Wednesday, March 27, 2024

Wednesday Closing Livestock Market Update - Cattle Find Mild Support

GENERAL COMMENTS:

The cattle contracts were able to close slightly higher following Tuesday's sharp descent. The cash cattle market still hasn't seen much trade develop -- but packer interest should improve by Thursday. Hog prices closed lower on the Daily Direct Afternoon Hog Report, down $1.37 with a weighted average price of $79.26 on 3,044 head. May corn is down 5 3/4 cents per bushel and May soybean meal is down $0.80. The Dow Jones Industrial Average is up 477.75 points.

LIVE CATTLE:

The live cattle complex was able to round the day out on a higher note – but given the severity of Tuesday's decline, today's higher end is hardly worth noting. Traders allowed the contracts to rally mildly, but with cash cattle prices expected to be lower than last week's record high, traders won't likely do much more with the futures complex ahead of the weekend. April live cattle closed $0.50 higher at $183.60, June live cattle closed $0.30 higher at $178.67 and August live cattle closed $0.25 higher at $176.67. There's been a handful of trade reported in the South at $185 which is $3.00 lower than last week's weighted average. Bids of $296 are currently being offered in the North but no dressed trade has been reported at this point. Asking prices remain firm in the South at $188 plus, and asking prices are still not established in the North.

Wednesday's slaughter is estimated at 124,000 head -- 8,000 head more than a week ago but 1,000 head less than a year ago.

Boxed beef prices closed lower: choice down $2.51 ($308.58) and select down $1.83 ($298.43) with a movement of 166 loads (103.87 loads of choice, 24.00 loads of select, 5.45 loads of trim and 32.19 loads of ground beef).

THURSDAY'S CATTLE CALL: Steady to $1.00 lower. Packer interest will need to improve on Thursday, and even though prices are currently being noted at $3.00 lower in the South, there's still a chance that prices could trade closer to last week's weighted average before the week's trade is all said and done.

FEEDER CATTLE:

The feeder cattle complex was also able to regain some market position following Tuesday's landslide. The nearby contracts of April and May say the biggest gains, but then the entire complex did round out the day higher. Sales in the countryside seemed to be a little stronger today and it's worth noting how strong cull bull and cow prices are. At Winter Livestock in Dodge City today a high-yielding cull bull brought $1.75 per pound! April feeders closed $1.42 higher at $246.87, May feeders closed $1.02 higher at $248.27 and August feeders closed $0.80 higher at $257.90. At Winter Livestock Auction in Dodge City, Kansas compared to last week feeder steers weighing 850 to 950 pounds traded steady to $4.00 higher. Steers weighing 650 to 850 pounds sold unevenly steady. Steer calves weighing 450 to 650 pounds sold $8.00 to $10.00 higher. Feeder heifers weighing 450 to 900 pounds traded $4.00 to $8.00 lower. Slaughter cows sold steady to $3.00 higher, and slaughter bulls sold $10.00 to $12.00 higher. Feeder cattle supply over 600 pounds was 78%. The CME feeder cattle index 3/26/2024: not available at this time.

LEAN HOGS:

The lean hog complex mostly kept with its rallying nature through Wednesday's end although the deferred contracts pulled back ever so slightly. The market seems to be holding its breath until the veil is pulled back on Thursday's Quarterly Hogs and Pigs report. I'm not certain that the report will be bullish enough to take out the market's long-term resistance, but hog enthusiasts can hope. Export sales will also play a big role in Thursday's trade direction. Pork cutout prices closed lower again but no one cut was to blame as the market saw a decline in the vast majority of the cuts. April lean hogs closed $0.52 higher at $86.10, June lean hogs closed $0.25 higher at $101.60 and July lean hogs closed $0.12 lower at $103.97. Pork cutouts totaled 230.10 loads with 190.15 loads of pork cuts and 39.95 loads of trim. Pork cutout values: down $1.27, $94.06. Wednesday's slaughter is estimated at 490,000 head -- steady with a week ago and 13,000 head more than a year ago. The CME lean hog index 3/25/2024: up $0.21, $83.69.

THURSDAY'S HOG CALL: Lower. Given that tomorrow is the last trading day of the week and packers are going into a long holiday weekend, it's unlikely that they show Thursday's cash market much interest.




Wednesday Midday Livestock Market Summary - Cattle Trade Lower While Hogs Keep Grinding Higher

GENERAL COMMENTS:

The livestock complex is still mixed as the market hasn't seen enough fundamental support Wednesday to push the cattle contracts higher, all while the lean hog market keeps with its steady upward trend. No cash cattle trade has developed yet but bids are on the table in both regions. May corn is down 4 1/2 cents per bushel and May soybean meal is up $0.90. The Dow Jones Industrial Average is up 225.35 points.

LIVE CATTLE:

The live cattle complex continues to trade lower as the market isn't strong enough on its own to trade higher. If the cash cattle market would commit to trading higher, then there's a chance the futures complex would follow suit; but there's yet to be any cash cattle traded. Bids of $184 to $185 are currently being offered in the South, and bids of $296 are being offered in the North. But feedlots would ideally like higher prices and aren't willing to hand over their showlists for cheaper money just yet. April live cattle are down $0.10 at $183.00, June live cattle are down $0.55 at $177.82 and August live cattle are down $0.45 at $175.97.

Boxed beef prices are lower: choice down $1.22 ($309.87) and select down $1.05 ($299.21) and with a movement of 93 loads (59.27 loads of choice, 10.67 loads of select, 4.93 loads of trim and 18.30 loads of ground beef).

FEEDER CATTLE:

The feeder cattle complex has toyed with the idea of trading mildly higher, but the market can't seem to muster enough support to consistently do so. Currently the nearby contracts are the most confident and are trading slightly higher, but the rest of the market is keeping with Tuesday's lower tone. It would help if the live cattle complex were trading higher, but with no cash cattle trade having developed -- that market isn't brave enough to trade higher either. April feeders are up $0.12 at $245.57, May feeders are down $0.47 at $246.77 and August feeders are down $0.65 at $256.45.

LEAN HOGS:

The lean hog complex is keeping with its steady upward grind as the market anxiously awaits Thursday's Quarterly Hogs and Pigs report. I am surprised traders are as confident as they are given that pork cutout values closed lower Tuesday afternoon and are lower again Wednesday morning. April lean hogs are up $0.55 at $86.12, June lean hogs are up $0.35 at $101.70 and July lean hogs are up $0.22 at $104.07.

The projected CME Lean Hog Index for 3/26/2024 is up $0.56 at $84.25, and the actual index for 3/25/2024 is up $0.22 at $83.69. Hog prices are lower on the Daily Direct Morning Hog Report, down $1.00 at $80.02, ranging from $76.00 to $83.00 on 1,404 head and a five-day rolling average of $80.72. Pork cutouts total 132.28 loads with 106.80 loads of pork cuts and 25.48 loads of trim. Pork cutout values: down $0.60, $94.73.




Wednesday Morning Livestock Market Update - Trader Psychology Drives Market

GENERAL COMMENTS:

Cattle futures pancaked lower as long liquidation gripped the market and sell stops were hit. As futures declined, increased technical selling took place. Some of the pressure stemmed from the bearish numbers on the Cattle on Feed report, but some was fear of what the discovery of bird flu in dairy cattle could mean for the industry. The concern over bird flu was just a psychological reaction as it really could be construed as bullish to the market. If it becomes more of a widespread issue, it could be very bullish as affected cattle would lose weight, which would delay marketing and tighten beef supply further. It could also impact nursing calves. However, uncertainty plays a large role in the commodity markets. Cattle futures did bounce back from the lows, which could bring buyers back in if cash would trade higher again this week. Boxed beef prices were mixed with choice up $0.20 and select down $1.70. Cash cattle have yet to trade this week.

Hog futures were able to shun much of the spillover pressure from the cattle complex. However, traders could not find much positive news either, resulting in a mixed close. The National Daily Direct Afternoon Hog report showed cash down $0.54 with a weighted average of $80.63. Cutouts were also lower with a decline of $0.41. Combining the weakness of cash and cutouts with the upcoming Quarterly Hogs & Pigs report on Thursday, trading activity might be mostly choppy. Thursday will also be the last day of trading before an extended weekend. Packers may have purchased most of their supply for the week, which may leave them unaggressive Wednesday.

BULL SIDE BEAR SIDE
1)

The huge decline in cattle futures Tuesday may have been more tied to emotional trading rather than fundamental trading.

1)

Technical damage was done to cattle futures. This may be difficult to overcome anytime soon as traders may be cautious about buying back into the market. Follow-through selling may take place.

2)

There is some anticipation cash cattle may trade higher this week, which would support futures immensely after the huge selloff Tuesday.

2)

Cash cattle should begin to trade Wednesday, and lower prices would solidify and support lower futures.

3)

Hog futures were able to hold much of the strong gains on Monday and held up well Tuesday against spillover pressure from cattle.

3)

Hog traders will position themselves ahead of the Hogs & Pigs report to be released Thursday. This may keep futures choppy.

4)

Hog futures may remain sideways through the end of the week, possibly building support.

4)

Packers may have purchased most of the hogs they need for the week, which may keep them less aggressive in the cash market.



 

Tuesday, March 26, 2024

Tuesday Closing Livestock Market Update - Cattle Close Sharply Lower as Fear and Anxiousness Set into Traders' Minds

GENERAL COMMENTS:

It was a mentally exhausting day watching the livestock complex trade as the cattle complex ran sharply lower as concerns, fear and nervousness set into traders' minds with HPAI currently affecting some dairy cows in the Southern Plains. The hog complex was able to maintain most of its position and continues to look forward to Thursday's Quarterly Hogs and Pigs report. Hog prices closed lower on the Daily Direct Afternoon Hog Report, down $0.54 with a weighted average price of $80.63 on 5,309 head. May corn is down 5 1/4 cents per bushel and May soybean meal is down $1.90. The Dow Jones Industrial Average is down 31.31 points.

LIVE CATTLE:

Today was a perfect example of how the market can quickly fall into the Chicken Little trap of "the sky is falling" mentality. The live cattle complex didn't suffer as gravely as the feeder cattle contracts did, but still, the live cattle market closed mostly $3.00 lower. April live cattle closed $3.10 lower at $183.10, June live cattle closed $3.22 lower at $178.37 and August live cattle closed $3.55 lower at $176.42. The cash cattle market could be a supportive factor that the futures complex desperately needs if it's able to trade higher again this week. Time will tell, but as of this point, no sizeable volume of cattle has traded. 

Tuesday's slaughter is estimated at 125,000 head -- 3,000 head more than a week ago but steady with a year ago.

Boxed beef prices closed mixed: choice up $0.20 ($311.09) and select down $1.70 ($300.26) with a movement of 122 loads (62.29 loads of choice, 24.62 loads of select, 12.72 loads of trim and 22.56 loads of ground beef).

WEDNESDAY'S CATTLE CALL: Steady to $1.00 higher. Packers may be building up supply, but the fact remains that showlists are still current and that with consumer demand as strong as it is -- they're going to keep procuring cattle.

FEEDER CATTLE:

If we want to look at today's market through a "glass half full" perspective, at least the feeder cattle contracts didn't close limit lower. But besides that fact, the market wasn't able to accomplish much else good throughout Tuesday's trade. I personally struggle with days like today because it seems like more and more often, the market and the traders and participants within the market like to react first and drive prices lower, and then think and ask questions. I understand that the HPAI flu that's affecting some dairy cattle is somewhat alarming. But isn't it overdone to push the market $4.00 to $5.00 lower when the USDA shared that consumers aren't at risk and the cattle affected are showing relatively minor side effects (a decrease in appetite and milk production decreased by 10-20%) and fully recover within seven to ten days? Whether it is or isn't overdone, the market traded lower throughout the day as fear and nervousness took hold of trader's interest like a thief in the night.

April feeders closed $5.00 lower at $245.45, May feeders closed $5.37 lower at $247.25 and August feeders closed $5.07 lower at $257.10. At Oklahoma National Stockyards in Oklahoma City, Oklahoma compared to last week feeder steers traded $3.00 to $6.00 lower and feeder heifers traded $4.00 to $8.00 lower. Steer calves sold steady to $5.00 lower while heifer calves traded steady to $2.00 lower. The sale report did note that it appeared as though grass buyers had pulled out of the market as seven weight steers and six weight heifers that would normally go to grass traded sharply lower. The CME feeder cattle index 3/25/2024: down $0.07, $251.63.

LEAN HOGS:

The lean hog complex may have faced a little bit of pushback in some of the market's nearby contracts, but all in all the market was able to close mostly higher as the market's deferred contracts didn't bat an eye at the market's turmoil. April lean hogs closed $0.42 higher at $85.57, June lean hogs closed $0.32 lower at $101.35 and July lean hogs closed $0.07 lower at $103.85. It's disappointing that pork cutout values closed lower as traders need continuous fundamental support if they're going to continue to advance the market and potentially take on the current resistance threshold at $103 in the June contract. The belly was the biggest reason why pork cutout values closed lower this afternoon as prices fell $10.36 lower there. Pork cutouts totaled 267.81 loads with 229.04 loads of pork cuts and 38.77 loads of trim. Pork cutout values: down $0.41, $95.33. Tuesday's slaughter is estimated at 490,000 head – 1,000 head less than a week ago and 9,000 head more than a year ago. The CME lean hog index 3/22/2024: down $0.09, $83.48.

WEDNESDAY'S HOG CALL: Steady to somewhat lower. Packers did buy slightly more hogs in today's cash market which could indicate that they need more supply, but with pork cutout values closing lower, I doubt that they'll be too aggressive in advancing the cash market.