeders are up $2.17 at $186.40.

LEAN HOGS:

The lean hog complex isn't going to sit idle ahead of the week's close and miss an opportunity to capture a modest rally ahead of the Friday's last bell. August lean hogs are up $1.80 at $118.10, October lean hogs are up $0.32 at $96.10 and December lean hogs are up $0.22 at $86.45. Aside from the livestock complex's strong underlying tones, it's helping that pork cutout values are trending higher into the afternoon. It's key that packers see continued strong pork demand amid such limited supplies of market-ready hogs as that will be key to keeping packers interested in the cash market.

The projected lean hog index for July 21 is up $1.12 at $118.16, and the actual index for July 20 is up $0.67 at $117.04. Hog prices are lower on the Daily Direct Afternoon Hog Report, down $3.05 with a weighted average of $117.99, ranging from $113.50 to $134.00 on 3,809 head and a five-day rolling average of $119.82. Pork cutouts total 153.02 loads with 138.59 loads of pork cuts and 14.43 loads of trim. Pork cutout values: up $3.02, $126.92.