Friday Morning Livestock Market Update - Traders Look Ahead to Cattle on Feed Report

GENERAL COMMENTS:

Cattle found an outside market reason for a rally after being under pressure for the past two weeks. The weakness of corn provided the catalyst despite lower cash trade. Corn is significantly lower overnight again, which could provide further support if Thursday's pattern is followed. However, with cash trading as much as $6.00 lower for dressed cattle and $2.00 lower for live cattle, there might be some hesitancy by traders to get too excited over cheaper corn. Along with that, the Cattle on Feed report will be released Friday afternoon. The average trade estimate for on-feed numbers on June 1 is 96.8%, placements in May at 101.7% of last year and marketings at 101.6%. Traders may be a bit cautious ahead of the report. Boxed beef prices were mixed Thursday with choice up $0.22 and select down $0.45.

Hog futures tried to push higher as August and later contracts initially moved above Wednesday's high, but the strength was not maintained. July futures fell back to close the chart gap from Tuesday and then some as profit-taking seemed to surface. The National Direct Afternoon Hog report showed cash down $1.55 as packers had purchased most of their needs earlier in the week. Cutouts were able to find strength with a gain of $0.42. Traders may begin to focus on the Quarterly Hogs and Pigs report to be released next Thursday, June 29, and continued uncertainty over Prop 12. Saturday slaughter is estimated at 79,000 head.

	BULL SIDE		BEAR SIDE
1)	Lower corn futures may provide further support as the market corrects from being oversold.	1)	Lower cash trade developing again this week is a concern as consumer demand has slowed seasonally and because of high beef prices.
2)	Cattle supplies remain tight and the Cattle on Feed report could remain supportive to higher prices.	2)	Weekly export sales of beef need to be good, or some pressure may be put back on the market even if corn prices are lower.
3)	Hogs have been supported by higher cash and cutouts with that trend probably not changing anytime soon.	3)	Lower cash hogs were expected Thursday, but it might be enough to see some follow-through selling Friday as futures correct from being overbought.
4)	Hog numbers seem to be tightening, which has caused packers to become more aggressive early in the week as they seek market-ready hogs.	4)	Less-than-stellar weekly export sales may put further pressure on hog futures. Increased demand is needed to continue to provide support.

Thursday Closing Livestock Market Update - Northern Dressed Cattle Begin to Sell for $290, $6.00 Lower

GENERAL COMMENTS:

Technically speaking, the cattle complex had a good day as the contracts were able to close higher after being beat up throughout Wednesday's market because of high corn prices. But cash cattle trade did develop lower in the North late Thursday afternoon. Hog prices closed lower on the Daily Direct Afternoon Hog Report, down $1.55 with a weighted average price of $94.79 on 4,793 head. December corn is down 8 cents per bushel and July soybean meal is down $14.50. The Dow Jones Industrial Average is down 32.45 points.

LIVE CATTLE:

The live cattle complex had a good day as the contracts were able to close higher despite seeing cash cattle prices trade softer in the North. August live cattle closed $1.40 higher at $171.15, October live cattle closed $1.72 higher at $174.67 and December live cattle closed $1.75 higher at $178.67. A moderate trade was reported in Nebraska where dressed cattle were trading for $290, which is $6.00 lower than last week's weighted average. Earlier in the day, some live trade was reported in Kansas at $180, which is steady with the rest of the week's business and $2.00 lower than last week's weighted average. Some more clean up trade is likely to develop, but it's likely that the week's prices are set. Thursday's slaughter is estimated at 125,000 head, 1,000 head less than a week ago and 2,000 head more than a year ago.

Thursday's actual slaughter data shared that, for the week ending June 4, 2023 steers averaged 882 pounds, which is 5 pounds less than the previous week but steady with a year ago. For the same week, heifers averaged 812 pounds, which is 4 pounds lighter than the previous week but 2 pounds less than a year ago.

Boxed beef prices closed mixed: choice up $0.22 ($334.47) and select down $0.45 ($303.80) with a movement of 98 loads (53.05 loads of choice, 27.88 loads of select, 7.61 loads of trim and 9.38 loads of ground beef).

FRIDAY'S CATTLE CALL: Steady. Given that prices have now been developed in both regions, prices will likely remain steady with the week's trend.

FEEDER CATTLE:

The feeder cattle complex rallied throughout Thursday's trade as the market was relieved to see corn prices trading lower after Wednesday's blood bath. The nearby corn contracts closed $0.06 to $0.10 lower with allowed for the feeder cattle contracts to close mostly $3.00 higher and regain a substantial portion of the market position lower on Wednesday. August feeders closed $2.95 higher at $230.67, September feeders closed $3.10 higher at $234.52 and October feeders closed $3.27 higher at $237.17. At Clovis Livestock Auction in Clovis, New Mexico, compared to last week, steer calves weighing 300 to 350 pounds sold $9.00 lower, steers weighing 400 to 450 pounds sold $12.00 higher, steers weighing 500 to 550 pounds sold $6.00 and steers weighing 650 to 700 pounds sold $11.00 higher. Feeder heifers weighing 650 to 700 pounds sold $4.00 higher. Slaughter cows sold $3.00 to $7.00 higher and slaughter bulls sold $6.00 to $8.00 lower. Feeder cattle supply over 600 pounds was 26%. The CME Feeder Cattle Index for June 21: down $0.45, $221.73.

LEAN HOGS:

The lean hog complex rounded out the day lower even after hearing the exciting news that the implementation of California's Prop 12 would be delayed until Dec. 31. Even so, the market closed lower as traders continue to be leery of the resistance looming around $95.00 in the spot August contract, and they didn't see any support in the cash market as prices traded lower on the thin volume sold. July lean hogs closed $2.90 lower at $91.85, August lean hogs closed $2.80 lower at $89.97 and October lean hogs closed $1.20 lower at $79.85. Thursday afternoon's carcass price was able to close higher thanks to a whopping $15.08 gain in the rib, as well as the $4.65 jump in the belly. Pork cutouts totaled 299.84 loads with 268.04 loads of pork cuts and 31.80 loads of trim. Pork cutout values: up $0.42, $96.50. Thursday's slaughter is estimated at 463,000 head, 2,000 head more than a week ago and 5,000 head less than a year ago. The CME Lean Hog Index for June 20: up $0.87, $89.62.

FRIDAY'S HOG CALL: Lower. It's likely that packers have fulfilled their needs for the week and won't need to buy any more hogs this week.

Thursday Midday Livestock Market Update - Corn Dips and Cattle Rally

GENERAL COMMENTS:

The cattle contracts are back to rallying as the surge in corn prices has seized for the time being, which is taking some immediate pressure off the cattle complex. The cash cattle market still hasn't seen much develop, as feedlots remain committed to marketing their cattle to the best of their ability. December corn is down 9 1/4 cents per bushel and July soybean meal is down $10.80. The Dow Jones Industrial Average is down 49.15 points.

LIVE CATTLE:

The live cattle complex is trading mildly higher as the market signs a sign of relief as corn prices venture lower through Thursday's trade. A few cash cattle sales have been reported Thursday morning in Kansas, but largely the market sits quiet yet again. There were some cattle traded Wednesday afternoon in the South at mostly $180, which is $2.00 lower than last week's weighted average. The North has yet to trade any sizable volume of cattle and at this point feedlots seem committed to waiting the week out and potentially rolling over their showlists if packers don't get more aggressively. Asking prices in the South remain at $182 plus and in the North at $292 plus. August live cattle are up $0.60 at $170.35, October live cattle are up $0.72 at $173.67 and December live cattle are up $0.92 at $177.85.

Boxed beef prices are mixed: choice down $0.95 ($33.30) and select up $1.10 ($305.35) with a movement of 53 loads (25.76 loads of choice, 16.14 loads of select, 5.33 loads of trim and 5.45 loads of ground beef).

FEEDER CATTLE:

With nearby corn prices trending $0.09 to $0.12 lower, the feeder cattle contracts are back to rallying as the market aims to take back some position that it lost throughout Wednesday's trade. Wednesday's market was dominated by substantially higher corn prices which completely pulled the rug out from underneath the feeder cattle complex. While corn prices are still higher than what feeders would like, at least the market isn't seeing yet another day of $0.27 to $0.30 gains in the corn sector. August feeders are up $2.05 at $229.77, September feeders are up $2.27 at $233.70 and October feeders are up $2.45 at $236.35.

LEAN HOGS:

It's odd that, on the day when news broke that implementation of California's Prop 12 will be delayed by six months to December 31, the lean hog market is trading lower. July lean hogs are down $2.77 at $91.97, August lean hogs are down $3.02 at $89.75 and October lean hogs are down $1.45 at $79.60. Some of the market's upward hesitancy could be stemming from the fact that traders have actively moved the market and are now running up against long-term resistance planes, which the market will have to handle one way or another. But currently traders aren't seeing consistent enough pork demand to find that leap a sound decision.

The projected lean hog index for June 21 is up $0.85 at $90.47, and the actual index for June 20 is up $0.87 at $89.62. Hog prices are lower on the Daily Direct Afternoon Hog Report, down $0.60 with a weighted average price of $95.43, ranging from $75.00 to $99.00 on 2,981 head and a five-day rolling average of $94.84. Pork cutouts total 213.50 loads with 194.43 loads of pork cuts and 19.07 loads of trim. Pork cutout values: down $0.25, $95.83.

Thursday Morning Livestock Market Update - Feeder Cattle Futures Could Bounce

GENERAL COMMENTS:

The cattle complex is struggling. Live cattle futures closed mixed Wednesday, holding their own considering the substantial pressure put on feeder cattle. Traders seem to have adjusted live cattle futures in line with the potential for lower cash again this week. Some light cash trade took place in the South at $180 or $2.00 lower with a few deals in the North at $184, averaging $1.00 to $2.00 lower. Boxed beef was lower with choice down $2.66 and select down $3.68. Boxed beef has been showing signs of weakening, which will have a negative impact on cattle prices. The large increase in corn futures sent feeder cattle plummeting. Futures gapped lower on the open and never looked back, moving contracts back to the lowest level since May 11. USDA will release the Cattle on Feed report Friday. The average trade estimate for on-feed numbers on June 1 is 96.8%. Placements in May at 101.7% of last year and marketings at 101.6%.

Hogs did not quite have the exuberance that has been nearly a daily occurrence since Memorial Day. The weakness of nearby months was not the result of cash or cutouts but likely some spread-trading activity. Some pressure may have stemmed from higher grain prices. The National Direct Afternoon Hog report showed cash up $0.78 with a weighted average of $96.34. Cutouts gained $1.46. This combination should provide support Thursday. Packers may have purchased much of what they needed for this week, which could result in lower cash.

	BULL SIDE		BEAR SIDE
1)	Lower corn futures overnight might relieve some of the pressure on e feeder cattle, allowing futures to bounce.	1)	Even though corn futures were lower overnight, prices are still the highest they have been since early November. This may keep some pressure on cattle.
2)	Traders may have lower cash cattle already factored in, which will leave further downside limited.	2)	Boxed beef has been showing some weakness as demand may be slowing due to high prices and seasonality.
3)	Hog contracts did make higher highs Wednesday, keeping the uptrend alive. Higher cash and cutouts yesterday could push futures higher Thursday.	3)	July hogs tried to move into the chart gap left Tuesday but stopped short of accomplishing it. That may be done Thursday if spread trading continues.
4)	Hog slaughter has been slowing, which may indicate hogs are not as plentiful as they had been.	4)	Packers may not be as aggressive the rest of the week as much of their buying is done. Lower cash may put pressure on futures.