Tuesday Midday Livestock Market Summary - Support Surfaces in Livestock Contracts

General Comments

Shaking off the Monday blues, lean hog and feeder cattle contracts wasted no time Tuesday in looking to take back some of the position they lost in Monday's downfall. The live cattle complex is the only livestock sector fighting the forward movement, even though trade earlier Tuesday morning tried to move higher. March corn is up 4 1/4 cents per bushel, and March soybean meal is down $1.00. The Dow Jones Industrial Average is up 248.03 points, and the NASDAQ is up 135.56 points.

LIVE CATTLE

Live cattle contracts are the only livestock sector unwilling to re-evaluate Monday's move and continue to trade mostly lower. Earlier Tuesday morning, the complex flirted with the idea of progressing prices higher but has since dropped back below Monday's close in most contracts. February live cattle are up $0.17 at $122.45, April live cattle are down $0.20 at $121.10 and June live cattle are down $0.10 at $112.90. The countryside continues to echo with crickets, as feeders are unsure where to price cattle this week and packers haven't inquired on any pens yet.

On Friday, USDA will release its biannual cattle inventory report, which is expected to come out bullish in lower total cow-herd numbers. If this is the case, the report could be the bump that the live cattle market needs in order to shoot cash prices higher and out of the steady sideways trade.

Consigned to Wednesday's Fed Cattle Exchange, there are 477 head with two pens coming from Kansas and one pen from Texas. All cattle are offered with the one-to-nine-day delivery.

Boxed beef prices are higher: choice up $0.15 ($213.74) and select up $2.59 ($213.09) with a movement of 61 loads (43.29 loads of choice, 7.14 loads of select, 0 loads of trim and 10.76 loads of ground beef).

FEEDER CATTLE

Feeder cattle contracts are up $0.27 to $0.62 throughout the complex as the feeder cattle market, like the other livestock contracts, is building some support into Tuesday's noon hour. January feeders are up $0.37 at $142.27, March feeders are up $0.62 at $135.80 and April feeders are up $0.37 at $138.37. With the January contract expiring in two short days, more interest in buying into the March contract, helping boost prices in that month.

LEAN HOGS

The April 2020 contract is seeing growing support Tuesday morning as the board starts to make a comeback from Monday's panic selling. February lean hogs are up $0.55 at $66.50, April lean hogs are up $1.25 at $71.70 and May lean hogs are up $0.85 at $77.82. Monday afternoon's cash prices stepped higher, which could have helped insulate Tuesday's ability to move the entire board higher.

The projected lean hog index for 1/28/2020 is up $0.10 at $61.74, and the actual for 1/24/2020 is up $0.11 at $61.64. Hog prices are lower on the National Direct Morning Hog Report, down $0.27 with a weighted average of $53.62, ranging from $49.00 to $56.50 on 10,460 head sold and five-day rolling average of $52.70. Pork cutouts total 259.05 loads with 237.18 loads of pork cuts and 21.86 loads of trim. Pork cutout values: down $0.12, $77.64.

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Tuesday Morning Livestock Market Summary - Market Volatility Expected to Continue

GENERAL COMMENTS:

Cash cattle market activity remains at a standstill early Tuesday morning, but this is not surprising given the limited early-week activity and bearish market shifts in futures trade. Asking prices and bids are undeveloped at this point, and likely may not be active until midweek or later. It is expected that both cattle feeders and packers will desire to wait until some of the dust settles surrounding the futures trade before actively entering the market. Late-week trade is not unlikely given the overall volatility in the entire complex. Futures trade is expected mixed, although a strong bearish tone continues to hold over the complex following limit losses in live cattle and feeder cattle trade Monday. The limit losses Monday will allow for expanded trading limits in all cattle markets, sparking increased potential for wide technical shifts through the upcoming days. Although futures trade is posting three-month lows, the pressure in the market during 2019, still has prices far from setting long-term support levels. But the moves lower the last two weeks, have moved prices away from the top end of the trading range. This may create some significant market boundaries through the spring months, potentially locking live cattle and feeder cattle within a wide sideways trading range in the upcoming months. Moderate short-covering attempts are likely early Tuesday morning as traders try to take advantage of limited early volume, but the underlying tone of the market is expected to remain generally weak. Tuesday slaughter runs are expected near 122,000 head.

Limit losses in April and May lean hog futures trade Monday have allowed for expanded trading limits of $4.50 per cwt in all lean hog futures contracts Tuesday. This underlying pressure across the complex followed the general market pressure in most markets based on concern and fear of coronavirus in China and other countries around the world. The fears that this could follow the trend of the SARS outbreak in 2003 has many not only cautious but extremely concerned. With the coronavirus impacting the Lunar New Year celebrations in China, increased impact to overall pork demand is also expected. It is uncertain at this point how much overall impact this will have on short- and long-term China imports of meat products, but the fact that African swine fever continues to remain a major issue and will continue to limit pork production in the country is raising increased questions. Trade focus will continue to look for increased overall export growth, there still remain questions of how quickly pork exports to China will ramp up. How much of this expected demand growth will be a direct result of the trade deal, and how much will be normal buying needs as other trade partners production levels are being maxed out still cannot be answered. Cash hog prices are called $1 lower to 0.50 higher with most bids expected steady to 50 cents lower. Slaughter Tuesday is expected at 495,000 head.

	BULL SIDE		BEAR SIDE
1)	Packers enter the week with a need to aggressively source market ready cattle in order to meet current market commitments. This is expected to still allow moderate-to-strong support to cash cattle prices as feeders try to push cash cattle prices higher with elevated early asking prices through the week.	1)	Limit losses in live cattle and feeder cattle futures Monday will allow expanded trade limits in all cattle futures. This may spark continued widespread liquidation through the complex during early week trade, causing increased long-term pressure through the market.
2)	Strong underlying demand support for beef continues in domestic and export markets despite concerns that additional growth may be stunted by coronavirus in China and other parts of the world.	2)	Growing focus on longer-term supply growth in the last half of the year is expected to create a wider price spread between spot-month live cattle contracts and summer contract prices. August futures currently hold a $11 per cwt discount to spot futures, which is expected to grow through the upcoming weeks.
3)	Expectations are that export trade to China will continue to increase over the upcoming weeks and months based on the trade agreement buying developing, which may help to offset most recent concerns of supply growth.	3)	Lack of support in pork cutout values early in the week is adding to the underlying weakness through the entire lean hog complex. This could add increased fundamental bearishness to the entire complex.
4)	Summer lean hog contracts continue to hold a strong premium to spot-month futures. This move higher not only supports traditional seasonal price shifts but is also focused on the expectation that increased trade will likely develop through the rest of 2020.	4)	Nearby August futures are testing long term support levels of $69.90 per cwt set during early August. A move below this level during the week would likely spark additional aggressive market liquidation in commercial and noncommercial traders.

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Monday Closing Livestock Market Summary - Livestock Contracts Dive Lower in Fear of Coronavirus

GENERAL COMMENTS:

Few answers surface about the coronavirus, which leave the entire marketplace up in the air and vulnerable to its roar. The worrisome part of the situation is that no one knows how vast the virus will spread or how detrimental its wake will be. Once officials have more understanding of the outbreak, reassurance should surface, but at this time little knowledge of the virus is known. Hog prices close higher on the National Direct Afternoon Hog Report, up $1.16 with a weighted average of $53.86. March corn is down 6 3/4 cents per bushel and March soybean meal is down $0.50. The Dow Jones Industrial Average is down 453.93 points and NASDAQ is down 175.60 points.

LIVE CATTLE:

Live cattle futures left nothing on the table as the day lunged lower with few questions answered; leaving the same distraught feeling for Tuesday. February live cattle dropped $2.60 lower to $122.25, April live cattle dropped $3.000 to $121.30 and June live cattle dropped $3.00 to $113.02. Until there's some understanding of the outbreak, traders, cattlemen and everyone in between are left in the same worry and wait mentality. There's no doubt that this will trickle into this week's fat cattle trade and most likely benefit packers. As of now there are no asking prices yet established.

Boxed beef prices closed lower: choice down $0.90 ($213.59) and select down $0.20 ($210.50) with a movement of 104 loads (67.99 loads of choice, 15.35 loads of select, 3.67 loads of trim and 17.48 loads of ground beef). Monday's slaughter is estimated at 122,000 head, steady with a week ago and 3,000 head more than a year ago.

TUESDAY'S CASH CATTLE CALL: Quiet. Unless some understanding of the virus is shared, it wouldn't be surprising to see trade wait until late in the week; for most likely lower prices.

FEEDER CATTLE:

Feeder cattle contracts felt the worry of the coronavirus like the rest of the complex and closed lower in every contract except the spot January month. January feeders closed $0.05 higher at $141.90, March feeders closed $4.50 lower at $135.17 and April feeders closed $4.5 lower at $138.00. Last Friday at Crawford Livestock Market in Crawford, Nebraska, 3,883 head of feeders sold in comparison to two weeks ago steers under 650 pounds sold $5.00 to $10.00 higher, steers over 650 pounds sold $4.00 lower except 800 pound steers, which sold $2.00 higher. Heifers sold unevenly steady across all weight brackets. The CME feeder cattle contract 1/24/2020: down $0.46, $144.30. The CME lean hog index 1/23/2020: up $0.24, $61.53.

LEAN HOGS:

Just once the lean hog market seems to find some strength and ability to move pries higher, external factors arise and shift prices lower. February lean hogs close $1.27 lower at $65.95, April lean hogs close $3.00 lower at $70.45 and May lean hogs close $3.00 lower at $76.97. Potentially the only positive thing about Monday market was that the cash hog market was able to move afternoon prices higher, a significant gesture in the middle of the day's mess.

Pork cutouts totaled 334.12 loads with 300.62 loads of pork cuts and 33.50 loads of trim. Pork cutout values: down $0.12, $77.26. Monday's slaughter is estimated at 498,000 head, 87,000 head more than a week ago and 26,000 head more than a year ago.

TUESDAY'S CASH HOG CALL: Steady. Until there's more understanding of the virus its doubtful that prices will move much.

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Monday Midday Livestock Market Summary - The Bears Aren't Hibernating This Winter

General Comments

We sometimes get caught in trap that thinking only internal factors of a market affect its trade, affect its nature and affect its wellbeing, which is a big misconception. Let's look at how the markets closed last week for example. All three of the livestock divisions closed lower even though feeder calves are selling well in the countryside, the lean hog market was rallying earlier in the week and Friday's Cattle on Feed Report was largely natural. With all that taken into consideration, one would have thought that the market would close steady to somewhat higher. But if we look at the external factors affecting the livestock markets, we find our answers. The market has slowed its paces; and rightfully so, in fear of what the coronavirus could amount to. March corn is down 7 3/4 cents per bushel and March soybean meal is down $1.40. The Dow Jones Industrial Average is down 335.68 points and NASDAQ is down 135.77 points.

LIVE CATTLE

Live cattle contracts are feeling the rest of the complex's pain as prices fall lower and people from all sides of the industry have the same concerns. February live cattle are down $2.17 at $122.67, April live cattle are down $2.95 at $121.32 and June live cattle are down $2.77 at 113.25. Asking prices have yet to be established and trade isn't expected until later in the week. In the meantime, it's really a waiting game to see what the virus amounts to and the implications it will have on the market place.

Formula totals for last week were mixed, higher in Texas, somewhat smaller in Nebraska, and smaller in Kansas: Kansas 80,110 (down 6,495), Nebraska 59,420 (down 864), Texas 78,949 (up 3,994). Total trade volume was also mixed, higher in Nebraska and Texas, but lower in Kansas: Kansas 102,284 (down 6,086), Nebraska 86,702 (up 1,418), Texas 83,330 (up 1,529). New showlists appear to also be mixed, lower in Kansas and Texas, and higher in Nebraska/Colorado.

Boxed beef prices are mixed: choice down $0.45 ($214.04) and select up $0.84 ($211.54) with a movement of 68 loads (50.92 loads of choice, 6.74 loads of select, zero loads of trim and 10.17 loads of ground beef).

FEEDER CATTLE

The bearish vibe of the market is wreaking havoc on feeder cattle contracts as every contract other than the January 2020 contract is now anywhere from $3.10 to near-limit losses of $4.10. The January feeder cattle contract is going to be under pressure as the market has three days until the January contract expires. In the meantime, the cash and futures markets are going to have to shore up the market's basis as the future's market is lower than going cash prices, which help explain the current $0.25 gain in the January contract. January feeders are up $0.25 at $142.10, March feeders are down $4.15 at $135.55 and April feeders are down $4.20 at $138.30.

LEAN HOGS

Concern for what the coronavirus could amount to has also affected the lean hog market and is driving prices lower on both the board and in the cash market. February lean hogs are down $1.62 at $65.60, April lean hogs are down $2.80 at $70.65 and May lean hogs are down $3.00 at $76.97.

The projected lean hog index for 1/24/2020 is up $0.11 at $61.64, and the actual for 1/23/2020 is up $0.24 at $61.53. Hog prices are lower on the National Direct Morning Hog Report, down $0.79 with a weighted average of $51.91, ranging from $48.00 to $53.00 on 3,826 head sold and five-day rolling average of $52.18. Pork cutouts total 182.41 loads with 171.26 loads of pork cuts and 11.15 loads of trim. Pork cutout values: up $1.11, $78.49.

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