Monday, August 10, 2020

Monday Closing Livestock Market Update - Livestock Contracts Higher

Livestock contracts mostly jumped at the opportunity to close higher. The feeder cattle complex was leery early in the day but eventually mustered up enough support to move the contracts higher. Hog prices closed higher on the National Direct Afternoon Hog Report, up $0.24 with a weighted average of $38.43 on 6,343 head. December corn is up 2 1/4 cents per bushel and December soybean meal is up $2.80. The Dow Jones Industrial Average is up 357.96 points and NASDAQ is down 42.62 points.
Monday's live cattle complex was anxious to trade higher after feeling encouraged by the market's ability to move the cash market $3.00 stronger last week on 100,000 head. Even though the market fell lower late last week, it's important to keep in perspective that these prices haven't been rallied since early March. August live cattle closed $0.80 higher at $103.60, October live cattle closed $0.70 higher at $107.15 and December live cattle closed $0.90 higher at $110.97. Cash cattle trade was painfully quiet as a few packers inquired on cattle, but with asking prices mostly undetermined, no bids were placed. The South has yet to determine their asking prices for the week, but northern cattle are priced live at $107 and dressed at $168. Monday's slaughter is estimated at 117,000 head, 4,000 head more than a week ago and 2,000 head more than a year ago.
Boxed beef prices closed higher: choice up $1.73 ($207.20) and select up $1.18 ($193.93) with a movement of 108 loads (64.05 loads of choice, 19.63 loads of select, 8.90 loads of trim and 15.23 loads of ground beef).
TUESDAY'S CASH CATTLE CALL: $1.00 to $2.00 higher. Feeders are going to fight tooth and nail to move the market higher again this week. Packers don't seem to intend to start lessening their weekly purchase, so, with northern feedlots mostly current, feeders may be able to move the week higher again.
Feeder cattle contracts closed higher after being fueled by the rest of livestock sector's momentum. Through Monday's initial morning hours, the feeder cattle contracts were trading mostly lower ,still feeling pressured to move away from the resistance levels that the market fell through late last week. But as the live cattle and lean hog contracts traded steadily higher, traders felt confident moving the market higher, but not above the $143.85 threshold. At Joplin Regional Stockyards in Carthage, Missouri, compared to a week ago, steers under 550 pounds sold $2.00 to $3.00 lower, steers weighing 550 to 750 pounds sold steady to $2.00 higher and steers over 750 pounds sold unevenly steady. Heifers weighing 450 pounds or less sold $2.00 to $3.00 lower, heifers weighing 450 to 700 pounds sold steady and heifers over 700 pounds sold steady to $3.00 lower. Even though prices were a little bit softer, demand was still considered good for the day's offering. Hot temperatures that have crept back into the region are putting a lot of pressure on the calves that are coming to town, especially the lighter weight calves that weren't pre-weaned. The CME feeder cattle index 8/7/2020: up $0.69, $142.61.
After breaking above the resistance that kept the market depressed, the lean hog contracts took the market's ambition and ran higher. October lean hogs closed $2.85 higher at $53.82, December lean hogs closed $1.77 higher at $54.70 and February lean hogs closed $0.77 higher at $61.75. Even though the pork cutout value didn't close stronger, the encouragement in higher cash hog trade is substantial ground for the market to stand on heading into Tuesday's trade, with the potential to trade higher. Monday's hog slaughter is estimated at 482,000 head, 62,000 head more than week ago and 26,000 head more than a year ago. Pork cutout totaled 385.81 loads with 356.63 loads of pork cuts and 29.19 loads of trim. Pork cutout value: down $1.86, $70.07. The CME lean hog index 8/6/2020: down $0.34, $52.44.
TUESDAY'S CASH HOG CALL: Slightly stronger. Though the market has seen packers buy well over 6,343 head in recent weeks, a movement over 6,000 head on a Monday is a good sign that packers may need more hogs as they bid aggressively early in the week.


Monday Midday Livestock Market Summary - Contracts Heading Higher

General Comments
Monday's encouragement is starting to trickle into all three of the livestock sectors as even the feeder cattle contracts are starting to show some stronger support. Meanwhile the live cattle and lean contracts trade steadily higher without any wavering support. Cash cattle trade is idle thus far though Northern feedlots have already set their asking prices for the week. December corn is up 1 3/4 cents per bushel and December soybean meal is up $4.10. The Dow Jones Industrial Average is up 265.98 points and NASDAQ is down 81.48 points.
A positive trade throughout Monday morning has put a positive spin on the live cattle contracts. August live cattle are up $0.87 at $103.67, October live cattle are up $0.82 at $107.30 and December live cattle are up $0.85 at $110.92. The Northern Plains have set this week's asking prices at $107 live, and $168 dressed while asking prices have yet to be set in the South. Packers have inquired on cattle throughout much of the five-are feeing region, but bids have yet to hit the table. Feeders are anxious to see where bids are going to land this week after last week's strong cash cattle trade and with showlists lower this week feeders have another opportunity to move cattle for more money again. Showlists appear to be somewhat lower in Kansas, lower in Nebraska/Colorado and sharply lower in Texas.
Last week's negotiated purchases totaled 100,601 head. Of that 87,039 are committed for delivery in the next two weeks while the remaining 13,562 head are for delivery in the following 15 to 30 days.
Boxed beef prices are higher: choice up $1.46 ($206.93) and select up $1.12 ($193.87) with a movement of 57 loads (32.91 loads of choice, 9.90 loads of select, 6.75 loads of trim and 7.06 loads of ground beef).
Feeder cattle contracts were leery of trading higher after falling below the $143.85 resistance plane last week but upon seeing the live cattle and lean hog complexes trade higher, midday morning the feeder cattle contracts started to see some support. August feeders are up $0.50 at $143.22, September feeders are up $0.02 at $145.15 and October feeders are down $0.10 at $146.30. How the feeder cattle contracts trade this week will be interesting. There could be pressure for the market to trade higher if cash cattle prices scale higher and if feeder cattle prices continue to sell steady to even stronger. But the fundamental pressure cautioning traders as the market as rallied significantly over the last month carries clout as well.
Last week's burst of optimism throughout the later part of the week has successfully continued into Monday's trade as lean hog contracts are trading $0.27 to $3.10 stronger. Deferred contracts have been trading upwards of $25 stronger than the nearby lean hog contracts so Monday's boost in nearby support comes as an encouraging change to hog producers. August lean hogs are up $2.05 at $53.05, October lean hogs are up $3.02 at $54.00 and December lean hogs are up $1.95 at $54.87. With pork cutout values stronger, and midday cash hog prices higher, if the afternoon can close higher and keep the other markets elevated, Tuesday is going to be in a fine position.
The projected lean hog index for 8/7/2020 is up $0.58 at $53.02 and the actual index for 8/6/2020 is down $0.34 at $52.44. Hog prices are higher on the National Direct Morning Hog Report, up $0.54 with a weighted average of $38.73, ranging from $37.00 to $38.81 on 4,150 head and a five-day rolling average of $38.86. Pork cutouts total 197.24 loads with 179.83 loads of pork cuts and 17.41 loads of trim. Pork cutout values: up $3.52, $75.45.


Monday Morning Livestock Market Summary - Limited Futures Support Expected Following Stronger Cash Sales

General Comments:
Cash cattle trade remains undeveloped for the week at this point, with showlist distribution and inventory is the main focus through the day. But the move to and above $100 per cwt price levels expected to be seen in the weekly average when it is released, and it would be the highest price levels in six weeks and represent a continued move away from seasonal lows following the pandemic. Limited trade is likely Monday, although following the pattern of the last few weeks, some are looking for more direction from cash markets on Tuesday, and then further trade trickling into the market during the rest of the week. Market-ready cattle numbers still appear to be ample, although it is expected that the limited supply of feeder cattle moving into feedlots over the first quarter of the year will continue to show some supply tightness at the end of the year. There is an indication that some of these cattle are being pulled forward during the month of August. It is unlikely that there will be a significant reduction in overall weights over the next few weeks, as overall market-ready cattle supplies continue to limit significant market optimism through the futures or cash markets. Despite the recent gains in cash trade, basis levels continue to remain weak, currently nearly $3 per under the August futures while traditional basis this time of year would be positive. The inability to firm cash cattle basis trade will likely limit widespread further support. Futures trade is expected to remain mixed as a combination of pressure in live cattle and feeder cattle trade at the end of last week is quickly eroding early August optimism.
Lean hog futures have continued to gain technical market support with triple-digit gains Friday helping to break out of the tight narrow pattern established near market lows. Although there is limited optimism through the futures complex, the upside market potential remains limited due to the amount of hogs in the system and limited changes in overall pork values over the near future. The questions of short- and long-term demand growth surrounding coronavirus issues impacting the food service industry should become more clear over the next few weeks as we get a better idea of how "return to school" plans will work out given the wide variability by district and region. This will continue to impact not only food service industries, but it will have a trickle-down impact on retail demand. Contracted orders by institutions will also be impacted over the next several weeks as plans remain generally fluid as to what products will be needed to meet individual area and regional demand. The ability to sustain last week's futures gains during early week trade will be essential in helping to spark renewed buyer interest moving into the complex. This could quickly sustain price levels above the $50 per cwt, setting a potential target for fourth quarter price levels near or above $55 per cwt. Cash hog prices are expected $1 lower to $1 higher with most bids expected steady to 50 cents lower. Slaughter Monday is expected at 474,000 head.
Strong moves in cash cattle trade last week will help to firm asking prices once again, helping to put more focus on the current price recovery through the month of August.
Cash cattle basis remains seasonally weak as traders and packers continue to focus on the available supply of cattle on the market.
Tighter cattle supplies through the end of the year and first half of 2021 should help to drive additional long-term buyer support into the complex. This may stimulate additional firmness in deferred live cattle and feeder cattle trade.
Beef demand growth could stagnate through the end of the year based on concerns of shutdowns and restrictions due to COVID-19 issues. The ability for school systems to reopen in many areas will have a significant impact on beef movement.
Triple-digit gains in nearby lean hog futures last week sparked increased buyer support across the entire complex. Maintaining this momentum is likely to bring additional commercial buyer support back to the complex.
Lean hog futures continue to trade near long-term lows, creating concerns of sustained buyer support over the coming days and weeks.
Firm gains in pork cutout values during early August is likely to bring further support over the next couple of weeks.
Hog supplies remain burdensome with current slaughter rates limiting the ability to quickly reduce the backlog of hogs in the system. This could continue to leave markets under pressure through the end of the year.


Friday, August 7, 2020

Friday Closing Livestock Market Summary - Cattle Contracts Weakened to Pressure

Cattle contracts weren't as powerful this Friday as they were last week, but with the cattle contracts stepping to the sidelines, the lean hog complex was able to gain traction and blow past nearby resistance.

Hog prices closed higher on the National Direct Afternoon Hog Report, up $0.17 with a weighted average of $38.11 on 8,212 head. December corn is down 3 cents per bushel and December soybean meal is down $1.60. The Dow Jones Industrial Average is up 39.98 points and NASDAQ is down 101.79 points.

From Friday to Friday livestock futures scored the following changes: August live cattle down $0.03, October live cattle down $1.43; August feeder cattle down $1.95, September feeder cattle down $1.10; August lean hogs down $1.00, October lean hogs down $1.35.

Live cattle contracts weren't granted any favors throughout Friday's trade as contracts closed $0.07 to $0.87 lower. August live cattle closed $0.17 higher at $102.80, October live cattle closed $0.52 lower at $106.45 and December live cattle closed $0.87 lower at $110.07. Traders seemed to grow leery of the market as the momentum in the feeder cattle contracts was weakening in the later part of the week, and coming off last week's rally, pushing contracts higher seemed risky. Friday's cash cattle trade was quiet as the cattle that did trade were mostly steady with the week's earlier accomplishments. Cattle traded in Iowa for $163 to $164, some cattle traded in Nebraska for $163 and Kansas moved some cattle late Friday afternoon for $100. Friday's slaughter is estimated at 109,000 head -- 4,000 head less than a week ago and 8,000 head less than a year ago. Saturday's kill is projected to be around 60,000 head.

Boxed beef prices closed higher: choice up $0.81 ($205.47) and select up $0.74 ($192.75) with a movement of 116 loads (64.21 loads of choice, 14.99 loads of select, 15.53 loads of trim and 20.93 loads of ground beef).

MONDAY'S CASH CATTLE CALL: Steady to slightly higher. Feeders will be anxious to price cattle higher again as they were able to move the market higher this week and really push on packers. Packers may push back as the lack of demand from the restaurant sector is changing their customary marketing structure.

Friday's pressure grew stronger as the day traded through the afternoon and the market's downward trend captured most of the feeder cattle contracts. August feeder cattle closed $0.75 lower at $142.72, September feeder cattle closed $0.75 lower at $145.12 and October feeder cattle closed $0.37 lower at $146.40. With feeder cattle sales continuing to ring the bell across the nation, next week's market is going to have to face the same challenge as weeks past: is there enough support to surpass resistance and keep above the $143.85 threshold or will the market fear a topping chart and simply trade sideways with little aggression? Iowa's weekly cattle report shared that on average, compared to a week ago feeder steers weighing 500 to 825 pounds sold steady to $10.00. And feeder heifers weighing 500 to 725 pounds sold $1.00 to $5.00 higher. The CME feeder cattle index 8/6/2020: up $1.13, $141.92.

The lean hog complex heads into the week with three strong motivators for next week's trade: a stronger close through the futures complex, a stronger cutout value and higher cash hog prices! August lean hogs closed $1.25 higher at $51.00, October lean hogs closed $1.77 higher at $50.97 and December lean hogs closed $1.42 higher at $52.92. One of the market's biggest challenges is taking care of its nearby contracts, as the first and second quarter of 2021 are far more favorable. Pork cutouts totaled 341.72 loads with 300.49 loads of pork cuts and 41.23 loads of trim. Pork cutout values: up $1.13, $71.93. Friday's slaughter is estimated at 474,000 head, steady with a week ago and 25,000 head more than a year ago. Saturday's kill is projected to be around 230,000 head. The CME lean hog index 8/5/2020: down $0.14, $52.78.

MONDAY'S CASH HOG CALL: Steady. It was encouraging to see packers not only pay slightly more for hogs Friday afternoon but to also see over 8,000 head trade. If the market's momentum can carry into next week, prices may be able to trade steady instead of scaling lower.