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Wednesday, September 30, 2020

Wednesday Closing Livestock Market Summary - Lean Hog Support Carries Through the Day

 GENERAL COMMENTS:

Wednesday was eventful for the livestock complex as the lean hog market absorbed unforeseen support and the market's cash cattle trade developed $2.00 stronger throughout both the Northern and Southern Plains. Heading into Thursday, there's a lot of pressure in the lean hog market waiting for Thursday's export report. Hog prices closed higher on the National Direct Afternoon Hog Report, up $0.55 with a weighted average of $64.47 on 8,341 head. December corn is up 14 1/4 cents per bushel and December soybean meal is up $10.90. The Dow Jones Industrial Average is up 329.04 points and NASDAQ is up 82.26 points.

LIVE CATTLE:

The live cattle complex closed slightly lower in nearby contracts, but kept some of the deferred contracts higher through the day's close. Worrying about corn prices affected the feeder cattle market, but put a halt on the live cattle complex's rally that the day initially started with. October live cattle closed $0.35 lower at $108.55, December live cattle closed $0.77 lower at $112.35 and February live cattle closed $0.35 lower at $115.87. Tuesday's rally was substantial in the fact that it pushed total open interest to 303,540 positions, which hasn't been achieved since March of earlier this spring. Some cash cattle trade developed in parts of the North as cattle sold for $167, $2.00 higher than last week's average. And late in the day, the Southern Plains sold cattle for $107 in Texas and Kansas. Wednesday's slaughter is estimated at 120,000 head, steady with a week ago and 1,000 head less than a year ago.

The Fed Cattle Exchange Auction listed a total of 901 head, of which 358 actually sold, but 543 head were listed as PO (Passed Offer). The state by state breakdown looks like this: Kansas 142 total head (1 lot), with 142 head listed as PO ($104.00); Nebraska 214 total head (1 lot), with 214 head sold at $106.00; Texas 545 total head (3 lots), with 144 head sold at $106.00, and 401 head listed as PO ($104.00). The delivery date/weighted averages breakdown is as listed: one- to nine-day delivery: 543 head total, all passed, and one- to 17-day delivery 358 head total all sold at $106.00.

Boxed beef prices are higher: choice up $0.58 ($217.74) and select up $0.55 ($207.54) with a movement of 155 loads (88.05 loads of choice, 30.62 loads of select, 10.40 loads of trim and 26.18 loads of ground beef).

THURSDAY'S CASH CATTLE CALL: $2.00 higher. Seeing that both the North and South were able to achieve prices considered $2.00 higher than last week's trade, the rest of cattle country is going to push for higher prices as well.

FEEDER CATTLE:

Feeder cattle contracts initially panicked when corn prices shot higher after Wednesday's USDA Grain Stocks report shared lower than expected corn supplies. The complex shot lower in fear of how high input costs could grow and worried about the long-term trajectory of 2020's fourth quarter. With drought already being on the forefront of everyone's mind, paying close attention to corn prices will be a necessity. October feeder cattle closed $1.57 lower at $141.35, November feeder cattle closed $1.72 lower at $142.05 and January feeders closed $1.37 lower at $140.30. At OKC West Livestock Auction in El Reno, Oklahoma, compared to a week ago, feeder steers sold $1.00 to $4.00 higher with some high-quality load lots available. Heifers sold mostly steady with lots traded $2.00 higher. Steer and heifer calves sold weaker again this week, as buyers are leery of bawling calves with the temperature swings this time of year. The CME feeder cattle index for Sept. 29: up $0.36, $142.58.

LEAN HOGS:

As Wednesday clocks out for the day, the hog industry waits patiently for Thursday's export report. Upon hearing that Germany confirmed another two cases of African swine fever in some wild boars, Wednesday's markets shot up in hopes that export demand will soon rise. If Thursday's report neglects to show increased interest, the market will most likely be disappointed, but again, that doesn't mean that increased demand will not ever rise, it may just take some time. October lean hogs closed $0.42 higher at $72.80, December lean hogs closed $1.12 higher at $63.10 and February lean hogs closed $1.00 higher at $68.00. Pork cutouts totaled 310.05 loads with 273.72 loads of pork cuts and 26.22 loads of trim. Pork cutout values: down $0.38, $91.37. Wednesday's slaughter is estimated at 473,000 head, 14,000 head less than a week and year ago. The CME lean hog index for Sept. 28: up $0.49, $75.91.

THURSDAY'S CASH HOG CALL: Steady. Packers have plenty of hogs already committed, so a lot of Thursday's buying will rest on the excitement around Thursday's export report. If demand is high and traders dive into the futures market with thrilled emotion, the market could be higher. If Thursday's export report is disappointing, the market could easily scale lower.




Wednesday Midday Livestock Market Summary - The Lean Hog Market Pulls Day's Attention

 General Comments

Cattle contracts were trading modestly higher Wednesday morning but as the noon hour approached both the live and feeder cattle contracts have taken a turn for lower prices and in an abrupt manner as the feeder cattle market sees as much as a $2.30 loss. With the announcement of Germany finding more wild boars carrying ASF and corn prices jumping as much as $0.16 to $0.17 per bushel, the attention has left the cattle complex and is focusing on lean hogs and corn. December corn is up 16 cents per bushel and December soybean meal is up $13.30. The Dow Jones Industrial Average is up 502.96 points and NASDAQ is up 176.29 points.

LIVE CATTLE

The market's attention for the cattle contracts has disappeared as there's more concern about the ASF cases in Germany and feeders want to get an understanding of the corn market's rally. Meanwhile live cattle contracts are trading lower but not as steeply as the feeder cattle complex. October live cattle are down $0.32 at $108.70, December live cattle are down $0.42 at $112.72 and February live cattle are down $0.35 at $115.87. Cash cattle trade remains at an utter standstill even after the day's online auction. Some early asking prices are noted in the South at $109, and bids of $167 are offered in Iowa but trade has yet to develop.

The Fed Cattle Exchange Auction listed a total of 901 head, of which 358 actually sold, but 543 head were listed as PO (Passed Offer). The state by state breakdown looks like this: Kansas 142 total head (1 lot), with 142 head listed as PO ($104.00); Nebraska 214 total head (1 lot), with 214 head sold at $106.00; Texas 545 total head (3 lots), with 144 head sold at $106.00, and 401 head listed as PO ($104.00). The delivery date/weighted averages breakdown is as listed: 1-9-day delivery: 543 head total, all passed, and 1-17-day delivery 358 head total all sold at $106.00.

Boxed beef prices are higher: choice up $1.48 ($218.64) and select up $0.94 ($207.93) with a movement of 97 loads (59.57 loads of choice, 15.60 loads of select, 6.88 loads of trim and 15.12 loads of ground beef).

FEEDER CATTLE

Feeder cattle contracts are taking the brunt of Wednesday's blow, seeing as much as $2.22 losses as the complex barley broke above the $144 resistance plane before shooting lower. October feeder cattle are down $1.50 at $141.37, November feeder cattle are down $2.10 at $141.67 and January feeders are down $1.95 at $139. Pressuring the feeder cattle complex tremendously is the corn market's rally as corn prices are jumping up as much as $0.15 to $0.16 per bushel.

LEAN HOGS

Just when the market wondered if the hype surrounding the ASF cases in Germany was dying down, news broke Wednesday morning that two additional wild boars were found positive with the disease. Upon hearing the news, the hope of export opportunity is helping boost the lean hog market. October lean hogs are up $0.12 at $72.50, December lean hogs are up $1.37 at $63.35 and February lean hogs are up $1.32 at $68.32.

The projected lean hog index for 9/29/2020 is up $0.63 at $76.54 and the actual index for 9/28/2020 is up $0.49 at $75.91. Hog prices are lower on the National Direct Afternoon Hog Report, down $0.02 with a weighted average of $63.90, ranging from $60.00 to $66.00 on 5,815 head and a five-day rolling average of $64.31. Pork cutouts total 190.09 loads with 167.25 loads of pork cuts and 22.84 loads of trim. Pork cutout values: down $0.55, $91.20.







Wednesday Morning Livestock Market Summary - Cattle Futures Search for Additional Late Month Support

 General Comments:

Activity in the cash cattle market has been extremely limited so far during the week with both sides likely to wait until the last half of the week. It appears there is little urgency by either side to ink deals before the end of the month, likely pushing most trade into Thursday or Friday. The underlying support in futures trade and stability in beef values is creating the potential for another round of moderate-to-firm cash price support. The question of just how many cattle packers will need to acquire during the first full week of October will be the limiting factor on just how aggressive bids become through the next couple of days. Trade attention through the morning will be firmly affixed to the direction of nearby live cattle and feeder cattle trade. The strong triple-digit gains in live cattle and feeder cattle futures Tuesday not only created underlying end of the month momentum, but December live cattle futures quickly moved through previous short-term highs of $112.27 set last week, putting price target levels near $114 per cwt. A move to this level before the end of the month would help to spark renewed bullish technical support through the entire live cattle complex, likely sparking renewed noncommercial support to move back into cattle trade during the fourth quarter of the year. Fundamentally, traders are looking for tighter supplies of market-ready cattle over the next six weeks, which should help to support cash values as packers continue to maintain current procurement levels.

Lean hog futures remain weak going into Wednesday trade, although the strong sell-off Tuesday is likely to create limited early market movement midweek. Although significant questions remain about long-term demand for pork from domestic and export growth through the end of the year, traders continue to focus on the growing supply levels within the coming weeks. The fact that abundant market-ready hogs will be available to the market during the month of October and most of November is not new and should not be a surprise to any market watcher. But the focus over the last three weeks has shifted from known supply growth, to potential export demand strength in order to make up for German pork exports banned in most countries. This expectation that significant price gains can be maintained is losing momentum, although prices remain well above prices when Germany discovered African swine fever within its borders. Given the volatility over the last several days, traders are likely to focus more on end-of-month position squaring given there is little fundamental market news expected Wednesday. Cash hog prices are expected $1 lower to $1 higher with most bids expected steady. Slaughter Wednesday is expected at 485,000 head. Saturday runs are expected at 179,000 head.

BULL SIDEBEAR SIDE
1)

December live cattle futures quickly blew through short-term resistance levels Tuesday, moving above $113 per cwt. The strong end of the month buyer support has the potential to establish monthly highs at the end September, while late summer resistance levels near $114 per cwt.

1)

Continued concerns of short-term beef demand growth may limit the ability to sustain recent price support in live cattle futures. This will likely continue to leave markets moving in a wide price pattern during the month of October.

2)

Feeder cattle futures are quickly moving away from last week's lows, creating moderate-to-strong momentum through the complex. November futures have rallied over $3.50 per cwt in the past two trading sessions, with the potential to close the month of September at the highest level since mid-August.

2)

Volatility in feeder cattle futures over the last month is expected to continue during the fourth quarter of 2020. This may severely limit upward market support over the near future with November futures likely to hit significant resistance levels near $145 per cwt.

3)

Strong premiums continue to hold in deferred lean hog futures trade. This continues to focus on the expected long-term price support and improving market conditions through second quarter of 2021. August and July 2021 contracts continue to hold a double-digit premium to December futures.

3)

Sharp losses in lean hog futures Tuesday created concerns of widespread follow-through liquidation in all contracts. The ability to hold current price levels opens the door to further market retractions during early October.

4)

Traders in the lean hog futures complex continue to look toward Thursday's export sales report for evidence of potential strong export movements. This support has been partially factored into the market, which could add further stability and buyer interest during early October.

4)

Hog supplies remain abundant and on the edge of burdensome as packers continue to maximize production levels through the fall months. The inability to slowly but steadily increase packer throughput in the upcoming weeks could add further pressure to lean hog futures.





Tuesday, September 29, 2020

Tuesday Closing Livestock Market Summary - Cattle Keep Momentum

 GENERAL COMMENTS:

It was a strong day for the cattle contracts as both the live cattle market and feeder cattle markets were able to close higher. Looking at boxed beef prices and seeing some positive gains in price along with a considerable movement of supply, bull-spreaders are eager about the nearby market. Hog prices closed lower on the National Direct Afternoon Hog Report, down $0.02 with a weighted average of $64.08 on 7,086 head. December corn is down 2 cents per bushel and December soybean meal is down $2.00. The Dow Jones Industrial Average is down 131.40 points and NASDAQ is down 32.27 points.

LIVE CATTLE:

Feedlots loved seeing the board scale higher throughout Tuesday's trade and are eager to move this week's market higher yet again. There was a lot of fear that Friday's Cattle on Feed report would flush bearishness into the marketplace, but the market let Friday absorb the report and left it there. With boxed beef prices showing some positive movement in prices and in sheer volume, bulls are liking how the market is shaping up and see the uptick in the boxed beef market as a sign of a strong market in the short term. October live cattle closed $0.95 higher at $108.90, December live cattle closed $1.47 higher at $113.12 and February live cattle closed $1.20 higher at $116.22. The cash market continues to be at a complete standstill as feedlots are planning to move cattle later in the week and hopefully for $1.00 to $2.00 higher. Tuesday's slaughter is estimated at 120,000 head, 1,000 head less than a week ago and 2,000 head more than a year ago.

Boxed beef prices closed mixed: choice down $0.56 ($217.16) and select up $0.57 ($206.99) with a movement of 134 loads (68.17 loads of choice, 29.60 loads of select, 11.10 loads of trim and 25.04 loads of ground beef).

WEDNESDAY'S CASH CATTLE CALL: Steady. It wouldn't be surprising to see trade wait until after the online auction Wednesday morning to sell. Over the last couple of weeks feeders have been adamant about regaining some of the leverage in the marketplace and have been able to do so by marketing their cattle later in the week.

FEEDER CATTLE:

The feeder cattle complex took full advantage of Tuesday's rally and left the market at least $1.00 higher, but commonly $2.00 higher in the nearby contracts. October feeders closed $2.00 higher at $142.92, November feeders closed $2.67 higher at $143.77 and January feeders closed $2.52 higher at $141.67. If the market keeps its momentum into Wednesday's trade, the market will feel some pressure from the resistance plane at $144. Depending on how serious traders are about solidifying their positions in the feeder cattle market, the week's anticipated stronger cash cattle trade could help the market move higher. Sales throughout the countryside remain hit or miss as some farmer feeders are out in the fields to harvest and others aren't quite ready to buy in this fall's market yet. The true test of the fall run won't happen for another 10 days to two weeks. The CME feeder cattle index Sept. 28: down $0.25, $142.36.

LEAN HOGS:

The lean hog market is feeling slightly jaded as the hype surrounding the African swine fever case in Germany shot the market higher as export demand is highly anticipated, but the lingering question of when the U.S. hog market will see export demand stalled the market once again. October lean hogs closed $0.32 lower at $72.37, December lean hogs closed $2.05 lower at $61.97 and February lean hogs closed $1.70 lower at $67.00. Pork cutouts totaled 376.54 loads with 347.82 loads of pork cuts and 28.71 loads of trim. Pork cutout values: down $1.64, 91.75. Tuesday's slaughter is estimated at 485,000 head, steady with a week ago and 4,000 head less than a year ago. The CME lean hog index Sept. 25: up $0.89, $75.42.

WEDNESDAY'S CASH HOG CALL: Steady to slightly lower. Packers are still wanting to secure their supplies but aren't necessarily wanting to do so at a higher expense. If Thursday's export report shares higher demand, the cash market will most likely stay steady if not creep higher with excitement, but if the report is vague then packers may start looking to at lowering their cost with cash hogs.




Tuesday Midday Livestock Market Summary - Cattle Contracts Rallying

 General Comments

The cattle contracts are thriving into Tuesday's afternoon as support has rallied the two markets substantially -- especially in the feeder cattle market. Meanwhile the lean hog sector is scaling lower as a unanimous consensus that the complex should trade higher doesn't seem likely for the time being. December corn is down 4 cents per bushel and December soybean meal is down $2.00. The Dow Jones Industrial Average is down 196.69 points and NASDAQ is down 26.95 points.

LIVE CATTLE

Live cattle contracts are on board for rallying into Tuesday's afternoon while the opportunity presents itself. October live cattle are up $1.22 at $109.17, December live cattle are up $1.80 at $113.45 and February live cattle are up $1.50 at $116.52. The cash cattle market continues to be quiet, as feeders are becoming keen on the notion of selling their cattle later in the week, and for higher prices. The South has priced cattle at $108-plus, but the North has yet to offer any initial asking prices for the week. If boxed beef prices can scale upward (even if its modestly) stronger beef demand could help feeders achieve another week of higher cash prices.

Boxed beef prices are higher: choice up $0.06 ($217.78) and select up $1.70 ($208.12) with a movement of 72 loads (36.95 loads of choice, 17.27 loads of select, 5.92 loads of trim and 12.34 loads of ground beef).

FEEDER CATTLE

As corn prices weaken $0.02 to $0.04 per bushel, the feeder cattle contracts rally $2.00 to $3.00 higher taking full advantage of Tuesday's support. October feeders are up $2.32 at $143.25, November feeders are up $3.07 at $144.17 and January feeders are up $2.90 at $142.05. Seeing the cash cattle market rally higher for the last two weeks has really helped to build somewhat of a positive mindset into the feeder cattle's highly anticipated fall run. There are numerous bearish reasons as to why the market's fall run could fall short of expectations (drought conditions, supply outweighing demand, and uncertainty still playing a large role in the marketplace). But if the cash cattle market can continue to gain leverage over the next two to four weeks, its positive momentum could carry over into the feeder cattle market.

LEAN HOGS

The cattle complex's rally is drawing attention away from the lean hog market as traders questions the longevity of these prices. Heading into the afternoon the lean hog contracts are $0.55 to $1.37 lower. Over the last three weeks the lean hog market's rally has been tremendous, but without seeing tremendous follow-through from the export side of things, the market wonders if these prices are sustainable. There will be a lot of pressure on this week's export report, which comes out on Thursday mornings. October lean hogs are down $0.05 at $72.65, December lean hogs are down $1.47 at $62.55 and February lean hogs are down $1.25 at $67.45.

The projected lean hog index for 9/28/2020 is up $0.49 at $75.91, and the actual index for 9/25/2020 is up $0.89 at $75.42. Hog prices are lower on the National Direct Morning Hog Report, down $0.49 with a weighted average of $63.61, ranging from $60.00 to $65.00 on 5,499 head and a five-day rolling average of $64.33. Pork cutouts total 240.10 loads with 218.83 loads of pork cuts and 21.27 loads of trim. Pork cutout values: down $0.05, $93.34.





Tuesday Morning Livestock Market Summary - Limited Market Direction Expected

 General Comments:

Cash cattle activity remains on the back burner Tuesday morning with traders focusing on establishing overall market ranges and focusing on the ability to further fine tune market direction following the full week of reports last week. Cattle showlists remain mixed for the week, but packers continue to focus on securing procurement levels in the upcoming weeks as the market starts to fall into a more traditional fall routine with end of the year and holiday beef demand expected to be the focus over the next couple of months. Cash trade may not become fully active until midweek or later, although it is likely that feeders will aggressively price cattle when asking prices develop over the next couple of days. The underlying support in futures trade and choppy back and forth moves in beef values is giving feeders the incentive to focus on further cash market gains through the week. Futures trade is expected to remain mixed in a narrow-to-moderate range. Following the ability for traders to shake off Friday's bearish Cattle on Feed report during Monday's session, sparking limited buying in nearby contracts. The focus is returning to a more fundamental routine, which should support more stable price levels over the near future, although live cattle and feeder cattle trade may continue to hover within a wide sideways trading range over the near future.

Trade in lean hog futures contracts is expected to remain mixed. Traders are focusing on the split direction between immediate market moves and intermediate direction through the end of the year. Strong export gains are likely in the next couple of weeks due to Germany being unable to export to its normal trading partners outside the European Union, which is sparking follow-through support in October futures. But this aggressive momentum is stopping short of December and February contracts. This is leaving the December contracts at a $7 per cwt discount to spot October, creating concerns about the ability to sustain the recent market surge once initial optimism wears off. Growing supplies of market-ready hogs will continue to keep the market under pressure through most of the fourth quarter, with traders uncertain that demand growth can offset this supply gap beyond the next couple of weeks. Cash hog prices are expected $1 lower to $2 higher with most bids expected steady to $1 higher. Slaughter Tuesday is expected at 486,000 head. Saturday runs are expected at 179,000 head.

BULL SIDEBEAR SIDE
1)

Firm cash market gains the past two weeks could indicate the fall seasonal low has been set in cash cattle trade. Over the last several weeks, cash cattle trade has mirrored moves in 2019, creating hope that additional firmness is still likely during the month of October.

1)

Limited interest in feeder cattle trade during early week activity seems to be creating more long-term pressure on the cattle complex. Feeder cattle futures remain focused on upcoming seasonal placements and recent feed price gains, which will likely limit significant buyer interest in the near future.

2)

Nearby live cattle futures continue to trade in the top end of the short-term market range, with traders focusing on much needed market stability and the potential to stabilize beef demand through the end of the year.

2)Beef values slipped lower early in the week, creating some concern that further pressure may continue to develop during late September. Late-year holidays are not typically focused on beef demand, which could limit the ability to move additional product out of freezers during the upcoming weeks.
3)

Active gains in pork cutout values are pointing to expectations of strong export pork sales in Thursday's report. The idea that active pork movement will continue to develop is sparking short-term buying interest.

3)

Cash hog prices shifted lower Monday, posting the first significant losses in several trading days. Although it is too early to show concern about prices tumbling lower, the inability for packers to aggressively bid market-ready hogs is raising some attention.

4)

Aggressive gains in October lean hog futures has led the complex higher, widening the aggressive premium to other nearby contracts as traders focus on potential strong pork demand from worldwide partners as the U.S. helps to stabilize supply levels around the world through the end of the year.

4)

Hog supplies remain abundant and on the edge of burdensome as packers continue to maximize production levels through the fall months. The inability to slowly but steadily increase packer throughput in the upcoming weeks could add further pressure to lean hog futures.





Monday, September 28, 2020

Monday Closing Livestock Market Summary - Quiet Day for Livestock Sector

 GENERAL COMMENTS:

Monday wasn't an overly exciting day as the livestock complex traded gingerly and kept its advancements and regressions modest. As the week advances and hog enthusiasts see if this week's export report yields exciting news, and feedlots see how aggressive packers are going to be, trade could become more vigorous. Prices were lower on the National Direct Afternoon Hog Report, down $0.72 with a weighted average of $63.98 on 5,183 head. December corn is up 1 1/2 cents per bushel and December soybean meal is down $4.70. The Dow Jones Industrial Average is up 410.10 points and NASDAQ is up 203.97 points.

LIVE CATTLE:

Live cattle contracts closed mostly higher, fueled by last week's robust cash cattle market. October live cattle closed $0.37 higher at $107.95, December live cattle closed $0.25 higher at $111.65 and February live cattle closed $0.42 higher at $115.02. Monday's cash cattle trade was as expected -- painfully quiet as feeders are confident in pricing cattle higher again this week and packers know bids won't be accepted this early in the week. If boxed beef prices scale higher like they did last week, packers will be more apt (than if they don't) to consider paying higher prices. Monday's slaughter is estimated at 118,000 head -- 2,000 head less than a week ago and 2,000 head more than a year ago.

Boxed beef prices closed lower: choice down $1.62 ($217.72) and select down $0.56 ($206.42) with a movement of 148 loads (85.38 loads of choice, 17.40 loads of select, 10.58 loads of trim and 34.32 loads of ground beef).

TUESDAY'S CASH CATTLE CALL: Steady to $1.00 higher. Given that the last two weeks have treated feeders exceptionally well as they've waited until later in the week to market their cattle, Tuesday will most likely be another quiet day.

FEEDER CATTLE:

Feeder cattle contracts closed mixed with most of the contracts higher, other than those from March 2021 to May 2021. Even with the corn market closing $0.01 to $0.02 higher per bushel, feeder cattle futures followed live cattle contracts higher. Until the fall run truly gets underway, the feeder cattle complex will trade in limbo, looking for support both on the board and throughout the countryside. October feeder cattle closed $0.60 higher at $140.92, November feeders closed $0.95 higher at $141.10 and January feeders closed $0.32 higher at $139.15. At Oklahoma National Stockyards in Oklahoma City, Oklahoma, compared to a week ago, feeder steers sold $2.00 to $3.00 higher and feeder heifers sold steady to $1.00 stronger. There was no comparison on steer and heifer calves due to a limited test. The CME feeder cattle index 9/25/2020: down $0.36, $142.23.

LEAN HOGS:

The lean hog market closed mostly higher even though some nearby contracts fought moderate resistance. October lean hogs closed $0.95 higher at $72.70, December lean hogs closed $0.40 lower at $64.02 and February lean hogs closed $0.77 lower at $68.70. The cash market closed slightly lower, but pork demand continues to be fueled as the market's cutout value closed $2.00 higher. If Thursday's export report can yield a prosperous showing, the market's momentum could rally again. Pork cutouts totaled 310.79 loads with 280.61 loads of pork cuts and 30.18 loads of trim. Pork cutout values: up $2.07, $93.39. Monday's slaughter is estimated at 489,000 head -- 11,000 heard more than a week ago and 4,000 head more than a year ago. Friday's hog slaughter was revised to 462,000 head, and Saturday's hog slaughter was revised to 220,000 head. The CME lean hog index 9/24/2020: up $0.83, $74.53.

TUESDAY'S CASH HOG CALL: Steady. Packers have been adamant about buying hogs and securing supplies; at some point prices have to veer to steady, if not to lower, levels.




Monday Midday Livestock Market Summary - Live Cattle Contracts Support Mild Gains

 General Comments

Nearby cattle contracts are drawing some attention and trading mildly higher into Monday afternoon. For the most part, the day's trade is slow to develop and unless substantial trader interest develops throughout the afternoon, the day will most likely close in the same lackadaisical manner. The lean hog complex is dancing on both sides of steady undecided if the market's excitement over potential exports will keep fueling the market or not. December live cattle are up $0.33 at $111.725, November feeder cattle are up $0.25 at $140.4, December lean hogs are down $0.55 at $63.875, December corn is up 4 1/4 cents per bushel and December soybean meal is down $5.20. The Dow Jones Industrial Average is up 468.98 points and NASDAQ is up 112.58 points.

LIVE CATTLE

Though live cattle contracts are rallying modestly, it's still a win for the market following Friday's bearish Cattle on Feed Report. October live cattle are up $0.25 at $107.82, December live cattle are up $0.10 at $111.50 and February live cattle are up $0.17 at $114.77. Following last week's sizable cash cattle trade, feeders will be motivated to price cattle higher again this week after two weeks of stronger cash cattle trade. Asking prices won't develop until later in the week but new showlists appear to be larger in Nebraska/Colorado, somewhat smaller in Texas, and lower in Kansas.

Last week's negotiated purchases totaled 124,791 head. Of that 91,672 head are committed for delivery in the next two weeks while the remaining 33,119 head are for delivery in the following 15 to 30 days.

Boxed beef prices are lower: choice down $1.67 ($217.67) and select down $0.58 ($206.40) with a movement of 89 loads (54.15 loads of choice, 7.58 loads of select, 5.26 loads of trim and 21.58 loads of ground beef).

FEEDER CATTLE

Feeder cattle market is pulling attention toward the nearby contracts as October feeders are up $0.15 at $140.47, November feeders are up $0.20 at $140.30 and January feeders are down $0.12 at $138.70. The market would like to rally confidently and throughout the entire complex but with the corn market rallying $0.02 to $0.04 per bushel, feeder cattle contracts are hesitant. With feed becoming an issue throughout the country it wouldn't be surprising to see more calves and feeders hitting the marketplace as early as next week to kick off the official start of the October fall run.

LEAN HOGS

The lean hog market doesn't know whether the market can support higher prices and is trading mixed into the afternoon. Pork cutout prices are sharply higher at midday which hopefully will trickle into the afternoon's prices and keep the same trend throughout the week. If Thursday's export report is fruitful the market has a stronger chance of rallying trader support again. October lean hogs are up $0.82 at $72.57, December lean hogs are down $0.45 at $63.97 and February lean hogs are down $0.67 at $68.80.

The projected lean hog index for 9/25/2020 is up $0.89 at $75.42, and the actual index for 9/24/2020 is up $0.83 at $74.53. Hog prices are unavailable on the National Direct Morning Hog Report due to packer submission problems. Pork cutouts total 157.34 loads with 144.41 loads of pork cuts and 12.92 loads of trim. Pork cutout values: up $5.72, $97.04.





Monday Morning Livestock Market Update - Cattle Trade Set to Sort Out Bearish Cattle on Feed Report

 General Comments:

Following the higher cash cattle trade last week, limited direction is expected in the cash market arena Monday. Generally, cash trade held $2 per cwt gains seen earlier in the week with live cattle trade hovering around $105 per cwt, while dressed cattle traded at $165 per cwt in nearly all northern regions. Showlist distribution and inventory taking is likely to be the focus of both sides during Monday with bids and asking prices likely to be undeveloped until midweek or later. Although the end of the month and quarter will be seen Wednesday, this is likely to have less impact on cash trade and timing than futures market moves where some traders will be squaring positions at the end of the third quarter. The Cattle on Feed report Friday carried a bearish tone with increased cattle placements becoming the focus of the September report. Placements increased 9% from year-ago levels, which was well above pre-report estimates. The focus on growing placement levels is not shocking, given the unusual pattern placements have seen through the year, but it does limit the expectation of long-term supply tightness through the first and second quarter of 2021 that has been previously anticipated. Cattle on feed numbers were also increased, which is likely to create additional market pressure through the complex Monday. But traders quickly backed away from all cattle markets Friday ahead of the bearish report, which may limit further through price pressure during morning activity. November and January feeder cattle futures led the complex lower Friday, posting losses over $2 per cwt, and quickly changing the short-term direction of the complex. Given the uncertainty in demand through the fourth quarter of 2021, it is likely that initial pressure will widely develop in live cattle and feeder cattle futures, but this downward market shift may not be able to hold as traders still focus on previous discounts that have already developed in the market over the last few days.

Friday's moves in lean hog futures trade indicate just how quickly traders can change direction as late day buying quickly negated the bearish supply report seen the previous day. This wide market surge not only posted triple-digit gains in most nearby contracts but pushed spot October contracts above $71 per cwt for the first time since February. The focus in the lean hog futures complex has been less on current supply levels, and more on the potential and ability to aggressively grow export demand. The focus on increasing pork exports to China and other Asian markets through the end of the year has quickly put October contracts at a strong premium over December futures. Even with the strong move higher in nearby prices, hog supplies will continue to build over the next sixty days, creating burdensome market issues when it comes to processing the expected larger and more plentiful hog crop through the end of the year. This could continue to widen the price gap between October and December contracts as counter seasonal market shifts may continue to develop. Cash hog prices are expected $1 lower to $2 higher with most bids expected steady to $1 higher. Slaughter Monday is expected at 484,000 head.

BULL SIDEBEAR SIDE
1)

Higher cash cattle trade at the end of last week continues to help support underlying market fundamentals. This is expected to create higher asking prices as the week continues as feeders continue to leverage market-ready cattle at higher prices expecting tighter supplies in the upcoming weeks.

1)

Sharp losses in live cattle and feeder cattle futures Friday is creating even more concern that further pressure will develop through the end of the month. Strong losses Monday morning could quickly spark triple-digit losses with traders unwilling to step in front of the complex on the move lower.

2)

Strong gains on Friday in choice boxed beef values helped to continue to support overall beef values, while also widening the price spread between choice and select cuts. This fundamental shift is helping to put more emphasis on higher end cuts with the expectation that choice cuts will continue to gain market support over the upcoming weeks.

2)

Feeder cattle placements increased 9% from year-ago levels. This is well above analyst expectations and will likely create additional underlying pressure through the complex at least in early Monday morning.

3)Strong underlying gains in all nearby lean hog futures quickly dashed fears of larger inventory, derailing the recent market rally. October futures surged above $71 per cwt, helping to focus on further long-term support developing during late 2021.3)

Despite Friday's rally higher in lean hog futures trade, the focus on abundant hog supplies through the end of the year, especially in October and early November is expected to limit further widespread market support.

4)

Cash hog values continue to slowly but steadily shift higher as packers continue to aggressively fill procurement needs in order to keep up with expected supply demand within the coming weeks, while maintaining strong packer margins.

4)

Short-term expectations for export pork demand growth have been aggressively built up over the past couple of weeks. This optimism is likely to be overly aggressive, creating a potential market correction if strong sales are not seen in the next two weeks.





Friday, September 25, 2020

Friday Closing Livestock Market Summary - Cattle Weaken While Hogs Rally

GENERAL COMMENTS:

Rounding out another week, the livestock complex closed mixed as cattle contracts closed lower, but the lean hog complex rallied heading into the weekend. Hog prices closed higher on the National Direct Afternoon Hog Report, up $0.14 with a weighted average of $64.74 on 9,863 head. December lean hogs are up $1.15 at $64.425, December corn is up 1 3/4 cents per bushel and December soybean meal is up $2.10. The Dow Jones Industrial Average is up 358.52 points and NASDAQ is up 241.29 points.

From Friday to Friday livestock futures scored the following changes: October live cattle up $0.23, December live cattle down $0.45; October feeder cattle down $2.10, November feeder cattle down $2.38; October lean hogs up $5.25, December lean hogs up $0.90.

LIVE CATTLE:

The live cattle complex fell lower as Friday progressed and headed into the weekend $0.07 to $1.05 lower. October live cattle closed $0.45 lower at $107.57, December live cattle closed $0.87 lower at $111.40 and February live cattle closed $105 lower at $114.60. As the day neared closing, worry about how much September's Cattle on Feed (COF) report would affect the marketplace grew. If looked at out of an analytical mindset, the report shouldn't wreck too much havoc. Yes, placements are sharply higher, but this isn't a surprise, as we witnessed historically low placements earlier this spring. However, it wouldn't be surprising to see next week's trade lower in the early part of the week as the COF report has a tendency of carrying into the next upcoming week.

Friday's cash cattle trade wasn't overly busy as the day served as a cleanup opportunity for both packers and feedlots. Following Thursday's robust cash cattle trade, Friday's trade followed suit, selling for $105 in the Southern Plains and for $165 mostly in the Northern Plains. Friday's slaughter is estimated at 112,000 head, 1,000 head more than a week ago and 2,000 head less than a year ago. Saturday's slaughter is projected to be around 57,000 head.

Boxed beef prices closed mixed: choice up $1.86 ($219.34) and select down $0.76 ($206.98) with a movement of 138 loads (83.11 loads of choice, 27.84 loads of select, 12.30 loads of trim and 14.60 loads of ground beef).

MONDAY'S CASH CATTLE CALL: Steady. Next week's cash cattle trade is going to be a tough sell for feedlots. Again, feedlots will be hopeful for steady trade, but as packers bought a sizeable volume of cattle this week, packers' desire to pay higher prices for cattle could be even less.

FEEDER CATTLE:

As Friday's afternoon progressed, the feeder cattle complex dove lower, closing anywhere from $0.97 to $2.20 lower. October feeders closed $1.95 lower at $140.32, November feeders closed $2.20 lower at $140.15 and January feeders closed $2.07 lower at $138.82. Worried about how Friday's COF report was going to sit with the market, and seeing weakness continuing to develop in the live cattle sector, bearish indicators pushed the feeder cattle complex lower. South Dakota's Weekly Cattle Auction Summary shared that, compared to a week ago, feeder steers under 850 pounds sold $2.00 to $5.00 higher, while steers over 850 pounds sold steady to $2.00 higher. Feeder heifers weighing under 850 pounds sold steady to $2.00 higher and heifers over 850 pounds sold unevenly steady. Demand remains very good for yearling steers and heifers as corn harvest has begun and cattle feeders are fully ready to take on incoming cattle. The yearlings are moving off grass and there is great competition for these cattle as their availability is becoming sparse. Spring born calves are starting to show up and farmer feeders are seeming interested in taking healthy calves home and feeding them out. The CME feeder cattle index for Sept. 24: down $0.36, $142.23.

LEAN HOGS:

As the cattle complex's support quivered in fear of the afternoon's COF report, the lean hog market jumped higher and took significant leaps in the nearby contracts. October lean hogs closed $2.27 higher at $71.75, December lean hogs closed $1.15 higher at $64.42 and February lean hogs closed $0.97 higher at $69.47. Following Thursday's hogs and pigs and export reports, the market seems unphased and willing to trade higher as both the cash market and futures market jumped higher before the weekend's close. Pork cutouts totaled 378.38 loads with 342.50 loads of pork cuts and 35.88 loads of trim. Pork cutout values: down $0.71, $91.32. Friday's slaughter is estimated at 478,000 head, 19,000 head more than a week ago and 4,000 head less than a year ago. Saturday's slaughter is projected to be around 230,000 head. The CME lean hog index for Sept. 23: up $0.81, $73.70.

MONDAY'S CASH HOG CALL: Steady to somewhat higher. The support for the lean hog market continues to grow and packers are obviously willing to pay higher prices to secure the fact that they'll be able to have more hogs when they need them.





Friday Midday Livestock Market Summary - Cattle Contracts Hesitant of COF Report

 General Comments

The cattle complex is left trading lower as the market is hesitant about Friday's afternoon Cattle on Feed Report. Throughout the countryside a few more cash cattle bids have been renewed in parts of Kansas and Nebraska, but thus far they simply remain as bids. The lean hog market is seeing strong, positive trade throughout nearby contracts, and some modest gains throughout deferred contracts. December corn is up 3 3/4 cents per bushel and December soybean meal is up $2.50. The Dow Jones Industrial Average is up 44.25 points and NASDAQ is up 107.08 points.

LIVE CATTLE

The live cattle contracts are feeling some modest pressure from the board as contracts dipping $0.07 to $0.60 lower. The live cattle complex feels like it's left balancing two different signals as the week concludes. Following Thursday's strong cash advancement, the market should be robust and confident, but with weakness plaguing the board and a bearish COF report expected to round out Friday's business, the market braces cautiously. October live cattle are down $0.05 at $107.97, December live cattle are down $0.45 at $111.82 and February live cattle are down $0.65 at $115.00. Friday's cash cattle trade is still mostly quiet as bids of $105 are offered in Kansas, and bids of $104 to $106, as well as $164 to $165 are offered in Nebraska. Some more trade should develop before the day's end.

Boxed beef prices are mixed: choice up $1.74 ($219.22) and select down $0.37 ($207.37) with a movement of 67 loads (32.54 loads of choice, 17.48 loads of select, 10.56 loads of trim and 6.07 loads of ground beef).

FEEDER CATTLE

Another day of looming pressure sends the feeder cattle contracts lower as the market searches for support while trying to secure position amid a $0.03 corn rally. October feeders are down $0.75 at $141.52, November feeders are down $0.75 at $141.60 and January feeders are down $0.75 at $140.20. Knowing that placements are expected to be significantly higher than a year ago on Friday's COF report, the feeder cattle market sits patiently, trending lower throughout Friday's morning trade.

LEAN HOGS

Rebounding from Thursday's reports and the lack of trader interest, the lean hog complex is seeing substantial gains in nearby contracts and modest support through deferred contracts. October lean hogs are up $2.32 at $71.80, December lean hogs are up $1.42 at $64.70 and February lean hogs are up $1.10 at $69.60. The followed through support from the cash market and modest growth through the cutout value helped solidify the fact that the market was OK, and able to continue with advancing.

The projected two-day lean hog index for 9/24/2020 is up $0.83 at $74.53, and the actual index for 9/23/2020is up $0.81 at $73.70. Hog prices are higher on the National Direct Morning Hog Report, up $0.41 with a weighted average of $65.01, ranging from $60.00 to $65.01 on 8,193 head and a five-day rolling average of $63.26. Pork cutouts total 252.10 loads with 225.18 loads of pork cuts and 26.92 loads of trim. Pork cutout values: up $0.91, $92.94.






Friday Morning Livestock Market Summary - Cash Cattle Prices Firm Ahead of Cattle on Feed Report

 General Comments:

Following speculation about whether packers would show up and offer higher prices during the last full week of September and ahead of the Cattle on Feed report, light-to-moderate cash business developed Thursday afternoon. Although additional trade is expected to develop before the week is over, cash cattle trade posted $2 per cwt gains from last week's levels in most areas. Trade developed at $105 per cwt live in both the North and South, while dressed trade in the North was near $165 per cwt. The boost in cash values not only followed underlying support redeveloping in futures and boxed beef values during the week, but it helped to create underlying widespread market support, which may spark further futures market buying before the end of the week. Traders are now quickly changing gears from the recent gains and cash market support, to the upcoming Cattle on Feed report. Analyst expectations are that on feed numbers will increase 3.5% over year-ago levels, while placements are likely to see a 6% bounce from 2019 numbers. Marketings during the month of August are also expected to be over 3% lower than year-ago levels. The uncertainty in the afternoon report is not focused on if placement and on feed numbers will increase, but if early projections are in the ballpark of inventory gains. This could not only create significant pre-report positioning through most of the day Friday, but a bearish report would likely have a significant impact on trade early next week. Futures trade is expected mixed Friday morning with technical support developing Thursday, sparking expected follow-through support.

Early trade in lean hog futures is expected to be a balance between bearish market news from Thursday's Hogs and Pigs report and firming cash and pork values. The underlying support in cash hog prices through late September has been impressive with light-to-moderate gains becoming even more consistent as packers continue to increase prices paid for market-ready hogs in order to keep plants full. The surge higher in pork cutout values is also impressive, with prices gaining $3.06 per cwt based on expected further pork movement in domestic and export markets through the fourth quarter. Larger-than-expected hog inventory levels as of Sept. 1 is likely to create market pressure through the market with traders focusing mostly on the growth of heavy-weight hogs from year-ago levels. Although breeding inventory declined from year-ago levels, the limited reduction in hogs kept for breeding and farrowing intentions is likely to carry a generally bearish market tone well into 2020. The biggest question yet to be answered Friday morning is "just how much of this bearishness was factored into the market during the week". This could keep prices volatile during the Friday session. Cash hog prices are expected $1 lower to $2 higher with most bids expected steady to $1 higher. Slaughter Friday is expected at 481,000 head. Saturday runs are expected at 221,000 head.

BULL SIDE BEAR SIDE
1)

Cash cattle gains Thursday helped solidify the underlying fundamental support that has been developing in the complex. Cash cattle prices posted $2 per cwt gains from last week's levels as packers focus on expected tighter supplies over the coming weeks, combined with beef value stability.

1)

Traders' attention will quickly move to the afternoon release of the Cattle on Feed report. Expectations of increased placements and higher cattle-on-feed numbers may curb any recent market optimism in futures trade.

2)

Firm gains in nearby live cattle futures has broken through short-term resistance levels of $112 per cwt in December contracts. December futures are trading at one-month highs, setting the next market target at $114 per cwt during the month of August. Narrowing this price gap during Friday's trade would help spark further technical support through the complex.

2)Despite the firm gains in cash and futures trade at the end of the week, narrow gains in beef cutouts has not kept up with the rest of the market. This could limit further widespread market support if beef values do not significantly move higher in the near future.
3)

Strong gains in pork cutout values Thursday focused on the continued ability to actively move pork in all markets. This may overshadow report pressure seen at the end of the week based on expectations of further active pork movement well into October.

3)

Growth of hog numbers in the 180 lb. and higher category signals continued bearish market news in the short term. This will put further pressure on the already-expected large supply of hogs ready for the market in the next month.

4)Farrowing intentions in Thursday's Hogs and Pigs report were most impacted in the September through November projection. This pullback of 5% from year-ago levels will further impact the availability of hogs during the middle of 2021. Putting increased price support to April through August lean hog futures.4)Despite hogs kept for breeding fell from year-ago levels, the reduction is not as great as most expected, or many feel will be necessary to keep lean hog futures trading in the current price range. This could have a bearish impact on 2021 price levels over the upcoming days and weeks.