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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.




Monday Midday Livestock Market Summary - Cattle Dive Lower While Hogs Keep Rallying

GENERAL COMMENTS:

Cattle and lean hog futures are trading on two totally different spectrums as the cattle contracts bear lower without any trader interest whatsoever, and hogs see gains of $2.00 to $3.00. Heading into the later part of the day, keeping an eye on slaughter speeds for both markets will be important and it could show signs of packer aggression in the days to come. May corn is up 5 1/2 cents per bushel and July soybean meal is up $5.10. The Dow Jones Industrial Average is down 165.09 points and NASDAQ is down 172.24 points.

LIVE CATTLE:

Live cattle futures aren't overly amused with Monday's arrival and are neglecting to rally any trader support. April live cattle are down $0.60 at $120.25, June live cattle are down $0.42 at $118.75 and August live cattle are down $0.50 at $118.65. Last week's cash cattle trade was bothersome in the number of cattle that are committed for the extended delivery. With supplies of market-ready cattle manageable, it's hard to stand much of a chance at trading higher when packers have a considerable percentage of their cattle already committed. Heading into this week's trade, feedlots will swing at higher prices but packers are going to want the market to trade steady at best. New showlists appear to be higher in Texas, Nebraska and Colorado, but somewhat lower in Kansas.

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 are mixed: choice down $0.23 ($275.82) and select down $1.58 ($270.68) with a movement of 52 loads (20.85 loads of choice, 7.67 loads of select, 5.70 loads of trim and 17.90 loads of ground beef).

FEEDER CATTLE:

Feeder cattle futures are not amused by the corn market's modest rally. April feeders are down $1.67 at $137.95, May feeders are down $1.25 at $142.27 and August feeders are down $1.97 and $152.57. The sheer pressure looming over the feeder cattle complex is immense as feedlots have to manage rising cost of gains and stomach fat cattle selling around $120 live. The feeder cattle market desperately needs to see the corn market stabilize and needs to see fat cattle prices strengthen to take some of the burden of higher input costs out of the equation.

LEAN HOGS:

Lean hog contracts rounded out last week on a tougher note, even though packers fully supported Friday's market heading into the weekend. There was some worry that with a disrupted kill schedule last week hog supplies may back up. But with supplies as thin as they are right now packers still had to jump into the market aggressively to secure supplies necessary Friday afternoon. Jumping into Monday's trade, the board is completely supportive of higher trade but it's too early to really get a good feel about how packers are going to approach the week. June lean hogs are up $3.25 at $104.95, July lean hogs are up $2.77 at $102.47 and August lean hogs are up $2.55 at $98.70.

The projected CME Lean Hog Index for 4/16/2021 is up $0.51 at $103.75, and the actual index for 4/15/2021 is up $0.21 at $103.24. Hog prices are lower on the National Direct Morning Hog Report, down $0.96 with a weighted average of $103.00, ranging from $102.15 to $108.00 on 3,028 head a five-day rolling average of $101.75. Pork cutouts total 162.81 loads with 146.27 loads of pork cuts and 16.54 loads of trim. Pork cutout values: up $2.61, $114.70.




Monday Morning Livestock Market Update - There Is Strong Hope for Stability

GENERAL COMMENTS:

One has to believe the selling pressure should subside soon. Cattle futures have fallen seven consecutive trading days, pushing the market into an oversold condition. Even though cash cattle traded steady to $1.00 higher last week, rising feed prices and poor exports were the overriding factor. The trend has turned lower for the time being. Packers will use this to their advantage and likely only want to purchase cattle at steady prices this week despite very strong boxed beef prices last week. They will still need to purchase cattle for strong demand, but the market may have turned. Weakening futures generally result in feedlots being more willing to sell rather than wait and continue to feed market-ready cattle and avoid a potential drop of prices. There is one technical consolation, and that is that April and June futures established an inside trading day Friday. However, later contracts did not show the same as they made lower lows.

Hog futures made a valiant effort to stem the tide of selling early on Friday, but that was short-lived, resulting in renewed heavy selling. Fortunately, futures rebounded from the lows by the closing bell. This does not change the concern that further weakness may unfold, but it could indicate that the aggressive selling has dried up. One still wonders why the heavy selling unfolded when cash price increased. The trigger was the market-year low of export sales. This provided the catalyst along with an extremely overbought market. That combination was all that funds needed to liquidate. The fundamental concern of tightening hog supplies remains, but will slower exports continue? China's first quarter pork production increased 31.9% from a year earlier totaling 13.69 million metric tons. China's pig herd increased to 415.95 million head at the end of March, up 29.5% from a year earlier, according to the National Bureau of Statistics.

BULL SIDE BEAR SIDE
1) Cash cattle were steady to higher last week with boxed beef very strong. This combination should stop the bleeding of futures as they may have overcorrected. 1) Cattle futures have fallen seven consecutive days and still not been able to bounce.
2) April and June live cattle futures posted an inside trading day Friday, which may indicate a bottom has been reached. 2) Higher grain prices and weaker futures may increase the desire of feedlots to move cattle earlier rather than later. The fear of lower cash may become a reality.
3) Packers paying higher prices and aggressively looking for market-ready hogs, should make this price dip short-lived. 3) The fall of hog futures in the face of rising cash makes one wonder if the rally is over. The return to higher prices may be difficult.
4) Demand remains strong, which should continue to support the market as packers will need to remain aggressive to meet that demand. 4) The report of a significant increase of China's hog herd over the past year is not friendly to the market. Their pork production increased as well as their hog herd. This is not a good combination.




Friday, April 16, 2021

Friday Closing Livestock Market Update - Rounding Out a Strenuous Week in the Complex

GENERAL COMMENTS:

It surely wasn't the week any livestock enthusiast had hoped for as the live cattle, feeder cattle and lean hog futures were all pressured multiple times to trade lower. Hog prices closed higher on the National Direct Afternoon Hog Report, up $1.71 with a weighted average of $104.49 on 9,185 head. May corn is down 4 1/2 cents per bushel and July soybean meal is down $0.10. The Dow Jones Industrial Average is up 164.68 points and NASDAQ is up 13.58 points.

From Friday to Friday livestock futures scored the following changes:

April live cattle down $2.57, June live cattle down $3.40; April feeder cattle down $5.13, May feeder cattle down $5.90; June lean hogs down $7.25, July lean hogs down $7.10.

LIVE CATTLE:

And just like that, Friday closes and the cattle contracts have endured seven consecutive days of weaker trade. April live cattle closed $0.75 lower at $120.85, June live cattle closed $0.47 lower at $119.17 and August live cattle closed $0.55 lower at $119.15. One of the market's biggest discouraging facets this past week was the steady to $1.00 higher cash cattle trade. Feedlots were hoping to be able to move the market at least $2.00 stronger this week but the burdensome factors of high corn prices and a premium some were able to get off the board's basis made it hard to summon higher cash cattle prices. Watching for Monday's official reports will be critical as this week's movement seems quite light. Live cattle traded in the South for $119 to $121, mostly $120 to $121 which is steady to $1.00 higher than last week. Dressed cattle in the North traded for $193 to $196, mostly from $195 to $196 which is steady to $1.00 higher than last week's average.

Friday's slaughter is estimated 113,000 head -- 2,000 head more than a week ago and 27,000 head more than a year ago. Saturday's kill is projected to be around 70,000 head -- 4,000 head more than a week ago and 32,000 head more than a year ago.

Boxed beef prices averaged higher again throughout the week when compared to last week's prices. Choice cuts averaged $273.42 (up $7.34) and select cuts averaged $267.51 (up $10.66) with a total movement of cuts, grinds and trim totaling 538 loads.

Boxed beef prices closed mixed: choice down $0.57 ($276.05) and select up $0.67 ($269.10) with a movement of 88 loads (54.68 loads of choice, 10.12 loads of select, 10.75 loads of trim and 12.89 loads of ground beef).

MONDAY'S CASH CATTLE CALL: Steady. Packers are going to want to buy cattle for steady to cheaper money next week. Thankfully demand is still considerably strong for beef right now, which will keep packers having to participate in the cash market to some degree. But their willingness to support a higher cash market will be minimal.

FEEDER CATTLE:

It was a rough week for feeder cattle futures. The market received far less support that it needed from the cash cattle trade and the corn market showed no mercy as it just keeps climbing higher and higher. As we've chatted about before, high corn prices aren't necessarily a problem as long as they also beckon higher cattle prices. But problems arise when input prices are high and your output is low. One of my favorite pieces of market advice came from my grandpa who said, "You make your money the day you buy, not the day you sell." Feedlots seemed to hang onto that mindset this week. With cash cattle prices dancing around $120, feeders were too expensive for them to dive into and expect to make any money. Kansas's Weekly Cattle Auction Summary shared that compared to last week feeder steers weighing 500 to 700 pounds sold $6.00 to $8.00 lower; those weighing above 700 pounds sold $1.00 to $5.00 lower. Feeder heifers sold $3.00 to $7.00 lower. Slaughter cows sold $3.00 to $5.00 lower and slaughter bulls sold $2.00 lower. The CME Feeder Cattle Index 4/15/2021: down $0.62, $141.68.

LEAN HOGS:

That some contracts were allowed to trade into their expanded limits throughout Friday and the only contract to close $3.00 lower was the June lean hog contract is far better that what the day's close could have been. June lean hogs closed $3.00 lower at $101.70, July lean hogs closed $2.67 lower at $99.70 and August lean hogs closed $1.65 lower at $96.15. Packers continue to scrap amongst one another throughout the countryside for any and all hogs. With supplies being as tight as they are packing plants are going to lighter Saturday kill schedules as there simply aren't enough pigs around to justify a full-bore Saturday kill amid difficulties finding help and plant maintenance needing to be performed. Choppy, volatile trade is expected next week as supplies are tight, but consumer demand continues to be outstanding. Pork cutouts totaled 265.86 loads with 222.39 loads of pork cuts and 43.47 loads of trim. Pork cutout values: down $1.28, $112.09. Friday's slaughter is estimated at 468,000 head -- steady with a week ago and 63,000 head more than a year ago. Saturday's kill is projected to be around 75,000 head -- 109,000 head less than a week ago and 142,000 head less than a year ago. Thursday's hog slaughter was revised to 474,000 head. The CME Lean Hog Index 4/14/2021: up $0.33, $103.03.

MONDAY'S CASH HOG CALL: Steady to somewhat higher. Given that packers are having to work the countryside so vigorously to get the hogs they need, after a weekend off they are most likely going to hit Monday aggressively.




Friday Midday Livestock Market Summary - Contracts Trade Steadily Lower

GENERAL COMMENTS:

After a long, gruesome week in the cattle futures, watching the contracts trade steadily lower into Friday afternoon feels like a brutal punishment and watching paint dry. The lean hog futures thus far haven't dipped into their expanded limits but are continuing to feel pressured as the day ticks on. May corn is down 5 3/4 cents per bushel and July soybean meal is steady. The Dow Jones Industrial Average is up 93.60 points and NASDAQ is up 5.34 points.

LIVE CATTLE:

Another day, another slippery slope of liquation and high corn prices amid slightly higher cash cattle prices and higher boxes in the live cattle market. Man, has it been a tough week! April live cattle are down $0.60 at $121.00, June live cattle are down $0.45 at $119.22 and August live cattle are down $0.45 at $119.25. The cash cattle market is still surprisingly quiet following Thursday's trade. There should be more cattle trade before the end of the day, though as of right now the countryside is oddly quiet. Feedlots grew skeptical about waiting the week out much longer than Thursday as they feared the week's lighter kill, the rising cost of corn and some had a basis incentive.

Boxed beef prices are higher: choice up $0.32 ($276.94) and select up $0.70 ($269.13) with a movement of 61 loads (37.31 loads of choice, 6.06 loads of select, 9.32 loads of trim and 7.84 loads of ground beef).

FEEDER CATTLE:

Feeder cattle futures are finishing up in the same doggish manner of their entire week. Without much incentive from the cash cattle market, and even though corn prices are trading lower heading into the afternoon, the market still must weigh the facts that inputs are high compared to their returns on cattle at this point. April feeders are down $0.02 at $140.02, May feeders are down $0.37 at $144.05 and August feeders are down $0.52 at $155.07.

LEAN HOGS:

With the April contract now expired, the lean hog market looks to June to set the pace. June lean hogs are down $1.67 at $103.02, July lean hogs are down $1.60 at $100.77 and August lean hogs are down $0.82 at $96.97. Packers vigorously supported the cash hog market early Friday morning as there's already been upward of 7,600 head bought at $2.80 more than Thursday morning's weighted average. After a volatile trade throughout Thursday, seeing the complex trade $1.00 to $2.00 lower is better than the steep $3.00 dip the market took Thursday. But how the contracts trade throughout the afternoon will be vital as the volatile environment can change in a second.

The projected CME Lean Hog Index for 4/14/2021 is up $0.33 at $103.03 and the actual index for 4/13/2021 is up $0.32 at $102.70. Hog prices are sharply higher on the National Direct Morning Hog Report, up $2.80 with a weighted average of $103.96, ranging from $101.30 to $106.00 on 7,610 head and a five-day rolling average of $101.32. Pork cutouts total 162.75 loads with 132.20 loads of pork cuts and 30.56 loads of trim. Pork cutout values: down $0.68, $112.69.




Friday Morning Livestock Market Update - Selling Pressure May Be Short-lived

GENERAL COMMENTS:

It was an ugly day in the livestock complex. Cattle futures continued to decline even though cash traded higher and boxed beef showed strong prices. The focus was on continued futures weakness as liquidation is still not finished. High grain prices, cash not increasing as much as most had anticipated, and somewhat dismal export sales kept pressure on futures. The bright spot was that cash did trade higher and boxed beef was significantly higher. However, that paled in comparison to the negatives. Fund liquidation has defied the usual three-day decline, especially in the face of increasing cash prices. However, exports have been struggling the past few weeks, indicating that beef prices have become too high for the international appetite. Export sales totaled 15,700 metric tons, down 14% from the previous week and down 23% from the four-week average. Not good. U.S. consumers have not backed away due to stimulus money and other benefits, which is keeping boxed beef prices strong. Increasing grain prices and plummeting futures triggered cash sales Thursday $0.50 to $1.00 higher. This was good, but disappointing to the trade. It may be difficult to see higher futures Friday, but some stability could be seen.

The exuberance of the hog market might have run its course for the time being. The job of the market is to reduce demand as supplies tighten. Prices may have reached that point. Export sales were dismal at 17,200 metric tons and a marketing-year low. This was down 48% from the previous week and down 60% from the four-week average. China was not even listed among the top five buyers. April futures went off the board Friday, leaving May as the font-month contract. May through August contracts were locked limit-down through the close Thursday with a significant pool of trades that could not be executed due to the limit move. Futures will have expanded limits Friday, but likely will not use them. There will be some follow through as contracts that could trade Thursday will be traded Friday at the opening. Higher cash and significantly higher cutouts should provide some support, which could kick in after liquidation has run its course. Saturday slaughter is estimated at 77,000 head.

BULL SIDE BEAR SIDE
1)

Cash cattle traded higher, indicating packers needed cattle and were willing to pay more.

1) Cattle futures have made lower highs and lower lows for five consecutive sessions. It may take a monumental effort to turn the market back up.
2)

Boxed beef indicates demand remains strong and has not reached domestic consumer price resistance.

2) Lower exports will mean more beef being available for domestic consumption. More supply means prices do not need to be as high.
3)

Cash hogs were higher with pork cutouts very strong. This may limit futures weakness.

3) Chart price gaps remain below the market in the May and June hog contracts, beckoning to be filled.
4)

Traders may buy the break as the outlook for tightening supplies remains intact. The break may be short-lived and just an overreaction to slower export sales.

4) Marketing-year low export sales sent shock waves through the market that traders will need to digest, leaving them less apt to buy back in until the dust settles.



Thursday, April 15, 2021

Thursday Closing Livestock Market Update - Day Extends No Grace to Livestock

GENERAL COMMENTS:

It was a rough day for the livestock contracts. The lean hog market tumbled upon seeing a marketing year low export report. The feeder cattle contracts are queasy at the thought of their cost of gains amid $120 fat cattle prices. And the cash cattle market disappointed many as trade developed for only $0.50 to $1.00 higher Thursday afternoon. Hog prices closed higher on the National Direct Afternoon Hog Report, up $1.43 with a weighted average of $102.78 on 7,540 head. May corn is down 4 cents per bushel and May soybean meal is up $3.70. The Dow Jones Industrial Average is up 305.10 points and NASDAQ is up 180.92 points.

LIVE CATTLE:

Southern feedlots started to trade cattle Thursday afternoon for $120 to $121, which is steady to $0.50 higher than a week ago. And some Northern feedlots sold cattle for $196, which is roughly $1.00 more than last week's business. With the market's downward progression, some feedlots got antsy, saw the basis premium and decided to sell cattle even though there maybe could have been more milked out of the cash cattle market. The feedlots that have yet to sell cattle are still hopeful that they can get $2.00 stronger this week, but it's always harder to do when some cattle have already traded. April live cattle closed $0.50 lower at $121.60, June live cattle closed $0.40 lower at $119.65 and August live cattle closed $0.47 lower at $119.70. Thursday's slaughter is estimated at 114,000 head, 5,000 head less than a week ago and 29,000 head more than a year ago.

Thursday's actual slaughter data shared encouraging news for steer carcass weights although heifers added more to their average. Steers averaged 894 pounds (down 5 pounds from the previous week) and heifers averaged 832 pounds (up 2 pounds from last week).

Beef net sales of 15,700 mt reported for 2021 were down 14% from the previous week and 23% from the prior four-week average. The three largest buyers were Japan (6,300 mt), China (3,300 mt) and South Korea (2,900 mt).

Boxed beef prices closed higher: choice up $3.71 ($276.62) and select up $1.12 ($268.43) with a movement of 103 loads (64.96 loads of choice, 9.31 loads of select, 7.39 loads of trim and 21.81 loads of ground beef).

FRIDAY'S CASH CATTLE CALL: $1.00 to $2.00 higher. Even though it was disheartening for the feedlots that have cattle left to sell to see some lots let cattle go already, there's still a chance that those who are holding out can get more money. Boxes closed higher and beef demand is still phenomenal -- and let's not forget that packers need cattle!

FEEDER CATTLE:

Even though the nearby corn contracts closed slightly weaker, the price point of the May contract ($5.90) and that of the July contract ($5.76) are gut-wrenching to feedlots while fat cattle trade around $1.20. Cost of gains are on the rise and feeder cattle buyers need to see an incentive to buy cattle with corn prices as high as they are. The past 10 days have treated sale barns extremely well as buyers are anxious to get cattle rounded-up and put together for grass and some for the feedlots, but if there isn't a turnaround in fat cattle prices buyers could grow weary. April feeders closed $1.10 lower at $140.05, May feeders closed $1.00 lower at $144.42 and August feeders closed $1.10 lower at $155.60. At Huss Livestock Market in Kearney, Nebraska, compared to two weeks ago, steers under 700 pounds sold $10.00 to $12.00 higher, and steers over 700 pounds sold steady to $4.00 higher. Heifers under 650 pounds sold $10.00 to $15.00 higher and those heifers weighing over 650 pounds sold $2.00 to $5.00 higher. Demand was excellent from the sale's start to finish and multiple buyers had to sit in the stands until the last pen sold to finish filling all their orders. The CME Feeder Cattle Index for April 14: down $0.26, $142.30.

LEAN HOGS:

It was a tough day for the lean hog future contracts as the April contract expired and the market's attention now closely eyes the June contract. June lean hogs closed $3.00 lower at $104.70, July lean hogs closed $3.00 lower at $102.37 and August lean hogs closed $4.00 lower at $97.80. The marketing-year low export report shook the market and rocked traders back on their heels even though pork cutout values show that demand domestically is still strong even given the lofty price levels that the market has jumped to. Looking at our foreign purchasers, they have begun to look at other sources for pork protein as our price point has rallied exponentially. Pork cutouts totaled 339.34 loads with 294.35 loads of pork cuts and 44.98 loads of trim. Pork cutout values: up $3.28, $113.37. Thursday's slaughter is estimated at 479,000 head, 13,000 head less than a week ago and 43,000 head more than a year ago. The CME Lean Hog Index for April 13: up $0.32, $102.70.

Pork net sales of 17,200 mt for 2021 -- a marketing year low -- were down 48% from the previous week and 60% from the prior four-week average. The three largest buyers were Mexico (7,800 mt), Japan (4,300 mt) and South Korea (1,300 mt).

Thursday's actual slaughter data shared mostly steady but somewhat better news for the hog industry. Live carcass weights fell 1 pound from the previous week to average 290 pounds, but dressed weights continue to hold steady at 217 pounds.

FRIDAY'S CASH HOG CALL: Steady to somewhat lower. With supplies as tight as they are, packers may look at the week's nearing and hold off on buying aggressively until next week.




Thursday Midday Livestock Market Summary - Contracts Tumble Lower

GENERAL COMMENTS:

It's been a downward spiral for the livestock futures Thursday as the cattle contracts wait patiently to see how the cash cattle market is going to pan out and the lean hog market is feeling pressured from the expiring April contract and the weaker export report. June live cattle are down $1.08 at $118.975, May feeder cattle are down $1.65 at $143.775, June lean hogs are down $3.00 at $104.7, May corn is down 5 1/4 cents per bushel and May soybean meal is up $3.40. The Dow Jones Industrial Average is up 276.65 points and NASDAQ is up 143.97 points.

LIVE CATTLE:

As feedlots look at a sixth consecutive day in a row of weaker trade, they look at the cash cattle market and know if there's one place the market is going to shoot them some positivity this week it's going to be in the cash market. That's not to say moving the needle in the cash cattle market is going to be easy as packers would obviously like to see prices trade at steady levels. But if feedlots can rally together and demand higher prices amid the higher boxed beef values, there's a good chance at least $1.00 if not $2.00 higher can be paid. April live cattle are down $1.15 at $120.95, June live cattle are down $1.05 at $119.02 and August live cattle are down $1.02 at $119.20. There's been some light trade in Texas at $120 and in Kansas a few head have sold at $121, which is $0.50 higher than last week. Bids of $122 have been placed on cattle in Iowa and bids of $196 are being offered in Nebraska.

Beef net sales of 15,700 metric tons (mt) reported for 2021 were down 14% from the previous week and 23% from the prior 4-week average. The three largest buyers were Japan (6,300 mt), China (3,300 mt) and South Korea (2,900 mt).

Boxed beef prices are higher: choice up $3.92 ($276.83) and select up $1.56 ($268.87) with a movement of 54 loads (23.79 loads of choice, 5.46 loads of select, 4.77 loads of trim and 19.86 loads of ground beef).

FEEDER CATTLE:

As the corn market takes a breather from rallying extensively the last two days, the feeder cattle contracts sit anxiously waiting to see what the cash cattle market does. If cash cattle can sell higher, then there may be enough supportive momentum in the complex to rally the feeder cattle higher. But at the noon hour the cash cattle market has only been meekly tested and traders want to see more confidence in the markets before they dive into higher prices. April feeders are down $0.95 at $140.20, May feeders are down $1.42 at $144.00 and August feeders are down $1.35 at $155.47.

LEAN HOGS:

Lean hog futures are feeling a little bent out of shape after Thursday's weaker export report, but the market still has strong support from both cash prices and the pork cutouts. The choppy volatile trade is nerve-wracking to watch, but given the high price point at which the complex is trading and given just how tight supplies are, we need to expect some volatility. June lean hogs are down $3.00 at $104.70, July lean hogs are down $3.00 at $102.37 and August lean hogs are down $2.75 at $98.05. Watching slaughter speeds will be important as we move into the afternoon.

Pork net sales of 17,200 mt for 2021 -- a marketing year low -- were down 48% from the previous week and 60% from the prior 4-week average. The three largest buyers were Mexico (7,800 mt), Japan (4,300 mt) and South Korea (1,300 mt).

The projected CME Lean Hog Index for 4/14/2021 is up $0.34 at $103.03, and the actual index for 4/13/2021 is up $0.32 at $102.69. Hog prices are higher on the National Direct Morning Hog Report, up $1.42 with a weighted average of $101.16, ranging from $99.96 to $105.00 on 3,730 head and a five-day rolling average of $99.79. Pork cutouts total 162.49 loads with 138.75 loads of pork cuts and 23.74 loads of trim. Pork cutout values: up $4.83, $114.92.




Thursday Morning Livestock Market Update - Weekly Export Sales May Provide Direction

General Comments:

Cattle futures continue to struggle. Traders seem to have lost their confidence in the market and are reducing some of their long positions. It is unclear as to why the market has not been supported over the past week other than pressure from feeder cattle that has been pressured by higher grain prices. Once cash cattle were traded significantly higher last week, it seemed as if the market ran out of steam. Boxed beef prices have been strong this week, indicating continued strong demand, but packers still have not indicated as to what price they are willing to purchase cattle. The general consensus is for $1.00 to $2.00 higher, but the market cannot be completely sure at this point. Weekly exports will be an important part of price direction. If these remain low, then there may be more supplies for the domestic market, limiting upward price potential. One thing for sure is that it will be difficult to regain what has been lost over the past week.

Hog futures came to life Thursday, reducing the concern that a top may have been established. The market still has its work cut out in order to reach back to new highs, but Wednesday's action provides hope. Cash was slightly lower with cutouts significantly lower, but the market seemed focused on tightening supplies. The market may have found some minor strength from the increase in China's hog price. Hog prices in the country have been weakening for a period of time potentially as a result of farmers selling due to continued problems with Africa swine fever. With prices turning higher, it could indicate liquidation of the herd is finished, leaving less available pork for their market. This may increase China's appetite for U.S. pork. However, that is a big "if." Projected hog slaughter for Saturday is 77,000 head.

BULL SIDE BEAR SIDE
1) The liquidation over the past week has moved cattle futures into oversold territory, which could increase the interest of traders to re-own futures again due to strong fundamentals. 1)

Weak technical action in cattle futures has gained momentum, which may be difficult to reverse.

2) Feedlots seem to be determined to capitalize on the recent strength of cash and will hold out for higher cash this week. 2) Futures indicate the rise of cash cattle prices might have run its course for the time being. Continued higher feed prices may cause feedlots to market more aggressively.
3) The rebound of hog futures paints a bullish picture for the market. Traders continue to buy the break in anticipation of strong demand both in the U.S. and abroad. 3) The choppy action of cash and cutouts could indicate the market is near a top. Packers are not bidding higher consistently as they once were.
4) Traders are looking past the dip in cash Wednesday and in lower cutouts. The concern of tightening hog numbers is very much of a concern. 4) If the export sales report shows signs of slowing and China is again not in the top three buyers, hog prices may have a difficult time moving back to the highs.



Wednesday, April 14, 2021

Wednesday Closing Livestock Market Update - Cattle Lower as Traders Are Hesitant

GENERAL COMMENTS:

It was a positive day for the lean hog market once again as the futures complex closed higher amid a slightly lower close in pork cutout value. Looking to Thursday's trade, both the cattle and hog markets are anxious to see the week's export report and hope that it can share some positive news. Hog prices closed lower on the National Direct Afternoon Hog Report, down $0.20 with a weighted average of $101.35 on 12,530 head. May corn is up 14 cents per bushel and May soybean meal is up $3.20. The Dow Jones Industrial Average is up 53.62 points and NASDAQ is down 138.26 points.

LIVE CATTLE:

The live cattle contracts continued to trade slightly lower throughout the day, not seeming to find interested traders at this point in the week. With boxed beef prices closing higher and with cash cattle prices expected to be fully higher come Thursday, traders may have a different attitude about the market after they see some more positive developments support the marketplace. April live cattle closed $0.30 lower at $122.10, June live cattle closed $0.87 lower at $120.05 and August live cattle closed $0.72 lower at $120.17. The day came and went without any substantial cash cattle trade developing -- packers were quiet following the online auction and it's looking like feedlots are going to stick to their guns and demand higher prices again this week. There was a small handful of cattle traded in the South for $121 but not enough to say that's where the market will trade this week. With boxed beef prices closing higher, they undoubtedly have every right to ask for more money. Wednesday's slaughter is estimated at 115,000 head, 5,000 head less than a week ago and 25,000 head more than a year ago.

Boxed beef prices closed higher: choice up $2.80 ($272.91) and select up $0.77 ($267.31) with a movement of 108 loads (57.23 loads of choice, 14.92 loads of select, 21.67 loads of trim and 14.51 loads of ground beef).

THURSDAY'S CASH CATTLE CALL: $2.00 higher. Feedlots have waited a long, long time to see the cattle market rally and they by no means are wanting to let this week's opportunity to rally the market come and pass them by. Showlists may be somewhat higher than they were a week ago, but supplies are still tight in Nebraska, and with beef demand continuing to be strong, they should be able to move the market beyond steady.

FEEDER CATTLE:

The feeder cattle contracts didn't stand much of a chance at trading higher as the nearby corn contracts rallied $0.10 to $0.14 higher. April feeder cattle closed $1.30 lower at $141.15, May feeder cattle closed $1.90 lower at $145.42 and August feeders closed $1.45 lower at $156.70.

It's likely that this week's cash cattle trade starts to attract some interest come Thursday and if corn prices don't trade sharply higher, the feeder cattle contracts may be able to rally off their momentum. At Winter Livestock Auction in Dodge City, Kansas, compared to last week, feeder steers weighing 400 to 1,000 pounds sold $4.00 to $8.00 lower. Feeder heifers weighing 400 to 925 pounds also sold $4.00 to $8.00 lower. Demand was moderate throughout the sale but not as strong as last week. Slaughter cows sold $2.00 to $4.00 lower and slaughter bulls sold $2.00 to $3.00 higher. The CME Feeder Cattle Index for April 13: down $0.10, $143.56.

LEAN HOGS:

The maintenance that is needing tended to in pork plants is putting a damper on this week's overall slaughter volume, as both Monday's and Tuesday's slaughter speeds have been revised lower and Wednesday's slaughter was stated lower from the get-go. Slower chain speeds never come as a positive gesture to producers, but packers will most certainly appreciate this opportunity to continue to buy in the cash market but not have to bump prices higher. Looking to Thursday's trade, producers are hopeful that Thursday's export report will be fruitful and will be another positive boost to the market. June lean hogs closed $1.52 higher at $107.70, July lean hogs closed $1.05 higher at $105.37 and August lean hogs closed $0.52 higher at $100.80. Pork cutouts totaled 324.44 loads with 284.45 loads of pork cuts and 39.99 loads of trim. Pork cutout values: down $2.40, $110.09. Wednesday's slaughter is estimated at 480,000 head, 14,000 head less than a week ago and 45,000 head more than a year ago. Tuesday's hog slaughter was revised to 484,000 head. The CME Lean Hog Index for April 12: up $0.49, $102.38.

THURSDAY'S CASH HOG CALL: Steady to somewhat lower. With production running at a slightly lower pace, packers may take this opportunity to continue to buy a large number of hogs in the cash market but not necessarily move prices higher as time gives them some opportunity.




Wednesday Midday Livestock Market Summary - Cattle Contracts Feeling Pressured

GENERAL COMMENTS:

The cattle contracts are faced with the same pressure that Tuesday posed as the corn market traders higher and the cash cattle market is waiting the week out, hoping to muster higher prices again this week. Meanwhile, the lean hog contracts are trading higher and are looking to keep these positive gains, hopefully through the day's close. May corn is up 15 1/4 cents per bushel and May soybean meal is up $2.70. The Dow Jones Industrial Average is up 207.21 points and NASDAQ is down 25.55 points.

LIVE CATTLE

The live cattle complex is caught trading lower as the market neglects to find any interest from traders at this point in the day. April live cattle are down $0.22 at $122.17, June live cattle are down $0.57 at $120.32 and August live cattle are down $0.60 at $120.30. The online auction didn't summon any reasonable bids from packers and the countryside still sits quietly without bids having surfaced as of yet. Feedlots know that if they want higher prices this week, it's going to be by patiently waiting and drawing the week's trade out until Thursday or Friday. Asking prices in the South are marked at $125 and in the North from $200 to $205. Packers could begin to show more interest as the day rolls into the afternoon.

The Fed Cattle Exchange Auction listed a total of 3,966 head (Nebraska 2,067 head, Texas 1,862 head and 37 head in Kansas), of which none actually sold as they did not meet the reserve prices that ranged from $122 to $128. Opening prices ranged from $120.50 to $128; high bids ranged from $120.50 to $126.

Boxed beef prices are higher: choice up $2.18 ($272.29) and select up $1.36 ($267.90) with a movement of 75 loads (39.10 loads of choice, 10.77 loads of select, 16.01 loads of trim and 9.46 loads of ground beef).

FEEDER CATTLE

As corn prices keep scaling higher the feeder cattle contracts are feeling pretty doom and gloom as input costs are sucking profits away rather quickly from feedlots' bottom line. April feeders are down $1.25 at $141.20, May feeders are down $1.55 at $145.77 and August feeders are down $1.52 at $156.62. Technically speaking, the feeder cattle contracts have plenty of room for opportunity and upside potential, the market's ability to trade higher is only going to surface if pressure from higher inputs lessens or if cash cattle begin to trade higher again this week.

LEAN HOGS

While the cattle contracts are floundering lower, the lean hog contracts are determined to keep their upward surge. June lean hogs are up $0.65 at $106.87, July lean hogs are up $0.32 at $104.60 and August lean hogs are steady at $100.25. The cash hog market may be slightly lower, but cutouts are still showing favorable demand. There has been some maintenance issues at pork plants this week, which is accredited to Monday's revised slaughter. The slightly weaker slaughter isn't expected to be great enough to backup hog supplies, but it could slow packer aggression in the cash market until plants are back to full capacity.

The projected lean hog index for April 13 is up $0.32 at $102.69, and the actual index for April 12 is up $0.48 at $102.37. Hog prices are lower on the National Direct Morning Hog report, down $0.22 with a weighted average of $99.74, ranging from $97.00 to $103.00 on 6,365 head. Pork cutouts total 174.67 loads with 159.94 loads of pork cuts and 14.73 loads of trim. Pork cutout values: up $0.76, $113.25.




Wednesday Morning Livestock Market Update - Market Uncertainty Remains Prevalent

GENERAL COMMENTS:

Cattle futures do not look healthy after the past few days and especially since June and August contracts closed below support of the 20-day moving average. Traders have not found a reason to step back into the market. Boxed beef was mixed, providing some cause for concern. It is unclear what bids and offers will be posted for cash, but these should surface Wednesday. Feedlots are a bit unnerved by the substantial decline of futures after the strong increase of cash last week. Feedlots will ask higher prices, but will they receive them? Packers are hoping to see some interest in selling at last week's prices or only $1.00 or $2.00 higher rather than a repeat of last week. Packers will need to purchase cattle as demand remains strong even though boxed beef settled mixed Tuesday. The strong increase of corn prices Tuesday may keep feedlots interested in moving cattle rather than play the waiting game.

Hog futures moved on both sides of unchanged Tuesday uncertain of which direction it should take. Futures could not muster enough buying interest to regain what was lost on Monday. Higher cash and a strong increase of cutouts Tuesday provided support to keep further liquidation at bay. The trend remains up, but the market may have a difficult time moving back to making new highs again during the rest of the week. The market is far from gloom and doom as packers remain aggressive. China imported 1.02 million tons of pork in March, which is the highest amount since January 2020. Continued strong exports sales reports will be necessary to keep support under the market and keep the trend higher. Hog supplies are expected to tighten as the year progresses, but any slowing of exports could put more supply on the domestic market.

BULL SIDE BEAR SIDE
1)

Cash cattle are expected to trade higher this week with business later in the week potentially increasing price potential.

1)

Cattle futures still have not been able to find a bottom. Higher grain prices continue to exert downward pressure.

2)

Fundamentals have not changed, and packers need to purchase cattle. Strong demand needs to be satisfied.

2) It is becoming more expensive to feed cattle and feedlots will want to remain current. This could increase their anxiousness to sell.
3)

Hogs were able to reject lower trade Tuesday generally closing higher. This should give traders some confidence to buy the break.

3) Any further weakness in hog futures could trigger further selling as technical support might be penetrated. The price gap in June is about $3.00 lower and could be filled.
4) Higher cash and strong cutouts should provide solid support. The trend remains up. 4)

A top might have been reached and futures could chop sideways for the time being as traders assess the overall market balance.




Tuesday, April 13, 2021

Tuesday Closing Livestock Market Update - Cattle Look for Direction, Hogs Keep Scaling Higher

GENERAL COMMENTS:

The day came and went without a whole lot of new developments affecting the livestock complex. The lean hog market was able to rally support and saw gains throughout both the cash market and in the day's cutout value, but the cattle contracts weren't as fortunate. Hog prices closed higher on the National Direct Afternoon Hog Report, up $1.01 with a weighted average of $101.55 on 9,470 head. May corn is up 11 cents per bushel and May soybean meal is down $6.90. The Dow Jones Industrial Average is down 68.13 points and NASDAQ is up 146.11 points.

LIVE CATTLE:

The live cattle market had a dreary day as the future contracts traded lower and boxed beef prices closed mixed. April live cattle closed $0.32 lower at $122.40, June live cattle closed $1.17 lower at $120.92 and August live cattle closed $1.05 lower at $120.90. The market's weaker trade doesn't come as a grappling surprise as traders are curious as to how this week's cash cattle market is going to pan out and need assurance that the market is indeed going to strengthen before they push the futures market higher. Will it be steady? Will it be $1.00 to $2.00 higher? Or will it come crashing into the week and shock us all at $4.00 higher? Time will certainly tell, but given that boxed beef prices are trading steady, $1.00 to $2.00 higher is the best guess as packers still need cattle but their willingness to throw more coin at the market is going to be less fun for them given the weaker choice cut prices. Tuesday's slaughter is estimated at 116,000 head, 4,000 head less than a week ago and 21,000 head more than a year ago. The Texas Cash Pool sold 689 head at $121.51, other packers offered bids of $119.11 and $120.55.

Boxed beef prices closed mixed: choice down $1.30 ($270.11) and select up $0.38 ($266.54) with a movement of 125 loads (74.53 loads of choice, 16.46 loads of select, 8.93 loads of trim and 25.52 loads of ground beef).

WEDNESDAY'S CASH CATTLE CALL: Higher. Packers are most likely going to offer bids that are steady to see if any feedlots are growing anxious. But if feedlots are able to let time favor their position, there's possibly more money to be had at the later part of the week, if feedlots can turn down packers' early bids.

FEEDER CATTLE:

The feeder cattle contracts sat through a long day of pressure that seemed to linger over the complex throughout the day. April feeders closed $2.05 lower at $142.45, May feeders closed $2.37 lower at $147.32 and August feeders closed $2.42 lower at $158.15. Without any support stemming from the live cattle contracts, and with added pressure building from the rallying corn prices, the feeder cattle contracts really had no other option but to trade lower. If later in the week corn prices can stabilize and cash cattle can give the live cattle market a gust of support, then the feeder cattle contracts may stand a chance at trading higher again. At Oklahoma National Stockyards in Oklahoma City, Oklahoma, compared to last week, feeder steers sold steady to $1.00 higher, and those weighing over 900 pounds sold upward of $3.00 higher. Feeder heifers traded steady to $2.00 higher. Demand was strong throughout the sale, especially for feeder cattle. Steer calves traded $1.00 to $2.00 lower and heifer calves traded unevenly steady. The CME Feeder Cattle Index for April 12: up $0.30, $143.66.

LEAN HOGS:

The lean hog market was relieved to see pork cutout values close higher and for the day's cash hog market to close notably stronger. We thoroughly understand that given the tight supplies in the hog market that price swings throughout pork cutout values are anticipated, but a day that closes higher is always more warmly accepted than that of a day that closes lower. Monday's cash hog trade was perplexing as volumes were noticeably light but come Tuesday, the cash hog market acted more like its recent self and traded over $1.00 higher on nearly 10,000 head. June lean hogs closed $0.02 higher at $106.17, July lean hogs closed $0.15 lower at $104.32 and August lean hogs closed $0.12 lower at $100.27. Pork cutouts totaled 375.27 loads with 340.80 loads of pork cuts and 34.47 loads of trim. Pork cutout values: up $2.39, $112.49. Tuesday's slaughter is estimated at 476,000 head, 6,000 head less than a week ago and 37,000 head more than a year ago. Monday's hog slaughter was revised to 488,000 head. The CME Lean Hog Index for April 9: up $0.52, $101.89.

WEDNESDAY'S CASH HOG CALL: Steady to somewhat higher. Seeing that packers were aggressive in Tuesday's cash hog market is a good supportive sign for Wednesday's cash hog market, but it will be interesting to see if Tuesday's slaughter is revised as Monday's slaughter was.




Tuesday Midday Livestock Market Summary - Cattle Futures Lack Support

GENERAL COMMENTS:

The cattle futures are having another bearish day, but the lean hog market is back to its upward trend. With corn prices trading higher, the feeder cattle contracts are on edge as rising input costs aren't what their bottom line likes to see. May corn is up 12 3/4 cents per bushel and May soybean meal is down $5.40. The Dow Jones Industrial Average is down 151.59 points and NASDAQ is up 81.20 points.

LIVE CATTLE:

Live cattle futures are continuing to scale lower in the same lackadaisical manner as Monday's trade. April live cattle are down $0.12 at $122.60, June live cattle are down $0.75 at $121.35 and August live cattle are down $0.72 at $121.22. There may be more cattle on this week's showlists, but that isn't an alarming concern given the fact that packers need cattle to keep up with demand. If cash cattle prices can trade higher again this week, this will be the fifth consecutive week in a row of higher prices. Prices may not be as sharply higher as last week's advancement, but somewhere around $2.00 higher isn't out of the equation. The countryside is still quiet without any bids having developed. Asking prices are starting to develop in the South at $125 plus and the North has yet to share their asking prices for the week.

Boxed beef prices are mixed: choice down $1.60 ($269.81) and select up $0.74 ($266.90) with a movement of 90 loads (53.90 loads of choice, 11.75 loads of select, 4.45 loads of trim and 20.04 loads of ground beef).

FEEDER CATTLE:

With corn futures making a swing at regaining what Monday lost and adding some to the complex, the feeder cattle contracts are having a depressed day as inputs are rising and the live cattle market isn't showing any support for the contracts to rally upon. April feeders are down $0.75 at $143.75, May feeders are down $0.92 at $148.77 and August feeders are down $1.37 at $159.20. The feeder cattle contracts are caught in the middle of absorbing what the corn market does all while trying to balance the developments in the cash cattle and live cattle markets. At this point, the market hasn't given the feeder cattle complex much hope in trading higher but higher cash cattle prices later in the week could spark some positivity.

LEAN HOGS:

Lean hog futures are back to trading higher after a doggish Monday. With the April contract set to expire Thursday, the market is looking to June and July to better gauge trader interest and market direction. Like we chatted about earlier, with supplies tightening, the choppy price variations in the pork cutout value is expected and most certainly evidenced in Thursday morning's $5.36 increase compared to Monday's $3.83 decrease. With demand still showing heightened interest and supplies continuing to tighten, these types of swings are expected to continue.

The projected CME Lean Hog Index for 4/12/2021 is up $0.48 at $102.37, and the actual index for 4/9/2021 is up $0.52 at $101.89. Hog prices are higher on the National Direct Morning Hog Report, up $0.39 with a weighted average of $99.96, ranging from $97.00 to $102.50 on 3,080 head and a five-day rolling average of $99.01. Pork cutouts total 236.03 loads with 212.10 loads of pork cuts and 23.93 loads of trim. Pork cutout values: up $5.36, 115.46.




Tuesday Morning Livestock Market Update - Traders May Buy the Break

General Comments:

There really was no surprise in live cattle futures as the market followed through from Friday. Tuesday will be critical technically. A break below support at the 20-day moving average could trigger further liquidation despite strong underlying cash support. One has to wonder why futures could not "catch" and trade higher when boxed beef prices increased nicely again. It is clearly evident that strong demand has not run its course. The chart action is almost identical to price action on March 18 and 19. The liquidation phase due in part by an overbought market may have run its course. The key will be whether trades will step back in to buy. The strong potential for higher cash and continued strong boxed beef should provide traders with the confidence the market has more upside. The Commitment of Traders report showed funds were net buyers of 8,647 contracts increasing their net-long positions to 91,884 contracts.

April, May and June hog contracts made new highs Monday. May and June quickly became the victims of aggressive selling posting triple-digit losses along with the other contracts through the end of the year. April closed higher as it remains close to cash with three days left to trade. Even with significant losses, the trend is still up as there was no breech of the trend line. This is another healthy correction to a bullish market. The selling was technical in nature, not fundamental. Cash was higher Monday, but cutouts slipped lower, but not enough to cause concern. The Commitment of Traders report showed funds as net sellers of 1,179 contract reducing their net-long positions to 76,933 contracts.

BULL SIDE BEAR SIDE
1)

After two days of liquidation, traders should be interested in buying futures due to bullish underlying fundamentals.

1) The break in live cattle futures may not yet be sufficient for traders to buy the market for the long haul. It may take a test of price support to generate aggressive buying.
2) Cattle futures did not penetrate support, keeping the uptrend intact. Feeder cattle futures closing higher Monday might lend a helping hand to live cattle contracts Tuesday. 2) The anticipation is for higher cash cattle this week, but the break in futures could leave packers less aggressive until they see the strength or weakness of boxed beef and weekly exports.
3)

Hog futures closed above the steep uptrend line, which should provide confidence to traders to buy this break. Overall fundamentals have not yet changed.

3)

It is possible the price correction of hog futures has further to go before the selling runs its course. Liquidation generally runs two to three days.

4) The action Monday relieves an overbought market. Traders may rebuy the break or add to already long positions. 4)

Weaker pork cutouts could indicate a slowing of demand. Traders may not be quick to buy into the market unless a strong increase of cutout prices are seen. 




Monday, April 12, 2021

Monday Closing Livestock Market Update - Contracts Lack Technical Support

GENERAL COMMENTS:

It was a mixed day for the livestock complex as the feeder cattle market closed higher but both the live cattle and lean hog contracts closed slightly lower. As traders look at the marketplace, they want to see strong fundamental backing before they help move the market any higher and risk their own positions. Hog prices closed higher on the National Direct Afternoon Hog Report, up $0.33 with a weighted average of $100.54 on 5,108 head. May corn is down 8 1/4 cents per bushel and May soybean meal is up $0.70. The Dow Jones Industrial Average is down 55.20 points and NASDAQ is down 50.18 points.

LIVE CATTLE:

It was a tough day for the live cattle contracts as the market aspired to trade higher but simply couldn't find the technical backing to do so. After rolling out of last week's stellar cash cattle market, feedlots are anxious to see the same kind of rally in this week's market but know that stronger prices are usually summoned with a healthy dose of patience. April live cattle closed $0.70 lower at $122.72, June live cattle closed $0.47 lower at $122.10 and August live cattle closed $0.45 lower at $121.95. The cash cattle market was quiet but that's expected for Monday. Looking to the later part of the week, packers will start to show some interest in cattle, and if boxed beef prices can keep a steady to somewhat higher progression, then packers will most likely be willing to pay more as their profit levels continue to be supported by end-consumers. Monday's slaughter was disappointing in its volume, as the day's slaughter is estimated at 112,000 head, 7,000 head more than a week ago and 24,000 head more than a year ago.

Boxed beef prices closed mixed: choice down $0.76 ($271.41) and select up $2.09 ($266.16) with a movement of 112 loads (68.75 loads of choice, 9.56 loads of select, 22.07 loads of trim and 11.45 loads of ground beef).

TUESDAY'S CASH CATTLE CALL: HIGHER. With supplies tight due to the oddity of placements last year, the cash cattle market has a window of opportunity as demand is strong and supplies are tight for this time.

FEEDER CATTLE:

Before Monday closed, the feeder cattle contracts fought vigorously to trade higher and felt like the day was going to be wasted if they didn't close higher amid the lower prices seen in the corn market. Feeder cattle contracts could have closed stronger if the live cattle market would have been supportive in its trade, but without seeing higher live cattle prices the feeder cattle contracts felt best playing the day safe and closed only modestly higher. April feeders closed $0.25 lower at $144.50, May feeders closed $0.07 higher at $149.70 and August feeders closed $0.62 higher at $160.57. On Friday at Ft. Pierre, South Dakota, compared to the previous sale, steers weighing 450 to 699 pounds sold $4.00 to $6.00 stronger and steers weighing 700 to 849 pounds sold steady to $2.00 higher. Feeder heifers weighing 500 to 749 pounds sold $2.00 to $4.00 stronger. The sale saw strong demand throughout the day's offering and buyers were aggressive on all the lots from lighter weight grass cattle to heavier, hay fed calves; buyers were lined up and willing to buy whatever came through the ring. The CME Feeder Cattle Index for April 9: up $1.45, $143.36.

LEAN HOGS:

The lean hog complex didn't have a rip-roaring Monday but, in past weeks, traders have been hesitant to support the complex too much before seeing where the market's fundamentals point to early in the week. The cash hog market closed higher yet again and the day's slaughter was aggressive, but both were also accompanied by a weaker pork cutout close. As the market tries to balance limited supplies and stellar demand, seeing these type of price swings isn't necessarily unusual and will most likely be how the market continues to trade given the circumstances of tight supplies and limited volumes. Meanwhile, the lingering question still floats all throughout the marketplace, where is the top? And how will the market trade after the top is established? Pork cutouts totaled 289.15 loads with 261.62 loads of pork cuts and 27.53 loads of trim. Pork cutout values: down $3.07, $110.10. Monday's slaughter is estimated at 494,000 head, 169,000 head more than a week ago and 188,000 head more than a year ago. Friday's hog slaughter was revised to 468,000 head and Saturday's hog slaughter was revised to 184,000 head. The CME Lean Hog Index for April 8: up $0.43, $101.37.

TUESDAY'S CASH HOG CALL: Steady to somewhat higher. With supplies being as tight as they are, packers will most likely continue to support the cash market as securing inventory remains crucial.




Monday Midday Livestock Market Summary - Contracts Meet With Indecisiveness

GENERAL COMMENTS:

It's been a back-and-forth day already for livestock futures as traders are waiting to see how the fundamentals pan out before rallying the contracts any higher. The markets still stand a strong chance at trading higher, especially if feedlots wait until later in the week to market their cattle. This week's cash cattle market is expected to be higher again. May corn is down 6 cents per bushel and May soybean meal is down $0.80. The Dow Jones Industrial Average is down 38.10 points and NASDAQ is down 43.18 points.

LIVE CATTLE:

Live cattle futures are battling the same indecisive pressure the rest of the livestock contracts are. If the market can get its bumps worked out early this week there's a strong likelihood we will be able to trade higher later in the week when cash cattle trade gets more aggressive and if boxed beef prices keep trading higher, which is highly anticipated. April live cattle are down $0.25 at $123.17, June live cattle are down $0.10 at $122.50 and August live cattle are down $0.17 at $122.22. Looking at the week ahead, the market stands a phenomenal chance of seeing robust cash cattle trade again this week. New showlists appear to be mixed, somewhat higher in Kansas, higher in Texas, but somewhat lower in Nebraska. As evidenced again last week, the market offered the strongest cash cattle prices late in the week, so one may consider pushing past Wednesday's trade and waiting for Thursday or Friday before getting serious about selling pens of cattle as supplies favor feedlot positions.

Last week's negotiated cash cattle trade totaled 108,513 head. Of that 70% (75,474 head) were committed for delivery in the next two upcoming weeks, while the remaining 30% (33,039 head) are scheduled for delivery in the following 15 to 30 days.

Boxed beef prices are mixed: choice down $1.34 ($270.83) and select up $1.20 ($265.27) with a movement of 53 loads (31.79 loads of choice, 4.15 loads of select, 14.39 loads of trim and 2.38 loads of ground beef).

FEEDER CATTLE:

Feeder cattle futures traded all across the board Monday morning as the complex fights itself and the signals its being given from the other markets as to where it should trade. The corn market is giving the feeder cattle contracts a break as the corn contracts trade slightly lower. But without like-minded, rallying support from the live cattle contracts the feeder cattle contracts feel uneasy about the day. April feeders are down $0.32 at $144.42, May feeders are up $0.27 at $149.90 and August feeders are up $0.45 at $160.40.

LEAN HOGS:

Lean hog futures have traded much like both the live and feeder cattle contracts -- for a little while the complex will feel confident and trade higher; but then in a matter of minutes the contracts are back to trading lower as traders are uncertain. June lean hogs are down $1.57 at $107.37, July lean hogs are down $1.27 at $105.52 and August lean hogs are down $0.77 at $101.65. Looking at the market's fundamental support, I'm glad to see packers supporting the morning cash hog market, but it will be important to watch and see how many hogs trade by this afternoon's close as 2,953 head is a slim movement.

The projected CME Lean Hog Index for 4/9/2021 is up $0.52 at $101.89 and the actual index for 4/8/2021 is up $0.43 at $101.37. Hog prices are higher on the National Direct Morning Hog Report, up $0.92 with a weighted average of $99.57, ranging from $98.62 to $102.50 on 2,953 head and a five-day rolling average of $98.67. Pork cutouts total 123.76 loads with 111.89 loads of pork cuts and 11.87 loads of trim. Pork cutout values: down $3.83, $109.34.




Monday Morning Livestock Market Update - A Cautious Start to the Week

General Comments:

Cattle futures came under pressure Friday partly as a delayed reaction to another week of slower exports, partly due to it being a Friday and partly due to the market in need of a price correction to relieve the overbought technical status. However, overall beef exports remain good with cumulative exports so far this year 89,425 metric tons (mt) higher than the same period last year reaching 459,439 mt. Looking back through the week, there was no reason for futures to decline on Friday as much as they had, or if at all. But such is the nature of the market. The key this week will be if traders will buy back into the weakness and if cash prices will trade higher. The anticipation is that higher cash is almost assured due to strong demand. Cutouts rocketed higher last week, causing packers to aggressively raise bids to procure needed cattle. That is not expected to change this week as demand seems to be red hot. There is no reason last week's strength should not carry over into this week. Cash cattle were traded earlier last week than usual, and I expect the same this week as packers will likely raise bids early to get cattle to fill demand.

Hogs did not feel the pressure from cattle. They held their own with most contracts posting higher prices. Thursday is the last trading day for April hogs with futures holding right in line with cash. May 2021 through April 2022 futures again made new contract highs Friday with the exception of August. August seems to have been the victim of spread trading and has not been able to make a new contract high since April 1. There is no other reason the contract should be lagging the others. The National Direct price moved higher Friday with cutouts showing an impressive gain. Hogs supplies are expected to tighten, keeping packers aggressive now as long as profits are good.

BULL SIDE BEAR SIDE
1) Strong boxed beef prices last week were not just a flash in the pan. Demand is building and packers need to aggressively own cattle. 1) A price correction many times lasts for two to three days. Friday was day one with Monday potentially seeing more weakness if that pattern holds.
2)

The large decline of futures Friday took away about a week's worth of gains, but it has not broken support or changed the trend. Traders may buy the break.

2) Weakness of futures could cause packers to pull back on bidding aggressively waiting to see if further losses are possible.
3)

Hog futures continue to make new highs with no underlying reason to change that pattern. The market is concerned about tightening supply.

3)

Hog futures remain extremely overbought with any negative news potentially triggering a sell-off.

4)

Demand has not reached price resistance yet and packers remain aggressive. As long as it continues, higher prices will continue.

4) It is too early to tell of China will back away from the export market further. They were not in the top three buyers last week. If they reduce imports of pork, domestic supplies could grow.