Friday Closing Livestock Market Update - Live Cattle Pull Back as Traders Braced for USDA Cattle Reports

GENERAL COMMENTS:

Both the live cattle and lean hog contracts closed lower Friday afternoon while the feeder cattle complex charged onward, seeming to celebrate the tremendous demand that's currently being seen in the countryside and because of the lower corn prices. Come Monday, both the live cattle and feeder cattle contracts could be pressured as Friday afternoon's Cattle on Feed report showed greater-than-expected placements, which never bodes well for the market regardless of how strong fundamentals are. Hog prices closed lower on the Daily Direct Afternoon Hog Report, down $3.26 with a weighted average price of $106.25 on 3,076 head. December corn is down 10 cents per bushel and December soybean meal is down $2.10. The Dow Jones Industrial Average is up 3.30 points.

From Friday to Friday, livestock futures scored the following changes: August live cattle down $0.15, October live cattle down $0.72; August feeder cattle down $0.72, September feeder cattle up $0.05; August lean hogs up $4.47, October lean hogs up $0.65; September corn up $0.21, December corn up $0.23.

LIVE CATTLE:

Trader grew leery of supporting the live cattle contracts ahead of seeing what Friday's Cattle on Feed and Cattle Inventory reports were going to share. The Cattle Inventory report came out as expected as the U.S. beef cow herd is lower than a year ago as well as beef replacement heifers, but the Cattle on Feed report was problematic as placements showed a 3% increase compared to a year ago. Nevertheless, traders pulled their typically move of hitting the sidelines before either report was shared and, come Monday, it's likely that traders will view the COF report as bearish and could trade live cattle lower even though, fundamentally, the market sits in a truly historic position. August live cattle closed $0.30 lower at $180.02, October live cattle closed $0.85 lower at $181.90 and December live cattle closed $0.80 lower at $185.17. A little more cash cattle trade developed throughout the day, but prices kept steady with Thursday's business. This week, Northern trade is mostly being marked at $295, which is $3.50 higher than last week's weighted average, and Southern live cattle are trading mostly at $180, which is $2.00 higher than last week's weighted average.

Friday's slaughter is estimated at 118,000 head, 3,000 head less than a week and year ago. Saturday's slaughter is projected to be around 15,000 head. The week's total slaughter is estimated at 628,000 head, 5,000 head less than a week ago and 35,000 head less than a year ago.

Boxed beef prices closed higher: choice up $0.18 ($302.74) and select up $2.02 ($276.73) with a movement of 103 loads (55.80 loads of choice, 17.93 loads of select, 6.72 loads of trim and 22.96 loads of ground beef). Throughout the week choice cuts averaged $304.07 (down $5.88 from last week) and select cuts averaged $275.95 (down $4.14 from last week) and the week's total movement of cuts, grinds and trim totaled 606 loads.

MONDAY'S CATTLE CALL: Steady. It will be interesting to see exactly how many cattle packers got bought this past week and to see how many of them were committed to the deferred delivery option. Feedlots to scrap for higher prices again next week, but if packers were able to get cattle bought and committed to the deferred delivery option, then feedlots gave them some leverage.

FEEDER CATTLE:

Well, it's a good thing that corn prices continued to trade lower throughout the day, which eased the pressure on feeders and ultimately allowed them to close higher as come Monday morning, feeder will likely be under pressure again. Friday's COF report showed that placements were up 3% compared to a year ago, which is a big pill to swallow given that placements were up 5% last month. Nevertheless, come Monday, feeders will likely trade lower as traders don't like stumbling upon unexpected results. August feeders closed $0.82 higher at $245.92, September feeders closed $0.97 higher at $249.27 and October feeders closed $1.17 higher at $251.00. The Oklahoma Weekly Cattle Auction Summary shared that, compared to last week and throughout the entire state, feeder steers traded $1.00 to $4.00 higher and steer calves traded steady. Feeder heifers and heifer calves sold steady to $3.00 higher. Slaughter cows sold mostly steady to $1.00 higher and slaughter bulls traded $2.00 lower. Feeder cattle supply over 600 pounds was 63%. The CME Feeder Cattle Index for July 20: up $1.13, $238.96.

LEAN HOGS:

The lean hog complex wasn't able to keep its momentum through Friday's close as most of the contracts rounded out the day lower. August lean hogs closed $0.05 higher at $100.67, October lean hogs closed $0.47 lower at $84.25 and December lean hogs closed $0.42 lower at $76.82. And even though pork cutout values closed higher, it was the $18.29 jump in the belly that saved the day as the rib fell $7.33 lower and the ham fell $5.50 lower. Traders will again be pressured on Monday to either take on the resistance at $84.00 or submit to its pressure and simply trade lower again. Pork cutouts totaled 200.21 loads with 170.74 loads of pork cuts and 29.48 loads of trim. Pork cutout values: up $0.15, $115.25.

Friday's slaughter is estimated at 438,000 head, 17,000 head less than a week ago and 4,000 head more than a year ago. Saturday's slaughter is projected to be around 32,000 head. The CME Lean Hog Index for July 19: up $0.30, $103.60.

MONDAY'S HOG CALL: Lower. Packers don't usually show the cash market much interest on Mondays and given that most of the cuts closed lower Friday afternoon, it's unlikely that they'll be too aggressive early next week.

Friday Midday Livestock Market Summary - Traders Anxiously Wait for Afternoon Cattle Reports

GENERAL COMMENTS:

The livestock complex is trending mixed into Friday's noon hour as traders are cautious heading into the weekend. The big news to watch for this afternoon is the USDA Cattle on Feed and Cattle Inventory reports. December corn is down 10 1/4 cents per bushel and December soybean meal is down $1.80. The Dow Jones Industrial Average is up 76.75 points.

LIVE CATTLE:

The live cattle complex is trading mixed with its nearby contracts trudging lower while the deferred contracts keep a mildly higher position ahead of the nearing noon hour. It's extremely supportive that the cash cattle market has continued to trade cattle at steady prices with Thursday's business. This week Northern trade is mostly being marked at $295, which is $3.50 higher than last week's weighted average, and Southern live cattle are trading mostly at $180, which is $2.00 higher than last week's weighted average. The slight hesitancy in the nearby contracts likely stems from the fact that later this afternoon two big USDA reports will be released -- the monthly Cattle on Feed and the biannual Cattle Inventory reports. Neither should come with any surprises and really both should continue to support cattle in their quest for steady to higher prices. August live cattle are down $0.30 at $180.02, October live cattle are down $0.75 at $182.00 and December live cattle are down $0.52 at $185.45.

Boxed beef prices are mixed: choice down $0.02 ($302.54) and select up $1.88 ($276.59) with a movement of 67 loads (36.41 loads of choice, 7.60 loads of select, 3.91 loads of trim and 19.01 loads of ground beef).

FEEDER CATTLE:

Seeing corn prices lower again Friday is wind under feeders' sail as the market and cattlemen alike grow extremely tired of the back-and-forth nature of corn prices this time of year as largely, the corn market is heavily influenced by the weather. Needless to say, the current $0.08 to $0.09 regression in corn prices amid a cash cattle market that's trading $2.00 to $3.50 higher is enough good news for traders to keep the feeder cattle contracts on a higher trek. Later this afternoon, the market will see both a Cattle on Feed and Cattle Inventory report released, which both should support feeders as placements and total on feed numbers are expected to be lighter on the COF report, and the Cattle Inventory report will likely show a decreased calf crop for the year. August feeders are up $0.80 at $245.90, September feeders are up $1.00 at $249.30 and October feeders are up $1.12 at $250.95.

LEAN HOGS:

The corn complex's continued weakness amid higher pork cutout values is encouraging traders to keep pushing the contracts higher, but as traders look at the long-term resistance they're up against, mixed tones dominate the hog market at noon. August lean hogs are up $0.92 at $101.55, October lean hogs are down $0.27 at $84.45 and December lean hogs are down $0.12 at $77.12. It's unlikely that the market runs much higher ahead of Friday's close as completely taking out the resistance around $84.00 is a big step for the market as it trades at the highest point since late April.

The projected lean hog index for July 20 is up $0.44 at $104.04, and the actual index for July 19 is up $0.30 at $103.60. Hog prices are lower on the Daily Direct Morning Hog Report, down $3.79 with a weighted average price of $99.32, ranging from $95.00 to $106.25 on 1,626 head and a five-day rolling average of $102.99. Pork cutouts total 117.80 loads with 99.31 loads of pork cuts and 18.48 loads of trim. Pork cutout values: up $3.29, $118.39.

Friday Morning Livestock Market Update - Report Anticipation to Influence Trade

GENERAL COMMENTS:

It was an interesting day for the cattle as early strength gave way to weakness. Traders did not wait for cash but decided to liquidate positions taking advantage of the new contract highs to bank some profits and prepare for the Cattle on Feed and Cattle Inventory reports today. However, with cash trade yesterday at $2.00 higher in the South and $3.50 higher for Northern dressed cattle, traders may buy back into the market today. Even with some higher cash trade yesterday, feedlots are holding for more with current offers higher. The market continues to be stretched with tight cattle supplies resulting in higher cash while at the same time demand has slowed. Boxed beef again was lower with choice down $1.03 and select down $1.25. Export sales continue to hold well with sales yesterday of 20,900 mt for the week which was up from the previous week. The Cattle on Feed report will be released after the close. Estimates are for July 1 on-feed to be 97.6% with a range of 97.0%-98.9%. Placements in June are estimated at 98.1% with a range of 96.2%-102.7%. Marketings in June is estimated at 95.5% with a range of 95.0%-96.0%. The Cattle Inventory report will also be released.

Hogs had an impressive day with contracts through February posting triple-digit gains. Front-month August so wanted to narrow the gap to cash that it left a gap in the chart on the opening. Demand remains strong with cutouts up $2.49 yesterday. Cash was slightly lower as expected with the National Direct Afternoon Hog report showing a decline of $0.19. Cash is expected to be lower again today as packers have most of the purchasing for the week completed. Exports sales were not supportive to the market yesterday as the volume was down 22% from the previous week at 19,200 mt.

	BULL SIDE		BEAR SIDE
1)	Higher cash trade yesterday with feedlots still asking for more should provide support to futures.	1)	The reversal of cattle futures yesterday may indicate a further correction may be possible ahead of the reports today despite what underlying cash does.
2)	The Cattle on Feed report and Inventory reports should show continued tighter numbers which should provide continued support under the market.	2)	The uncertainty of the reports generally has traders positioning themselves to minimize exposure if there are unexpected numbers released.
3)	Steadily increasing cutouts indicate strong demand requiring packers to be more aggressive with hog purchases resulting in higher cash prices.	3)	The gap left in August hogs yesterday may be filled at some point during the next three weeks.
4)	The discount of about $20.00 on the October futures carry to cash will narrow providing support for the contract.	4)	Slower export demand may put pressure on prices as more pork remains available to the domestic market.

Thursday Closing Livestock Market Update - Feedlots Move Prices Higher Again This Week

GENERAL COMMENTS:

Both the live cattle and feeder cattle contracts grew hesitant ahead of Thursday's close, but the lean hog market pressed onward through closing and kept its elevated position through the day's end. Some light cash cattle trade has been reported in the South at $180 ($2.00 higher) and in the North at $295 ($3.50 higher). Hog prices closed $0.19 lower on the Daily Direct Afternoon Hog Report, equating to a weighted average of $104.29 on 6,503 head. December corn is down 6 3/4 cents per bushel and December soybean meal is down $4.30. The Dow Jones Industrial Average is up 163.97 points.

LIVE CATTLE:

Technical pressure grew beyond what traders could withstand and ahead of Thursday's end the complex closed lower. But, having seen what cash cattle are trading for, it's likely that traders slightly regret their skeptical close. Even so, with Friday being a major USDA report day for the cattle complex, there is some anxiousness floating throughout the marketplace. Neither the Cattle on Feed nor Cattle Inventory report are expected to showcase anything unexpected, but they both are worthy of time and attention, still. A light trade has been reported in the South at $180 which is $2.00 higher than last week's weighted average. Dressed trade in Nebraska is being marked at $295 which is $3.50 higher than last week's weighted average. More trade will likely need to occur on Friday if packers intend to keep from becoming short bought. Asking prices in the South remain firm at $183-plus and in the North at $298-plus. 

Thursday's slaughter is estimated at 126,000 head, 1,000 head less than a week ago and 4,000 head more than a year ago.

Thursday's actual slaughter data shared that, for the week ending July 8, steers averaged 892 pounds, which is 8 pounds more than the previous week. For the same week, heifers averaged 812 pounds, which is 5 pounds more than a week ago but still a pound less than a year ago.

Beef net sales of 20,900 mt for 2023 were up noticeable from the previous week and up 60% from the previous four-week average. The three largest buyers were South Korea (7,800 mt), Mexico (4,100 mt) and China (2,900 mt).

Boxed beef prices closed lower: choice down $1.03 ($302.56) and select down $1.25 ($274.71) with a movement of 152 loads (101.94 loads of choice, 31.17 loads of select, 3.11 loads of trim and 15.65 loads of ground beef).

FRIDAY'S CATTLE CALL: Steady to somewhat higher. Feedlots have again successfully championed this week's cash cattle market as prices are trading higher, but depending on how desperate packers are for cattle, prices could get even higher yet.

FEEDER CATTLE:

Even though the nearby corn contracts closed $0.05 to $0.08 lower, the feeder cattle complex drew back ahead of the day's end as the live cattle market's hesitancy created some concern. But now that fat cattle have begun to trade for $2.00 to $3.50 higher, traders most likely regret pulling the cattle contracts back. Nevertheless, the market's relentless demand continues to fuel prices higher in the countryside, and traders will be able to breathe easier once Friday has come and gone and the two big USDA reports are no longer hidden and yet to be seen. August feeders closed $1.70 lower at $245.10, September feeders closed $1.02 lower at $248.30 and October feeders closed $0.72 lower at $249.82. At Mitchell Livestock Auction in Mitchell, South Dakota, compared to last week, there weren't very many light feeders available, but of those weighing 1,000 pounds and more a steady $2.00 to $3.00 price increase was seen. Feeder heifers weighing 750 to 950 pounds sold $2.00 to $8.00 stronger. Feeder cattle supply over 600 pounds was 95%. The CME Feeder Cattle Index for July 19: down $0.65, $237.83.

LEAN HOGS:

The lean hog contracts were the champions of the day for the livestock complex as they were the only livestock market able to sustain a higher position though closing. The onset of slightly cheaper corn prices helped traders continue to support the complex, as well as the slight increase in pork cutout values. What was especially comforting about today's cutout report is that moderate gains were seen across nearly all the cuts, which is much more supportive than one individual cut jumping $17.00 higher and skewing the carcass price. August lean hogs closed $2.70 higher at $100.62, October lean hogs closed $3.00 higher at $84.72 and December lean hogs closed $2.30 higher at $77.25. Pork cutouts totaled 207.86 loads with 195.14 loads of pork cuts and 12.72 loads of trim. Pork cutout values: up $2.95, $115.56. Thursday's slaughter is estimated at 469,000 head, 4,000 head more than a week ago and 27,000 head more than year ago. The CME Lean Hog Index for July 18: up $0.77, $103.30.

Pork net sales of 19,200 mt for 2023 were down 22% from the previous week and 28% from the prior four-week average. The three largest buyers were China (5,300 mt), Mexico (5,000 mt) and Japan (4,100 mt).

FRIDAY'S HOG CALL: Lower. Packers didn't show much interest in the cash market Thursday and it's likely that they'll show even less interest come Friday.