Tuesday Midday Livestock Market Summary - Prices Mostly Lower as Feed Costs Push Higher

GENERAL COMMENTS:

The active contracts of cattle, feeders and lean hogs are all trading lower Tuesday, showing caution in the face of rising feed costs and ahead of Wednesday's decision from the Federal Reserve.

LIVE CATTLE:

Here on Tuesday, August live cattle futures are down $0.65 at $172.55, still well below the weighted average of $188.75 negotiated live steers traded at last week in the five-state area. New show lists for the week appear to be lower in Texas, but a little higher elsewhere.

It is looking like Tuesday will be another day of active cattle slaughter. Dow Jones estimates Tuesday's slaughter at 126,000, up from 125,000 a week ago. So far in 2023, cattle slaughter is down 3.5% from a year ago, but beef production is down 4.8%. Choice boxed beef prices were up 90 cents Tuesday morning to $338.33, while selects were up 76 cents at $3.11, both remaining strong sources of support, despite any concerns about the economy. Southern Oklahoma and eastern Colorado got some rain Monday, but it looks like the prominent feature of the week will be triple-digit temperatures in Texas where the forecast is dry.

FEEDER CATTLE:

At midmorning Tuesday, August feeder cattle are down $0.57 at $238.47, down from last week's contract high at $245.17 with July corn trading a nickel higher and traders keeping an eye on the dry early start for this year's row crops. Early Tuesday, the U.S. Labor Department said consumer prices were up 4.0% in May from a year ago, the smallest increase since March of 2021. Many are hoping that will help convince the Federal Reserve to hold off on a rate increase Wednesday afternoon, but there's no guarantee, meaning livestock and other commodity markets are still susceptible to disappointment from outside markets.

The good news for cattle producers is that beef demand has remained strong in 2023, despite concerns about the economy and that continues to be the case. The latest CME Feeder Cattle Index was at $227.99 for Friday, June 9, well below the August futures price. This week's seven-day forecast continues to offer hit and miss chances for light to moderate rain amounts. Pasture conditions have improved in the western Plains, but more rain is needed throughout the Midwest.

LEAN HOGS:

At midmorning Tuesday, July hog futures are trading down $1.12 at $90.47 after getting closer to resistance at $94.55. Futures contracts had a sharp, two-week rally after USDA helped the market with a $50 million pork purchase and cash prices responded higher. Even so, there is a lot of confusion as to how the new requirements of Proposition 12 will be implemented and how it will change the supply chain for pork. There is also a possibility last minute sales are being made to California ahead of the July 1 deadline, but it is not completely clear when stores have to be rid of older pork products.

Cash hog prices in Tuesday morning's Daily Direct Hog report are a little easier with national negotiated trades averaging 91.38 cents per pound and the swine formula base firming to 84.87 cents. Pork cutouts were up $1.33 at $89.53 Tuesday morning with higher trade in bellies and picnics. CME's most recent lean hog index was projected at $84.73 for Friday, June 9, 2023. Here on Tuesday, Dow Jones estimated Tuesday's hog slaughter at 470,000, even with last week. So far in 2023, hog slaughter is up 1.3% and hogs have been easy for packers to obtain, but pork production is only up 0.5%.