Wednesday, February 19, 2020

Wednesday Closing Livestock Market Summary - Onward and Forward to Higher Prices

Another strong close for the livestock complex as all three sectors were able to close higher and are sitting in a fine position to end the week fully higher as well. Seeing that Wednesday has come and gone, and cash cattle interest is building, everyone starts to eye higher prices for fat cattle this week too. Cash hog prices are higher on the National Direct Afternoon Hog Report, up $0.19 with a weighted average of $49.83. March corn is down 2 1/2 cents per bushel and March soybean meal is up $0.80. The Dow Jones Industrial Average is up 115.84 points and NASDAQ is up 84.44 points.
Cattle bought in Texas, on Wednesday, for $1.00 higher than last week's weighted average is a sign that packers are short bought. A light trade was reported Wednesday afternoon at $120 in Texas, while the rest of cattle country sits idly. Cattle have been bid at $119 in Nebraska and $120 in Kansas, but at this point Texas is the only state to trade. Seeing that the futures market is putting itself back together and establishing a bottom in market, cash prices are ready for their time to shine. February live cattle closed $0.12 lower at $121.30, April live cattle closed $0.20 higher at $120.80 and June live cattle closed $0.10 higher at $112.30.
Boxed beef prices close lower: choice down $0.56 ($205.57) and select down $1.97 ($201.76) with a significant movement of 181 loads (114.72 loads of choice, 34.85 loads of select, 5.27 loads of trim and 26.30 loads of ground beef). Wednesday's slaughter is estimated at 122,000 head, 2,000 head more than last week and 13,000 head more than a year ago.
THURSDAY'S CASH CATTLE CALL: $1.00 to $2.00 higher. Seeing that there was a very limited amount of cattle that traded last week, packers are going to have to step up and buy cattle this week.
The feeder cattle market continues to keep its rigorous pace sending contracts higher and closing on a positive note heading into Thursday. March feeders are up $1.47 at $140.77, April feeders are up $1.25 at $143.02 and May feeders are up $0.60 at $144.37. On Tuesday, at McAlester Union Livestock Auction in McAlester, Oklahoma, 2,490 feeder sold, and in comparison to last week's sale, steer calves sold $5.00 to $11.00 higher. Heifer calves sold $4.00 to $10.00 higher. Quality was considered average to good and demand was phenomenal. More farmer feeders are sitting in the sale barns looking to pick up buys, which is helping drive prices up on calves. Seeing that there are a lot more feeders already in the feedlots this year, demand for feeders this spring could be exponential as cattlemen will want green cattle for grass. The CME feeder cattle index 2/18/2020: down $0.10, $141.20.
Pork prices continue to climb as interest rebuilds itself in the lean hog market and China's need for pork continues to hold true. April lean hogs re up $2.07 at $67.57, May lean hogs are up $1.75 at $75.30 and June lean hogs are up $1.80 at $83.17. Pork cutouts totaled 319.62 loads with 259.56 loads of pork cuts and 60.06 loads of trim. Pork cutout values: down $1.00, $64.01. Wednesday's slaughter is estimated at 492,000 head, steady with last week and 27,000 head more than a year ago. The CME lean hog index 2/17/2020: down $0.31, $55.66.
THURSDAY'S CASH HOG CALL: Steady. Thursday's cash trade could be very similar to Wednesday's; trading both higher and lower to amount to near steady prices. As cash cattle trade develops, attention will probably shift over to the cattle side of things at the week ends.


Wednesday Midday Livestock Market Summary - Still Rolling Higher

General Comments
Live cattle contracts have dipped here and there throughout the morning, but the rest of the market seems pretty firm in the decision to trade higher. March corn is down 2 3/4 cents per bushel and March soybean meal is up $0.50. The Dow Jones Industrial Average is up 162.09 points and NASDAQ is up 92.72 points.
Live cattle prices have tested both sides of steady Wednesday morning but as the noon hour approaches the market leans toward trading higher. Nearby contracts still more than deferred but are only slightly lower. February live cattle are down $0.12 at $121.30, April live cattle are down $0.07 at $120.52 and June live cattle are down $0.07 at $112.12. Wednesday morning at the Fed Cattle Exchange there was 422 head of cattle cosigned, consisting of three lots (one in Texas and two in Kansas). Asking prices ranged from $119 to $121. The one lot in Texas was bid at $119.75, but that offer was passed. The lots in Kansas did not sell. The rest of cattle country remains quiet with bids still hard to come by. Asking prices of $122 have been set in the South, and dressed cattle are priced in the North for $195 to $197. It isn't likely that trade really develops until later in the week.
Boxed beef prices are lower: choice down $0.14 ($205.99) and select is down $0.50 ($203.23) with a movement of 100 loads (59.53 loads of choice, 13.38 loads of select, 2.77 loads of trim and 23.83 loads of ground beef).
Feeder cattle prices tested the waters Wednesday morning and beard lower for a short time but have since circled back to trading higher. March feeders are up $1.22 at $140.50, April feeders are up $0.80 at $142.57 and May feeders are up $0.42 at $144.20. The market continues to put a bottom in the latest downfall's trend and slow but surely prices are making their way higher.
Cash hog prices were softer Wednesday morning but that could be due to the fact that packers are starting to back off on their aggressive kill schedule. Cattle contract bobbled a little Wednesday morning, but the lean hog market has kept prices driving higher and most contracts are exceeding gains of over $1.00. April lean hogs are up $1.42 at $66.92, May lean hogs are up $1.72 at $75.27 and June lean hogs are up $1.60 at $82.97. The weaker cash prices most likely won't affect the board's vigor as trade is reluctantly trading higher and interest continues to grow.
The projected lean hog index for 2/18/2020 is down $0.12 at $55.54, and the actual index for 2/17/2020 is down $0.31 at $55.66. Hog prices are lower on the National Direct Morning Hog Report, down $0.83 with a weighted average of $48.79, ranging from $45.00 to $50.34 on 4,500 head sold and five-day rolling average of $49.75. Pork cutouts total 176.56 loads with 143.62 loads of pork cuts and 32.93 loads of trim. Pork cutout values: down $1.73, $63.28.


Wednesday Morning Livestock Market Summary - Cattle Futures Expected to Churn Higher

Cash cattle trade remains at a standstill going into Wednesday morning with both sides hovering on the sidelines waiting for more direction in futures trade and wholesale beef values before jumping into the market and offering bids or pricing cattle. The strong market rally over the past three trading sessions combined with firm wholesale beef price support last week will create optimism in feedlot managers as they aggressively price cattle, expecting nothing less than steady money by the end of the week. Saddled with eroding packer margins and the outlook of additional cattle numbers available at their disposal in the next six to eight weeks, packers are expected to fight hard to keep prices steady to lower through the week. This could create a significant standoff that may not develop in cash cattle being sold until late Friday, potentially after the release of the cattle on feed report Friday afternoon. Early estimates for the cattle on feed report point to light to moderate gains in all categories, although moderate analyst ranges develop, leaving uncertainty heading into the end of the week. Futures trade is expected steady to higher early Wednesday morning as the underlying momentum continues to build through the cattle complex following April futures able to hold prices above $120 per cwt, and clearly establish a market low last week near $117 per cwt. Although sharp follow-through gains will be difficult to sustain over the near future, the potential for a more steady to firm market growth could help to build increased confidence through the entire complex. Wednesday slaughter is expected near 121,000 head.
Mixed trade is expected to slowly develop early Wednesday morning with the ability to hold prices above early month lows as increased momentum is likely to slowly but steadily move back into the lean hog complex. With improving signs that new coronavirus cases in China seem to be slowing and the daily death tolls have started to drop slightly early in the week, there is additional hope that more U.S. pork will continue to move into the country over the coming weeks. Traders will also watch the export sales report which will be delayed until Friday due to the holiday on Monday, but it is not expected that a strong bump in exports to China will be seen until either the last week in February or early March at the earliest. Even though China has announced that it will allow tariff waivers on certain products, and pork is involved in this list, these waivers will have a more long-term impact that will affect trade through the rest of the year rather than immediate movement of product. With continued strong pork production expected through the U.S., it is likely that prices may continue to hover in a moderate range from $65 to $68 per cwt in spot April futures. Cash hog prices are called 50 cents lower to $1 higher with most bids expected steady to 50 cents higher. Slaughter Wednesday is expected at 495,000 head. Saturday runs are expected at 180,000 head.
1)Continued strong futures support seen in feeder cattle trade during early week trade is helping to spark additional bullish market support through live cattle futures. This focuses on not only buyer interest in nearby contracts, but triple-digit gains developing in summer and fall feeder cattle trade.1)Sharp losses developed in choice and select beef cuts Tuesday afternoon, resulting in lower boxed beef values. The inability to sustain last week's momentum in beef prices could derail the optimism being seen through the cattle market.
2)Tighter market-ready cattle numbers are still seen, with this trend expected to last another three to four weeks. This should give cash trade markets an opportunity to take advantage of recent gains in beef values and the surge in futures trade, resulting in higher cash cattle through the end of February.2)Expected increases in cattle placements and overall cattle on feed numbers in Friday's report is expected to spark overall uncertainty through the complex as traders focus on potential growth in long-term cattle numbers which may limit price support through the second half of the year.
3)Sharp gains in cash hog prices and pork cutout values Tuesday is sparking moderate to strong fundamental support through the entire complex. This is expected to help stimulate additional longer futures support as traders build on recent gains.3)Lack of additional news surrounding pork exports to China continue to add concern that active global demand may be much slower to build than previously expected early in the year. This could limit additional upside market movement through the entire lean hog complex.
4)Indication that coronavirus cases appear to have started to decline in China is helping to spark renewed optimism that the country may start getting back to a more normal business routine within the country. This would help to spark additional pork demand, potentially adding to new exports from the U.S.4)Hog production continues to remain extremely strong through the month of February, and likely to continue through the first half of the year. This will continue to limit price support despite potential export growth to China over the coming months.


Tuesday, February 18, 2020

Tuesday Closing Livestock Market Summary - Steady Gains Through Closing

All three sectors were able to close the day higher and secure more market position and interest through closing Tuesday. The feeder cattle and lean hogs markets were the most optimist, but the live cattle contracts weren't far behind and look for higher cash prices later this week. Hog prices close higher on the National Direct Afternoon Hog Report, up $2.05 with a weighted average of $50.05. March corn is up 5 1/4 cents per bushel and March soybean meal is up $1.10. The Dow Jones Industrial Average is down 165.89 points and NASDAQ is up 1.56 points.
Feeders see the quiet day as almost a relief that packers are pushing the doors again this week and wanting to kick trade off early in the week. Not to mention, feeders want to take their time feeling out this week's market as the board is adding more and more support as time ticks on. February live cattle closed $0.60 higher at $121.42, April live cattle closed $0.27 higher at $120.60 and June live cattle closed $0.20 higher at $112.20. The live cattle market was the most conservative of the three on Tuesday, but little incremental gains can still make powerful movements over time. Cash cattle trade was more or less obsolete Tuesday afternoon as both sides want to see how the week's attitude develops before prices are arranged.
Boxed beef prices close lower: choice down $1.13 ($206.13) and select down $2.45 ($203.73) with a movement of 128 loads (62.91 loads of choice, 22.87 loads of select, 10.55 loads of trim and 31.44 loads of ground beef). Tuesday's slaughter is estimated at 123,000 head, 1,000 head more than last week and 7,000 head more than a year ago.
WEDNESDAY'S CASH CATTLE CALL: $1.00 to $2.00 higher. Given that cash cattle trade has been lower the last couple of weeks, and with the board seeming to put a bottom in this market, I see prices being fully higher this week.
Feeder cattle prices held strong through closing and continued to pull prices out of the whole the market has been in over the last couple of weeks. March feeders closed $0.77 higher at $139.30, April feeders closed $0.40 higher at $141.77 and May feeders closed $0.57 higher at $143.77. Wrapping up the day with steady gains throughout the complex levels the market and allows investors to feel as if the momentum is stable and secure, which will hopefully continue to trickle into the rest of the week.
Last Friday, at the Public Auction Yards in Billings, Montana, 2,230 head of feeders sold in comparison to the last week's sale steer calves weighing less than 600 pounds sold most $5.00 to $10.00 higher, steers weighing 600 pounds and heavier sold steady to firm. All weights of heifer calves sold generally steady. Demand for cattle suitable to run on grass was mostly good as order buyers competed with farmer feeders for offerings. Many buyers were actively bidding on feeders and consequently created a very active market. The CME feeder cattle index 2/17/2020: not available at this time.
Moderate gains were held throughout the lean hog complex as the day closed and market closed anywhere from $0.10 to $1.20 higher. April lean hogs are up $1.20 at $65.50, May lean hogs are up $0.55 at $73.55 and June lean hogs are up $0.47 at $81.37. Most of the market's interest lies in the new April spot contract and traders are least interested in buying into the May contract at this time. Stable gains in both the cash market and future market help support the market's movement. Pork cutouts totaled 365.53 loads with 321.35 loads of pork cuts and 44.18 loads of trim. Pork cutout values: up $2.15, $65.01. Tuesday's hog slaughter is estimated at 494,000 head, 2,000 head less than last week and 18,000 head more than a year ago. The CME lean hog index 2/13/2020: down $0.41, $55.97.
WEDNESDAY'S CASH HOG CALL: Slightly higher. After a big day of gains on Tuesday, Wednesday will most likely keep the market's direction, but it could be at a smaller scale, which isn't a bad thing. Gains little by little can be just as powerful as days of massive movement.