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Tuesday, April 20, 2021

Tuesday Closing Livestock Market Update - Contracts Savor the Victory of a Fully Higher Close

GENERAL COMMENTS:

It was a rather impressive day throughout the livestock sector, as nearly the entire complex closed higher, and the market's fundamentals are aligning for a strong trade later in the week as well. Hog prices closed higher on the National Direct Afternoon Hog Report, up $1.14 with a weighted average of $106.08 on 6,205 head. May corn is up 14 1/2 cents per bushel and July soybean meal is up $3.40. The Dow Jones Industrial Average is down 256.33 points and NASDAQ is down 128.50 points.

LIVE CATTLE:

With the board closing fully higher, boxed beef prices higher again and slaughter running aggressively to hopefully process somewhere between 650,000 to 660,000 head this week, the cash cattle market has stars aligning in its favor if feedlots can wave by the week's early bids. April live cattle closed $0.22 higher at $120.57, June live cattle closed $0.60 higher at $119.20 and August live cattle closed $0.75 higher at $119.40. The June contract flirted with the idea of trading below the support plane at $118.00, but thankfully the market had a surge of support favor the market early in the day, which allowed for a successfully higher close. The deferred contracts fared the best as their gains were well over $1.00. The cash cattle market has yet to see any bids surface and asking prices are still unestablished. The Texas Cash Pool didn't sell any cattle this week as their highest bid was $120.55 with time -- the only other packer to offer a bid was at $119.02. Tuesday's slaughter is estimated at 121,000 head, 5,000 head more than a week ago and 36,000 head more than a year ago (year ago levels were greatly affected by COVID-19).

Boxed beef prices closed higher: choice up $2.09 ($278.26) and select up $1.34 ($270.47) with a movement of 91 loads (51.01 loads of choice, 11.01 loads of select, 11.37 loads of trim and 17.87 loads of ground beef).

WEDNESDAY'S CASH CATTLE CALL: Steady to $1.00 higher. This week's cash cattle market has a chance at trading higher, but it won't come easy as packers sit on supplies of cattle that they've bought with time. Packers knew that the cash market was going to continue to creep higher and that supplies were going to only become thinner as the spring continues to trade on, so they were wise and have been buying a significant volume of cattle with time. That's disheartening to this week's cash cattle market, but the fact remains that packers need cattle in order to push slaughter above 650,000 head and to keep up with consumer's demand. Bids will most likely begin to surface Wednesday.

FEEDER CATTLE:

Even though the nearby corn contracts closed $0.09 to $0.14 higher and the May corn contract closed above $6.00 -- the feeder cattle contracts were able to hold above the $142 support plane and rally on the momentum that stemmed throughout the livestock complex. April feeders closed $0.15 lower at $137.57, May feeders closed $0.30 higher at $142.77 and August feeders closed $1.75 higher at $154.52. With corn prices continuing their scorching rally, the cattle contracts need to see some upward progression to ensure profitability. At Callaway Livestock Center in Kingdom City, Missouri, compared to last week, steer calves weighing 450 to 500 pounds sold steady to $3.00 lower, steer calves weighing 500 to 550 pounds sold steady to $5.00 lower, and steers weighing 550 to 600 pounds sold $4.00 to $8.00 lower. Feeder heifers weighing 400 to 500 pounds sold steady to firm, heifers weighing 500 to 600 pounds sold $3.00 to $5.00 lower and heifers weighing 600 to 750 pounds sold mostly steady. The CME Feeder Cattle Index for April 19: down $1.65, $138.48.

LEAN HOGS:

The lean hog complex was elated to close mostly $1.00 to $2.00 higher Tuesday afternoon after last week's downward spiraling trade Thursday and Friday. The contracts were able to rally amid strong pork demand without worrying about a lack of technical support. Pork cutout values were able to close higher and cash prices saw a significant jump Tuesday afternoon as cash prices rose $1.14. Still, the cash hog movement for the day only totaled 6,205 head, which most likely stems from the fact supplies are so hard to come by, not that packers are only selectively buying. Pork cutouts totaled 353.13 loads with 330.99 loads of pork cuts and 22.14 loads of trim. Pork cutout values: up $0.95, $115.03. Tuesday's slaughter is estimated at 485,000 head, 1,000 head more than a week ago and 125,000 head more than a year ago (year ago levels were greatly affected by COVID-19). Monday's hog slaughter was revised to 485,000 head -- down 5,000 head from the originally stated 490,000 head. The CME Lean Hog Index for April 16: up $0.52, $103.76.

­­­­­WEDNESDAY'S CASH HOG CALL: Steady. With pork prices jumping over $1.00 Tuesday afternoon, packers will most likely support a steady, if not somewhat higher market, as market-ready hog supplies are hard to come by. Yes, Monday's slaughter was revised lower but only by a mere 5,000 head, which won't hinder packer's buying quotas significantly this week if the market continues to process at that 485,000 head mark.




Tuesday Midday Livestock Market Summary - Contracts Back to Trading Fully Higher

GENERAL COMMENTS:

The cattle contracts felt left out Monday afternoon as the lean hog contracts rallied throughout the day. But with the dawning of a new day and a strong shot of optimism the entire livestock complex is now rallying into Tuesday afternoon. May corn is up 15 cents per bushel and July soybean meal is up $4.70. The Dow Jones Industrial Average is down 236.43 points and NASDAQ is down 130.06 points.

LIVE CATTLE:

The live cattle contracts decided eight consecutive days in a row of lower trade was enough and are back to rallying modestly. April live cattle are up $0.47 at $120.82, June live cattle are up $1.05 at $119.65 and August live cattle are up $1.15 at $119.80. With both boxed beef prices higher and a rigorous kill schedule expected for the week ahead, feedlots are liking how this week's market is shaping up for the cash cattle side of things. With the futures market now playing a supportive role in the week's developments, feedlots could stand to gain at least $1.00 or $2.00 amid strong demand and favorable fundamental signs. Feedlots have yet to share their asking prices and bids have yet to surface and it's most likely that the week's business will at least wait until Wednesday to transpire if not later. Packers have bought a considerable number of cattle for delayed delivery and that could be one hiccup that arises in the cash cattle market and makes it more difficult for feedlots to demand higher prices.

Boxed beef prices are higher: choice up $1.38 ($277.55) and select up $1.30 ($270.43) with a movement of 56 loads (30.18 loads of choice, 5.48 loads of select, 10.28 loads of trim and 10.43 loads of ground beef).

FEEDER CATTLE:

And just like that, the spot May corn contract jumps $0.15 Tuesday morning to now demand a stout $6.07 per bushel price. And as odd as it may seem, the feeder cattle contracts have gone from trading lower early Tuesday morning to now trading modestly higher in the nearby contracts and well over $1.00 higher in some of the deferred contracts. April feeders are up $0.42 at $138.15, May feeders are up $0.97 at $143.45 and August feeders are up $1.62 at $154.40. Call it what you want. Some will say higher corn prices may be summoning higher cattle prices; some will say feeders are trying to establish a short-term bottom; and some will fall flat out of their feed-wagons and howl that the markets are plum drunk at noon!

LEAN HOGS:

Last week's hard sell-off in the futures complex surely didn't feel good at the moment but it has allowed for the contracts to rally early this week without any resistance pressure. June lean hogs are up $1.55 at $105.87, July lean hogs are up $1.77 at $103.75 and August lean hogs are up $1.32 at $99.87. Paying much attention to the midday pork cutout value doesn't do anyone much good, so don't let the slightly weaker pork cutout concern you. It's positive to see cash prices higher Tuesday morning but heading into the afternoon it's going to be even more important to keep an eye on the day's estimated slaughter and the total number of hogs bought through the cash market. Strong slaughter speeds will be challenged in the weeks and months to come from limited hog supplies but keeping a snappy pace is vital to keep up with demand.

The projected CME Lean Hog Index for 4/19/2021 is up $0.65 at $104.42 and the actual index for 4/16/2021 is up $0.52 at $103.76. Hog prices are higher on the National Direct Morning Hog Report, up $0.88 with a weighted average of $103.88, ranging from $102.82 to $109.00 on 2,826 head. Pork cutouts total 221.93 loads with 210.40 loads of pork cuts and 11.53 loads of trim. Pork cutout values: down $0.25, $113.83.






Tuesday Morning Livestock Market Update - Cattle Are Ripe for a Bounce

GENERAL COMMENTS:

The bandage was not large enough to stop the bleeding Monday. Live cattle futures slowed their descent, but pressure from feeder cattle still pushed them into negative territory for the eighth day. Futures washed out early but rebounded substantially from the lows. This might signal that futures have fallen low enough to catch the interest of traders to buy back into the market. After all, cash has remained strong with no indication of what this week may bring. Boxed beef prices have also remained strong. It seems cattle futures have more than compensated for higher grain prices. April futures are trading at a discount to cash with only 1 1/2 weeks remaining to trade. The Commitment of Traders report showed funds as net sellers of 4,653 contracts, trimming their net-long positions to 87,231 contracts.

Hogs completely diverged from cattle Monday. Triple-digit gains were seen in all contracts through July 2022. The temporary liquidation phase ran its course with futures regaining most of the losses of Friday. The market has a ways to go to regain the losses of last week, but the strength Tuesday certainly seems to indicate that this may take place sooner rather than later. Higher cash and higher cutouts continue to unfold as strong demand and tightening supply permeates the market. Even though the report on Friday of a 31.9% increase of pork production in China for the first quarter of the year, their imports for the first quarter of the year totaled 1.16 million metric tons, up 22% from the previous year. The Commitment of Traders report showed funds were net buyers of 1,027 futures contracts, increasing their net-long position to 77,960 contracts.

BULL SIDE BEAR SIDE
1) Cattle futures rebounded about $1.00 off their lows Monday as selling pressure subsided and buying became more aggressive. 1) Lower lows and lower highs of futures still does not indicate a bottom has been reached. Further weakness is possible.
2) Cash is expected no worse than steady this week. Futures now have a discount to cash as they may have been overdone to the downside. This could trigger a sharp retracement. 2) Higher grain prices may be putting pressure on feedlots, possibly pushing them to make cash sales at steady or even slightly lower prices.
3) Hogs defied higher grain prices and outside pressure from cattle pushing higher to regaining most of what was lost on Friday. This should provide traders with further confidence to buy into the market. 3) A major top may have been put in the hog market, and it could be difficult to move back up to challenge those highs in the near-term.
4) Cash and cutouts continue to trend higher. Strong demand needs to be met. 4) Slowing exports could put more pork into the domestic market to meet strong demand, build cold storage inventory and reduce price.



Monday, April 19, 2021

Monday Closing Livestock Market Update - Cattle and Lean Hogs Close Starkly Different

GENERAL COMMENTS:

The cattle contracts may have had another rough day, but the lean hog contracts didn't let than rain on their ambitious market. As corn prices keep creeping higher, the cattle contracts continue to wane lower, but the lean hog market took Monday with a bold grasp and rallied significantly higher. Hog prices closed higher on the National Direct Afternoon Hog Report, up $0.45 with a weighted average of $104.94 on 6,311 head. May corn is up 6 1/2 cents per bushel and July soybean meal is up $4.90. The Dow Jones Industrial Average is down 123.04 points and NASDAQ is down 137.58 points.

LIVE CATTLE:

Other than the downward attitude that filtrated its way through the live cattle complex, there wasn't much else to note about Monday's trade. A lack of trader interest sent the contracts trading lower, and the cash cattle market is yet to be tested as it's too early in the week for interest to have developed. April live cattle closed $0.50 lower at $120.35, June live cattle closed $0.57 lower at $118.60 and August live cattle closed $0.50 lower at $118.65. New showlists appear to be higher in Texas, and Nebraska/Colorado and somewhat lower in Kansas. Monday's slaughter is estimated at 119,000 head -- 7,000 head more than a week ago and 32,000 head more than a year ago.

Last week's negotiated cash cattle trade totaled 88,624 head. Of that 55% (48,568 head) are committed for delivery in the next two weeks while the remaining 45% (40,056 head) are committed for delivery in the following 15 to 30 days.

Boxed beef prices closed higher: choice up $0.12 ($276.17) and select up $0.03 ($269.13) with a movement of 91 loads (44.18 loads of choice, 17.51 loads of select, 9.67 loads of trim and 19.68 loads of ground beef).

TUESDAY'S CASH CATTLE CALL: Steady to $1.00 higher. Feedlots have their work cut out for them this week, but higher trade isn't completely out of the question. As feedlots step back and see corn prices rallying amid rallying boxed beef prices, feedlots know there is more to be had than that packers are currently paying.

FEEDER CATTLE:

The recent spike in corn prices has really come as a hinderance to the feeder cattle contracts. With cost of gains on everyone's mind, it's hard to stomach higher corn prices while fat cattle prices continue to dance around $120.00 live. Feedlots have gotten creative in using other feeds to try to lessen some of their input costs, but when inputs are a lofty problem, operations must become meticulous about where every penny goes. April feeders closed $1.90 lower at $137.72, May feeders closed $1.25 lower at $142.47 and August feeders closed $1.77 lower at $152.77. At Joplin Regional Stockyards in Carthage, Missouri at their midsession point compared to last week feeder steers under 600 pounds were selling steady, while those under 600 pounds were selling steady to $3.00 lower. Feeder heifers that weighed under 500 pounds sold steady and those weighing more than 500 pounds sold $3.00 to $5.00 lower. The CME Feeder Cattle Index for April 16: down $1.55, $140.13.

LEAN HOGS:

Pork cutouts closed higher and Monday's slaughter is estimated at a brisk pace, which are all positive, bullish signs to the lean hog market. June lean hogs closed $2.62 higher at $104.32, July lean hogs closed $2.27 higher at $101.97 and August lean hogs closed $2.40 higher at $98.55. With last week's mixed trade, the lean hog contracts were able to rally boldly through Monday's hours and not feel immediately pressured by longtime resistance levels. So long as domestic consumer demand can continue to shine through the market, hog prices stand a chance at continuing to trade steady. Pork cutouts total 328.56 loads with 299.19 loads of pork cuts and 29.36 loads of trim. Pork cutout values: up $1.99, $114.08. Monday's hog slaughter is estimated at 490,000 head -- 2,000 head more than a week ago and 125,000 head more than a year ago. The CME Lean Hog Index for April 15: up $0.21, $103.24.

TUESDAY'S CASH HOG CALL: Steady to somewhat higher. Packers weren't overly aggressive in Monday's cash market, but seeing that slaughter speeds are running vigorously and that pork cutouts closed higher, packers may feel more confident about this week's market as demand remains strong.