Monday Midday Livestock Market Summary - Hog Futures Continue Lower

General Comments

Triple-digit losses have swept through hog trade, adding to the already weak market structure seen last week. Nearby hog futures are posting $2 per cwt losses at midday with technical weakness developing through the entire complex. Corn futures are higher in light trade. July corn futures are 4 cents higher. Stock markets are mixed in light trade. Dow Jones is 40 points higher with NASDAQ down 4 points.

LIVE CATTLE:

Mixed trade is seen through the entire live cattle complex with nearby gains offsetting limited follow through pressure in deferred contracts. Gains during the morning in June and August futures has helped to bring a sense of stability to the market despite strong pressure in feeder cattle and hog trade. This could limit further losses during the end of the session, even though prices remain generally weak. Cash cattle trade remains undeveloped with bids and asking prices unavailable. Show list distribution and inventory taking is the main focus across the entire market Monday, with additional packer interest likely over the next couple of days. Boxed Beef cut-outs at midday are higher, $0.79 higher (select) and up $0.27 per cwt (choice) with light movement of 50 total loads reported (33 loads of choice cuts, 10 loads of select cuts, no loads of trimmings, 7 loads of ground beef).

FEEDER CATTLE:

Underlying pressure continues to hold in feeder cattle trade with initial weakness Monday morning gaining momentum as the session continues. This is adding increased pressure to the complex with futures $1.30 to $1.90 per cwt lower at midday. Despite the limited moves in corn prices and mixed live cattle trade, renewed bearishness is seen in feeder cattle futures as prices have broken through May lows, once again establishing new contract lows in nearby contracts. This is likely to further weaken feeder cattle trade through the near future, as traders focus on prices below $132 per cwt.

LEAN HOGS:

Active pressure continues to develop through lean hog futures trade with losses of $2 per cwt in nearby contracts. The underlying weakness seen through the entire complex as technical pressure continues to develop and prices erode is adding to commercial liquidation across the complex. Expanded limits are available Monday following Friday's limit losses, but at this point losses have been limited to $2 per cwt in most contracts months. Cash prices are lower on the National Direct morning cash hog report. The weighted average price is down $1.53 at $72.32 per cwt with the range from $64 to $75 on 4,118 head reported sold. Cash prices are unreported due to confidentiality on the Iowa/Minnesota Direct morning cash hog report. Pork values firmed following sharp gains in rib and belly cuts. Pork cutouts added $0.73 per cwt at $77.46 per cwt with 123 loads traded. Lean hog index for 6/20 is $79.14, down 0.41, with a projected two-day index is unreported due to delays.

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Monday Morning Livestock Market Summary - Weakness is Likely Early

GENERAL COMMENTS: 

Cash cattle interest is expected to remain limited Monday morning with packers and feeders busy with showlist distribution and inventory taking. Bids and asking prices are not expected through the day. The limited trade reported last week should still keep packers short bought. This is likely to stimulate activity earlier in the week than last week, although the volatility in futures trade and beef values will likely limit early-week interest. Futures trade is expected to open mostly lower, although a combination of follow-through liquidation is likely with moderate short-covering following the triple-digit losses Friday. The increase in cattle inventory in feedlots at the beginning of the month is likely to add to the underlying market pressure with total cattle on feed at 102% of year-ago levels. This is above market estimates before the report. The combination of underlying weakness in the complex last week as well as growing cattle numbers is expected to put firm pressure on the entire complex.

Limit losses Friday is expected to create additional market volatility in the entire complex, allowing for expanded trading limits through the entire complex. July through October futures fell $3 per cwt lower in late-day trade as a significant technical reversal developed late last week. Due to limited volume early Monday morning, moderate short-covering interest is likely in the complex, leaving the markets potentially mixed during morning trade. Cash trade remains steady to $1 lower Monday morning with most bids steady. Expected slaughter Monday is at 477,000 head.

	BULL SIDE		BEAR SIDE
1)	Cattle marketed in May increased 1% from year-ago levels. This is a fractional bounce above pre-report estimates, allowing for potential focus on continued cattle movement through the spring months.	1)	Cattle on feed levels increased not only from year-ago levels, but also beat analyst expectations, placing larger inventory levels in feedlots. This is causing renewed pressure in an already weak cattle complex.
2)	Moderate-to-firm export outlooks continue to develop for beef products in several areas of the country. Increased access for beef in the European Union will continue to stimulate firmer export demand through the upcoming months.	2)	Sharp losses late last week created technical pressure in nearby live cattle trade with August futures moving below $102.50 and breaking out of the sideways market trend from the last few months. This is likely to create additional pressure in the near future.
3)	Traders continue to look toward the anticipated trade talks with China scheduled for this week. This is a glimmer of hope that the hog market cannot lose sight of, as increased access to the Chinese pork market will be critical to stimulate strong long-term demand.	3)	Limit losses in nearby lean hog trade has not only allowed for expanded trading limits Monday, but sparked widespread liquidation. This could allow for additional long-term pressure developing across the entire complex.
4)	Hog futures remain oversold, with sharp losses the last two weeks moving prices to its lowest price since early March. This could help to bring about renewed short-covering, which may spark moderate interest from noncommercial traders through the early half of the week.	4)	Follow-through weakness in pork values developed at the end of last week. This is likely to create additional market pressure in the entire complex as traders close out the month of June.

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Friday Closing Livestock Market Summary - Lean Hogs Close Limit Lower

GENERAL COMMENTS: Lean hog futures closed down the $3-per-cwt limit Friday, which will trigger expanded limits Monday. Cattle futures also fell late Friday, breaking through short-term support. From Friday to Friday, livestock futures scored the following changes: Jun LC off $2.23; Aug LC off $2.05; Aug FC off $1.85; Sep FC off $1.75; Jul LH off $5.10; Aug LH off $2.72. Cash cattle trade appears to be done for the week following light-to-moderate trade Thursday. A few scattered bids were seen at $109 to $110 per cwt live basis and $178 dressed, but the lack of interest at the lower prices is likely to keep most cattle on showlists until next week. The National Daily Direct afternoon hog report was $0.69 lower ($65-$76, weighted average $74.03) on 8,216 head sold. Corn futures eroded Friday afternoon with July down 7 3/4 cents per bushel. The Dow Jones Index was 34 points lower with the NASDAQ down 19 points.

LIVE CATTLE: Live cattle futures closed $0.42 to $1.72 lower. The August contract led the market lower, falling $1.72 per cwt to close at $102.22 per cwt. With this end-of-the-week move, the August contract broke through support of $102.80 per cwt set in May and moved out of the sideways trading range it had been confined to for the last couple of months. The live cattle market could come under pressure again early next week given weaker fundamentals and technical pressure seen over the last couple of days. The June 1 USDA Cattle on Feed report showed a 2% gain from a year, which was above pre-report estimates but is not likely to create significant pressure when trade resumes on Monday. Concern that beef supplies will remain burdensome while demand remains sluggish may continue to pressure the market. Beef cut-outs: lower, down $1.93 (select, $199.55) to down $0.90 (choice, $219.82) with light demand and moderate offerings, 99 loads (37 loads of choice cuts, 37 loads of select cuts, 10 loads of trimmings, 16 loads of coarse grinds).

MONDAY'S CASH CATTLE CALL: Steady. Firm pressure in cash and futures trade late in the week will likely soften initial activity next week, although showlist distribution and inventory-taking may be the limit of movement Monday.

FEEDER CATTLE: Feeder cattle futures closed $1.05 to $1.32 lower. Even though corn futures fell 6 to 7 cents Friday, it wasn't enough to support buyer interest in feeder cattle trade. Contracts still remain in the current trade range, although a breakthrough in support levels could bring about increased pressure next week. CME cash feeder index for 6/20 is $131.37, down $1.62.

LEAN HOGS: Lean hog futures closed $0.52 to $3 lower. Losses quickly swept through lean hog futures Friday morning, leading to limit losses of $3 per cwt in the first three contract months. A lack of buyer support sparked technical pressure with prices breaking through support levels. Contracts moving below $80 per cwt is significant, as this is not only a three-month low, but is nearing lows set in early 2019. A move below $76.46 per cwt in the August contract ($1.44 per cwt below current levels) would signal additional long-term pressure and erase the entire market rally that was based on expected China demand due to African swine fever losses. Growing concerns about the ability to build export demand and reach a trade agreement with China are once again eroding market support. Pork prices continued to slide lower with triple-digit losses in butt, picnic and rib cuts. Pork cutout values fell $0.71 per cwt, moving to $76.73 per cwt on 255 loads. CME cash lean index for 6/19 is $79.55, up $0.06. DTN Projected lean index for 6/20 is $79.14, down $0.41.

MONDAY'S CASH HOG CALL: Steady to $1 lower. Continued pressure in cash and futures trade Friday is setting the tone for additional cash market weakness next week. Most bids are expected to be 50 cents lower, as packers secure end of the month needs. Monday slaughter numbers are expected at 477,000 head.

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Friday Midday Livestock Market Summary - Sharp Losses Develop Across Livestock Futures

General Comments

Sharp losses developed in all livestock trade Friday morning with nearby lean hog futures posting limit losses of $3 per cwt. Late-morning buying developed, with live cattle futures currently mixed as traders cover short positions in front of the weekend break, and afternoon cattle on feed report. Corn futures are lower in light trade. July corn futures are 1 cent lower. Stock markets are mixed in light trade. Dow Jones is 40 points higher with NASDAQ down 17 points.

LIVE CATTLE:

Sharp losses Friday morning created additional market pressure through the entire complex, allowing nearby contracts to break through support levels during morning trade. Limited follow-through selling late Friday has sparked short covering in deferred contracts. This may add increased underlying stability through the end of the week with traders trying to adjust positions following sharp market swings during the last couple of weeks. Market closes at current price levels would hold prices above short-term support levels and maintain the sideways trading range seen over the last couple of months. Traders are also starting to adjust to the upcoming cattle on feed report. With light to moderate cattle on feed increases expected, markets are not expected to show significant market shifts. Cash cattle interest remains sluggish with limited bids redeveloping at the lower end of range Thursday. Live bids of $109 to $110 live are seen and $178 dressed. It is uncertain if additional trade will develop before the weekend. If trade does develop, feeders may wait until after the cattle on feed report before pulling the trigger on extra cattle sales for the week, otherwise holding off until next week before selling into this lower market trend. Boxed Beef cut-outs at midday are lower, $0.46 lower (select) and down $0.72 per cwt (choice) with light movement of 52 total loads reported (18 loads of choice cuts, 16 loads of select cuts, 7 loads of trimmings, 11 loads of ground beef).

FEEDER CATTLE:

Follow-through pressure continues to develop in feeder cattle trade. This may add increased underlying weakness through the end of the week. Although prices remain lower Friday, markets have pulled off session lows with August futures now holding narrow losses. Pre-report adjustments are developing midmorning Friday as traders are focusing on reduced cattle placements in May, compared to year-ago levels. Grain trade has stabilized, but this is still leaving concern about overall production costs and feed supply levels through the next year.

LEAN HOGS:

Limit losses have developed across nearby lean hog trade following active selling over the last two trading sessions. The most recent pressure has broken through short-term support levels established last week, with futures trading at three-month lows. There is expected to be some additional underlying pressure as traders search for technical support through the end of June. Cash prices are lower on the National Direct morning cash hog report. The weighted average price is down $0.64 at $74.08 per cwt with the range from $66 to $76 on 5,191 head reported sold. Cash prices are unreported due to confidentiality on the Iowa/Minnesota Direct morning cash hog report. Pork values shifted lower following firm pressure in most primal cuts. Pork cutouts fell $0.36 per cwt at $75.84 per cwt with 142 loads traded. Lean hog index for 6/19 is $79.55, up 0.06, with a projected two-day index is $79.14, down 0.41.

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