Subscribe for Updates!

Enter your email address:

Delivered by FeedBurner

Friday, January 29, 2021

Friday Closing Livestock Market Update - Cash Cattle Finally See Significantly Higher Prices

GENERAL COMMENTS:

The cattle contracts sank lower before Friday's close, but the cash cattle market didn't squander the opportunity to still trade higher. Meanwhile, the lean hog contracts closed mixed with strong pork cutout values helping keep some of the contracts elevated through closing. Hog prices closed lower on the National Direct Afternoon Hog Report, down $0.23 with a weighted average of $56.78. March corn is up 12 1/2 cents per bushel and March soybean meal is up $3.90. The Dow Jones Industrial Average is down 620.74 points and NASDAQ is down 266.47 points.

From Friday to Friday livestock futures scored the following changes: February live cattle down $1.68, April live cattle down $0.67; March feeder cattle down $6.43, April feeder cattle down 5.38; February lean hogs down $0.13, April lean hogs up $0.50.

LIVE CATTLE:

There's no better way to round out the week than with a bullish Cattle Inventory report, and with significantly stronger cash cattle prices. The futures market closed modestly lower Friday afternoon as traders avoided the cattle contracts, unsure if their positions would be secure if the contracts went much higher. February live cattle closed $0.95 lower at $115.05, April live cattle closed $0.85 lower at $141.85 and June live cattle closed $1.22 lower at $117.60. Even though the futures market hit a lull, the cash market and boxed beef prices continues to trail higher through the week's close. This week's cash cattle trade was only lightly tested as packers tried to avoid higher cash cattle prices at all costs. Packers dipped into the slaughter cow and bull market aggressively in efforts to lessen their need of cash cattle. Oklahoma reported slaughter cows $6.00 to $10.00 higher and bulls $2.00 higher. But even with buying slaughter cows and bulls, live cattle prices in the South jumped $3.00, averaging $113, and Northern dressed cattle traded $5.00 higher at $178.

Friday's slaughter is estimated at 120,000 head, 1,000 head more than a week and year ago. Saturday's slaughter is projected to be around 62,000 head.

Friday's Cattle Inventory report thankfully shared more bullish news that favors cattle producers. All cattle and calves in the United States as of Jan. 1, 2021, totaled 93.54 million head, which is down slightly from the 93.79 million head from Jan. 1, 2020. Even more importantly to cattle producers across the U.S. is that beef cows totaled 31.15 million head, down 1% from a year ago. This adds strength to the long-term trajectory of the cattle market as fewer cows yield fewer calves, which ultimately means that producers could potentially see greater returns with less supply pressure on the market.

It was another stellar week for boxed beef prices! For the week, choice cuts jumped $11.19 to average $230.28, and select cuts jumped $10.58 to average $219.22 and the week's total movement of cuts, grinds and trim totaled 528 loads.

Boxed beef prices closed higher: choice up $1.96 ($233.95) and select up $1.82 ($222.70) with a movement of 75 loads (47.44 loads of choice, 7.02 loads of select, 13.85 loads of trim and 6.26 loads of ground beef).

MONDAY'S CASH CATTLE CALL: Higher. It's unlikely that packers will jump into the cash cattle market as early as Monday, but with sale reports still being light for the week, packers are mostly likely going to have to support the cash cattle market again next week in order to secure enough cattle.

FEEDER CATTLE:

As the nearby corn contracts kept their $0.11 to $0.12 gains through closing, the feeder cattle contracts were pressured to trade sharply lower. March feeder cattle closed $2.07 lower at $137.72, April feeder cattle closed $1.92 lower at $140.75 and May feeders closed $2.00 lower at $142.37. Looking to next week's trade, if corn prices continue to rally the feeder cattle contracts will be pressured to continue to trade lower. With the strong gains seen through this week's cash cattle market, and with seeing lighter receipts no longer pressuring sale barns throughout the countryside, the feeder cattle contracts will be given mixed signals. The complex will have to continue to manage the rising cost of inputs, all while balancing strong demand from auctions. Oklahoma's Weekly Summary shared that, throughout the state, compared to last week, steer calves sold steady to $3.00 higher and heifer calves sold steady to $4.00 higher, and feeder heifers sold steady to $3.00 higher. Slaughter cows sold mostly steady to $6.00 higher with instance of $7.00 to $10.00 stronger, and slaughter bulls sold $2.00 higher. Packer interest was extremely aggressive this past week for slaughter cows and bulls compared to weeks past. The CME feeder cattle index for Jan. 28: up $0.68, $136.02.

LEAN HOGS:

The lean hog contracts closed mixed as some nearby contracts were able to defend their stronger positions through closing. February lean hogs closed $0.15 lower at $69.80, April lean hogs closed $0.27 higher at $76.65 and June lean hogs closed $0.45 higher at $87.30. Largely throughout the week both pork cutout values and a slightly stronger cash market helped encourage the market to keep trading positive. Friday's afternoon cash prices aren't that surprising as packers look to the weekend and would prefer to buy more hogs next week rather than to carry them over and pay more now. Pork cutouts totaled 245.28 loads with 216.38 loads of pork cuts and 28.90 loads of trim. Pork cutout values: up $1.87, $85.36. Friday's slaughter is estimated at 487,000 head, 3,000 head less than a week ago and 4,000 head more than a year ago. Saturday's slaughter is projected to be around 249,000 head. The CME lean hog index for Jan. 27: up $0.34, $67.29.

MONDAY'S CASH HOG CALL: Steady. It was a good week for the cash hog market and heading into next week, if pork cutout values keep trading higher, packers may continue to show buying aggression.





Friday Midday Livestock Market Summary - Feedlots Aren't Weak at Heart and Want More Money

GENERAL COMMENTS:

While cattle contracts are met with mixed signals from the futures market, lean hog contracts are happy to trade mostly higher and hope to keep the board's support, higher cash prices and strong cutout values through the afternoon. Feedlots and packers are still going rounds, as feedlots want more for their cattle and packers are trying to avoid paying their full asking prices this week at all costs. March corn is up 14 1/4 cents per bushel and March soybean meal is up $1.50. The Dow Jones Industrial Average is down 548.89 points and NASDAQ is down 221.52 points.

LIVE CATTLE:

The last time live cattle traded for more than $112 was over seven months ago; you better believe feedlots are ready to see stronger cash cattle prices and are willing to wait as long as it takes to see the market get where it needs to be. Live cattle futures have traded mixed throughout Friday morning. Earlier in the day, traders showed some slight interest in the complex. But, nearing the noon hour, most live cattle contracts are lower. February live cattle are down $0.17 at $115.82, April live cattle are up $0.27 at $112.97 and June live cattle are up $0.15 at $118.97. Feedlots would obviously like to see the board trade higher as Friday has rolled around and still the cash cattle market has only been lightly tested. But with boxed beef prices continuing to trail higher, feedlots have the support they need to summon stronger cash cattle prices.

Just minutes ago, there were a few cattle traded in Texas for $113, which is $3.00 higher than a week ago. But the rest of the countryside is still holding out. Asking prices in the South remain firm at $114 to $116 and $182-plus in the North.

In a couple hours the industry will get to see the latest Cattle Inventory Report. Bullish numbers are expected to be reported, which will add more gusto to both the live cattle and feeder cattle markets.

Boxed beef prices are higher: choice up $1.91 ($233.90) and select up $1.55 ($222.43) with a movement of 36 loads (19.99 loads of choice, 5.21 loads of select, 7.16 loads of trim and 3.79 loads of ground beef).

FEEDER CATTLE:

As the corn market scales to nearby gains -- 12 to 13 cents higher -- feeder cattle contracts readjusted to lower ranges, feeling the pressures of rising feed costs once again. March feeders are down $.10 at $139.70, April feeders are down $0.10 at $142.57 and May feeders are down $0.32 at $144.05. Auctions this week have started to see lighter sale receipts, which has helped take some of the supply pressure off the feeder cattle market. The large runs earlier in January were largely anticipated as a lot of producers carried calves over from earlier this fall. But having to market them in a short time period can create pressure in and of itself.

LEAN HOGS

The spot February lean hog contract continues to face opposition, but the rest of the nearby contracts are happy to trade modestly higher. This week's support from both the cash market and from pork cutout values has really helped keep the board from trailing lower as outside markets trade in uncertainty and the lean hog contracts face new highs and long-term resistance levels. February lean hogs are down $0.02 at $69.92, April lean hogs are up $0.77 at $77.15 and June lean hogs are up $0.97 at $87.82.

The projected lean hog index for 1/28/2021 is up $0.12 at $67.41 and the actual index for 1/27/2021 is up $0.33 at $67.29. Hog prices are higher on the National Direct Morning Hog Report, up $0.20 with a weighted average of $56.48, ranging from $53.00 to $56.63 on 3,370 head and a 5-day rolling average of $56.09. Pork cutouts total 148.80 loads with 137.44 loads of pork cuts and 11.36 loads of trim. Pork cutout values: up $2.11, $85.60.




Friday Morning Dairy Market Update - Traders Optimistic Over Cash

General Comments:

On occasion, significant cattle business is put off until the last day of the week at which time a flurry of activity takes place. This is one of those weeks. Feedlots have been holding out for packers to put some higher digits on their bids. Bids have been hovering around $112 while futures show $4.00 higher. This has been giving feedlots the resolve to hold out in the anticipation buyers will be more aggressive as they need to procure cattle for processing. Trade is not expected to take place all the way up to $116, but likely some middle ground will be found. The fact that boxed beef gained significantly Thursday should increase the desire to increase bids to obtain the cattle to meet demand. Technically, cattle are overbought, and any weakness of fundamentals could trigger futures selling. The Cattle Inventory report will be released Friday, which may not have a large influence on trading.

Hog futures are rolling over, relieving an overbought market situation. Weights are higher than a year ago, putting more pork in the market, yet weights have recently been decreasing from the beginning of the year. Strong exports and December cold storage are showing strong demand with belly stocks substantially lower than a year ago, which should keep support under the market. Analysts have been talking about large pork supplies for quite some time, but April hogs are near the highest prices since mid-November 2019. Supply is being absorbed without difficulty.

BULL SIDE BEAR SIDE
1) Bids are expected to be raised Friday in order to purchase needed supply to keep plants operating at steady speeds. Feedlots want to sell but are holding out for higher prices. 1)

Although packers may raise their bids, the premium of futures to cash may be a bit too much for the time being. There is no shortage of beef for the market.

2)

Strong boxed beef prices should add to the urgency of buyers to purchase cattle as packing plants want to take advantage of better margins.

2)

The recent surge of futures seems to have run its course. If the Cattle Inventory report shows more cattle than a year ago and weights continue to remain higher, traders may sell the market.

3)

A stronger cash market has pushed futures significantly higher as fundamentals remain supportive. Packers will want to take advantage of current pork demand.

3)

Hog futures posting lower highs and lower lows Thursday may increase short-term selling interest into the weekend.

4) Technically, hog futures have relieved an overbought market and are now ready to resume the uptrend as cash news remains mostly positive. 4)

The potential slowing of demand for pork to China will be a cloud that will remain over this market. This could trigger selling at any time if there is an indication of exports declining. Domestic demand would not be able to absorb the increased supply at current prices.




Thursday, January 28, 2021

Thursday Closing Livestock Market Update - Lack of Trader Interest Leaves Contracts Closing Lower

GENERAL COMMENTS:

Thursday's trade wasn't anything the livestock contracts got excited about as the market faced minor losses due to the fact that traders have grown leery of pushing the market too much higher, even though the market's fundamentals are still strong. Hog prices closed higher on the National Direct Afternoon Hog Report, up $0.26 with a weighted average of $57.01 on 7,350 head. March corn is up 1/2 cent per bushel and March soybean meal is down $9.50. The Dow Jones Industrial Average is up 300.19 points and NASDAQ is up 66.56 points.

LIVE CATTLE:

Thursday's live cattle contracts faced modest opposition like the rest of the livestock sector. Traders are wanting to see how much short-term upside potential the market has before continuing to invest and risking their position. February live cattle closed $0.45 lower at $116.00, April live cattle closed $0.07 higher at $122.70 and June live cattle closed $0.22 higher at $118.82. The intense market to watch this week is the cash cattle market. Feedlots look at the February contract, see it trading upward of $116, all while continuing to hear bids of $112 hit the table, and by no means are feedlots getting in a rush to dump their pens. The market's real opportunity is obviously going to come with time, and feedlots know that, with boxed beef prices as high as they are, packers want to be processing cattle. So once again, the cattle market sits patiently and waits for cattle to trade. And it would be a shame if we didn't applaud feedlots in their marketing efforts this week. There's been some light trade in Iowa and in Kansas but not nearly enough to establish even a slight trend for the week. Thursday's slaughter is estimated at 120,000 head, steady with a week ago and 3,000 head less than a year ago.

In keeping tabs with all that's to develop Friday, the market is also anxious to see the Cattle Inventory report Friday afternoon. Analysts believe that the report will show lighter figures, but by less than 1%. The smaller the cow herd is the more bullish the report will be for the industry.

Thursday's actual slaughter data shared another week of a rigorous slaughter pace, but unfortunately steer carcass weights are still on the rise. For the week ending Jan. 16m the week's actual slaughter totaled 651,879 head. Steer carcass weights averaged 925 pounds (up 2 pounds from the previous week) and heifer weights decreased by a pound to average 850 pounds.

Beef net sales of 28,800 mt reported for 2021, increases primarily for Japan (9,100 mt, including decreases of 600 mt), South Korea (8,100 mt, including decreases of 400 mt), Mexico (3,800 mt, including decreases of 100 mt).

Boxed beef prices closed higher: choice up $2.33 ($231.99) and select up $1.89 ($220.88) with a movement of 110 loads (79.65 loads of choice, 13.31 loads of select, 4.95 loads of trim and 12.06 loads of ground beef).

FRIDAY'S CASH CATTLE CALL: Higher. Come Friday packers will get aggressive with their bids or they will be sent into next week even more hungry for cattle.

FEEDER CATTLE:

The feeder cattle contracts had an uneventful day, not feeling immense pressure from the corn market as it trades on both sides of steady, but rather that overall interest from traders continues to be the dogging factor that's not allowing the market to trade higher. March feeders closed $0.27 lower at $139.80, April feeders closed $0.40 lower at $142.67 and May feeders closed $0.50 lower at $144.37. Truthfully, the market knows that with the strong fundamentals that keep aligning in favor of both the live cattle and feeder cattle markets, higher trade is on the horizon, but putting your finger on when is what's holding traders back. At Winter Livestock Auction in Pratt, Kansas, compared to a week ago, feeder steers weighing 700 to 1,000 pounds sold $3.00 to $7.00 higher. Steer calves weighing 400 to 700 pounds sold $2.00 to $5.00 lower on a light test. Feeder heifers weighing 600 to 900 pounds sold $2.00 lower. Heifer calves weighing 400 to 600 pounds sold $3.00 to $6.00 lower on a light test. Demand was moderate throughout the entire sale. Slaughter cows and bulls sold $3.00 to $8.00 higher. The CME feeder cattle index Jan. 27: up $0.51, $135.34.

LEAN HOGS:

Lean hogs were trading modestly higher throughout most of the contracts before Thursday's noon hour, but as the day traded on through the afternoon traders grew more skeptical and the complex closed mixed. February lean hogs closed $0.62 lower at $69.95, April lean hogs closed $0.07 higher at $76.37 and June lean hogs closed $0.50 lower at $86.85. It was encouraging to see the cash market close higher again Thursday afternoon on 7,530 head and to see Thursday's slaughter be at 495,000 head. As Monday's Cold Storage report was so vividly shared, there's plenty of room for hogs in the coolers and, with the strong export demand that the hog market has seen, packers need to keep processing speeds elevated, which is long-term bullish for hog producers. Pork cutouts totaled 310.98 loads with 260.77 loads of pork cuts and 50.21 loads of trim. Pork cutout values: up $0.18, $81.11. Thursday's slaughter is estimated at 495,000 head, 3,000 head less than a week ago and 4,000 head more than a year ago. The CME lean hog index Jan. 26: up $0.72, $66.95.

Thursday's actual slaughter data shared a respectable slaughter for the week ending Jan. 16 and even better lighter weights for the pork industry. For the week ending Jan. 16, slaughter totaled 2,643,757 head with live weights averaging 295 pounds (down 2 pounds) and dressed weights averaging 221 pounds (down 1 pound).

Pork net sales of 52,900 mt reported for 2021, increases primarily for Mexico (18,900 mt, including decreases of 1,100 mt), China (13,900 mt, including decreases of 1,000 mt), the Philippines (6,000 mt, including decreases of 200 mt).

FRIDAY'S CASH HOG CALL: Steady to somewhat higher. With packers interested in keeping processing speeds elevated, their interest in the cash market will likely continue through the week.




Thursday Midday Livestock Market Summary - Contracts Continue to Trade With Mixed Signals

General Comments

The cautious tone of the marketplace has left the livestock contracts to trade mixed. Fundamentally, the market still stands to trade higher, but the opposition from traders is keeping the market from achieving those goals. The cash cattle market is still quiet; painfully quiet, as feedlots are unwilling to drop their asking prices, knowing all too well that cash prices need to be stronger. March corn is up 3 cents per bushel and March soybean meal is down $7.10. The Dow Jones Industrial Average is up 595.84 points and NASDAQ is up 194.18 points.

LIVE CATTLE

The live contracts are in a position much like the rest of the livestock complex; facing resistance from trading higher as traders are hesitant of the marketplace, but the market's fundamentals keep pointing to higher levels. February live cattle are down $0.35 at $116.10, April live cattle are up $0.22 at $112.85 and June live cattle are up $0.07 at $119.12. With a strong export report accompanied by continued support for the boxed beef market -- feedlots are playing a tough, TOUGH game of hard ball this week and aren't willing to let their cattle go for steady money. Southern feedlots are determined to get $114 to $115 and Northern feedlots have their cattle priced at $182 to $185. There's also been mention that a major feedlot is looking to add to their Saturday kill schedule which, favors feedlots once again. Bids of $112 are offered in Texas, but otherwise the countryside sits idle as feedlots are willing to wait.

Beef net sales of 28,800 metric tons (mt) reported for 2021, increases primarily for Japan (9,100 mt, including decreases of 600 mt), South Korea (8,100 mt, including decreases of 400 mt), Mexico (3,800 mt, including decreases of 100 mt).

Boxed beef prices are higher: choice up $0.98 ($230.64) and select up $2.39 ($221.38) with a movement of 63 loads (39.39 loads of choice, 7.88 loads of select, 4.95 loads of trim and 10.35 loads of ground beef).

FEEDER CATTLE

The feeder cattle contracts are met with mixed support as the contracts trade on both sides of steady. Nearby contracts are finding mild support, which is likely being encouraged by the strong feeder cattle sales throughout the countryside and the strengthening undertone that's begging the cash cattle market to trade higher as well. March feeders are up $0.10 at $140.17, April feeders are down $0.10 at $142.97 and May feeders are down $0.20 at $144.67. Largely, the board continues to trade in the same sheepish manner it presented Wednesday as traders are leery about how much higher they are going to take this market in the near future.

LEAN HOGS

Of all the livestock contracts, the lean hog complex is faring the best with modest support seeming to come to the contracts easily. February lean hogs are down $0.42 at $70.15, April lean hogs are up $0.65 at $76.95 and June lean hogs are up $0.22 at $87.57. With the market's strong export report, higher cash prices and elevated pork cutout values -- by all means the market should encourage higher trade!

Pork net sales of 52,900 mt reported for 2021, increases primarily for Mexico (18,900 mt, including decreases of 1,100 mt), China (13,900 mt, including decreases of 1,000 mt), the Philippines (6,000 mt, including decreases of 200 mt).

The projected lean hog index for 1/27/2021 is up $0.33 at $67.29, and the actual index for 1/26/2021 is up $0.72 at $66.96. Hog prices are higher on the National Direct Moring Hog Report, up $0.42 with a weighted average of $56.28, ranging from $51.00 to $58.00 on 4,440 head and a five-day rolling average of $55.89. Pork cutouts total 139.96 loads with 110.89 loads of pork cuts and 29.07 loads of trim. Pork cutout values: up $3.31, $84.42.




Thursday Morning Livestock Market Update - Cautious Cattle Traders Focus on Firming Cash Cattle Markets

General Comments:

It appears that this is the week to start a cash cattle market rally as feeders continue to aggressively price cattle in order to take advantage of the widespread support seen in futures and boxed beef values over the last couple of weeks. Although the majority of cash cattle still needs to trade in the next two days, the ability to spark limited cash trade in the South at $112 to $113 per cwt is helping to create renewed optimism in the entire complex. Asking prices on cattle remain at $115 and higher in the South and $182 to $184 live basis in the North with the expectation that packer bids will continue to improve through the next day or so. A $3 to $4 per cwt weekly rally in cash values from last week's average is not out of the question, but the higher prices may bring wider trading ranges over the upcoming weeks, which may become more difficult to determine short-term market support. So far, continued strength is seen in boxed beef values, but the inability to hold these gains through early February could quickly cool the optimism in the cattle complex. Moderate midweek pressure developed across all cattle trade Wednesday with feeder cattle futures holding the brunt of market losses. The focus in the feeder cattle market is moving back to the renewed buyer interest developing in corn prices and overall feed costs. The aggressive gains last week across the complex was sparked by aggressive price pressure in corn trade. But given renewed active buying in the corn market by noncommercial traders and a large export sale to China early in the week, corn prices are once again testing market highs. This will continue to put increased pressure on feeder cattle prices based on higher feed and production costs. Technical and fundamental factors still remain bullish in live cattle futures, but traders have started to slowly back away from the market on a short-term basis, as the recent price softness is expected to be driven by position taking, rather than any significant change in market direction. With strong beef demand growth still expected to develop through the upcoming months, the momentum to hold live cattle above the $120 per cwt is likely to continue to build.

Lean hog futures have started to see moderate position adjustments, although the tone of the market remains strong. Traders will continue to focus on the ability to move active pork supplies in domestic and export markets through the next couple of months, although current hog production seems to have stabilized for the time being. Average carcass weights have started to tumble over the last week, falling nearly 5 pounds over the last couple of days. This is starting to show the impact of higher feed prices as producers and packers will continue to move hogs through the system faster. This not only creates less overall pork available to the market, but also helps to increase overall turnaround time in barns through the upcoming months. Overall pork cutout prices continue to shift slightly higher based on firming underlying support in pork prices. But price volatility in individual pork cuts remains high with prices bouncing higher and lower in wide ranges. Ham cuts on Wednesday gained nearly $8 per cwt, offsetting the $7 per cwt losses the day before. With each cut moving in a wild range, it is hard to find overall market consistency in this current environment. Although prices have done well given the wild and erratic market shifts, the lack of consistency and confidence on end user buying will continue to limit further market support. Cash hog bids are expected $1 lower to $1 per cwt higher with most bids expected steady to higher. Thursday slaughter numbers are expected near 494,000 head. Saturday runs are expected at 248,000 head.

BULL SIDE BEAR SIDE
1)

Cash cattle trade appears to be breaking higher with early indications of $3 to $4 per cwt gains from last week's averages starting to build further optimism in the cash cattle market. Although most cash cattle trade still needs to develop, the ability to build on this momentum is likely to create longer-term positive shifts in the complex.

1)

Corn values have regained most of last week's losses as aggressive China corn purchases sparked an early week rally. This is moving prices back near market highs, which is weighing heavily on feeder cattle prices as the week continues.

2) Following the strong market shift higher in the last two weeks, nearby live cattle futures have expanded the chart gap above the 40- and 100-day moving averages. This chart signal continues to spark a combination of commercial and noncommercial support through late January. 2)

Despite the continued strong support in boxed beef prices, the trend of rising beef stocks in cold storage should not be overlooked. A continued trend of rising beef inventory levels could create further long-term concerns about changing trends in the market.

3)

Active support in cash hog values midweek continues to focus on tighter supplies of market-ready hogs to packers as hog weights have started to aggressively shift lower over the last week. This is expected to continue to tighten supply levels in the next several weeks.

3)

Moderate pressure in lean hog futures Wednesday has not signaled a market reversal, but the potential that commercial traders may be slowly backing away from the complex could cool the recently hot lean hog complex.

4)

Traders will closely monitor the weekly Export Sales report with sales and shipments to China remaining the focus of the report. This is likely to continue to stimulate additional market volume Thursday morning.

4)

Volatile moves in pork cutout values and wide-ranging shifts in pork cuts over the last couple of weeks has created less consistent commercial buying across the industry. This limits the long-term market trends, as traders start to make purchases not on demand expectations, but daily price swings, adding further volatility to the complex.




Wednesday, January 27, 2021

Wednesday Closing Livestock Market Update - All Eyes Look to the Cash Cattle Market

GENERAL COMMENTS:

It was a sluggish day for the livestock contracts as the complex drifted lower, unable to keep the trader interest and momentum needed to continue to add to the market's position. Bids have surfaced for this week's cash cattle market, but feedlots are resistant to cave this early in the week when they stand the chance to move this week's cash market potentially $2.00 to $3.00 higher. Hog prices closed higher on the National Direct Afternoon Hog Report, up $0.58 with a weighted average of $56.75 on 5,776 head. March corn is up 1 3/4 cents per bushel and March soybean meal is up $0.10. The Dow Jones Industrial Average is down 633.87 points and NASDAQ is down 355.47 points.

LIVE CATTLE:

This week's cash cattle market is shaping up to be strong. Seeming to mirror the atmosphere of a good card game, feedlots are disinclined enough this week to know not to fold too early and to milk out higher prices. The board's weaker trade doesn't crumble the cash market's confidence as feedlots know that traders are simply looking at how strong the market has performed as of late and want to make sure that this is the direction the market is truly headed before extending themselves any further. And let's not forget that even though the board closed weaker -- boxed beef prices are still on the upward track. February live cattle closed $0.55 lower at $116.45, April live cattle closed $0.47 lower at $112.62 and June live cattle closed $0.42 lower at $119.05. The cash cattle market was quiet all Wednesday, other than the trade that develop on the Fed Cattle Exchange. Wednesday's slaughter is estimated at 119,000 head, 1,000 head less than a week ago and 5,000 head less than a year ago.

The Fed Cattle Exchange Auction listed a total of 1,570 head, of which 1,128 actually sold, 442 head were listed as unsold, as they did not meet the reserve prices that ranged from $112.50 to $115. Opening prices were at $111 to $112, high bids ranged from $112.75 to $113. The state-by-state breakdown looks like this: Kansas 150 total head, all of which went unsold; Texas 1,193 total head, with 901 head sold at $112.75-$113, 292 head went unsold; Oklahoma 227 total head, all of which sold at $113.

Boxed beef prices closed higher: choice up $0.60 ($229.66) and select up $1.66 ($218.99) with a movement of 121 loads (71.56 loads of choice, 11.76 loads of select, 15.99 loads of trim and 21.32 loads of ground beef).

THURSDAY'S CASH CATTLE CALL: Higher. Feedlots -- the last time the live negotiated prices traded over $112 was the week ending May 30, 2020. The market is in a fine position to push for higher prices, don't squander this opportunity!

FEEDER CATTLE:

The feeder contracts weren't pressured by the corn market throughout Wednesday's trade, but traders seemed to think the entire livestock complex needed a correction, which led to Wednesday's dreary trade. March feeders closed $1.40 lower at $140.07, April feeders closed $1.20 lower at $143.07 and May feeders closed $1.07 lower at $144.87. The feeder cattle contracts are gambling with the corn market, knowing that there's upward potential in the market, but continuing to monitor input costs is a necessity. At Winter Livestock in Dodge City, Kansas, compared to a week ago, feeder steers weighing 600 to 950 pounds sold steady. Steer calves weighing 450 to 600 pounds sold $2.00 to $4.00 lower. Heifer calves weighing 450 to 650 pounds sold steady. Heifers weighing 650 to 750 pounds sold $2.00 to $3.00 higher. Heifers weighing 775 to 900 pounds sold steady. There was only a light test of slaughter cows and bulls, but a higher undertone was noted. The CME feeder cattle index for Jan. 26: down $0.13, $134.83.

LEAN HOGS:

Upon reaching contract highs for a lot of the lean hog contracts, Wednesday ended up trading lower as traders grew leery of the market's position. Thankfully the market's fundamental drivers of pork cutout values and the cash market both closed higher, which should encourage higher trade long term in the trends can continue. Pork cutouts total 310.98 loads with 260.77 loads of pork cuts and 50.21 loads of trim. Pork cutout values: up $0.18, $81.11. Wednesday's slaughter is estimated at 492,000 head, 6,000 head less than a week ago and 3,000 head less than a year ago. Tuesday's slaughter was revised to 449,000 head. The CME lean hog index for Jan. 25: up $0.35, $66.23.

THURSDAY'S CASH HOG CALL: Steady to somewhat higher. Packers may be willing to move the cash market slightly higher again Thursday as their processing was lighter early in the week. In order to catch back up to necessary levels, they may need to jump into the cash market.




Wednesday Midday Livestock Market Summary - Support Slips Away from Contracts

General Comments

The week's support has left the livestock complex and leaves the live cattle, feeder cattle and lean hog contracts to all trade lower. The gusto of support that was ample earlier in the week has come up short upon Wednesday's arrival. The feeder cattle contracts are lacking trader interest, but their lower trend is spurred by higher corn prices as even the corn market is trading mostly lower. March corn is up 1 cent per bushel and March soybean meal is up $0.10. The Dow Jones Industrial Average is down 342.23 points and NASDAQ is down 162.40 points.

LIVE CATTLE

As the live cattle contracts rest from their recent run of higher prices, once again the market's eyes fall to the cash cattle market as packers hate the idea of the market trading much higher but feedlots know they need to capitalize on this opportunity to gain some market-share. Live cattle contracts are trading modestly lower with the entire complex seeing pretty even pressure as the contracts trade anywhere from $0.62 to $0.90 lower. February live cattle are down $0.70 at $116.30, April live cattle are down $0.62 at $112.47 and June live cattle are down $0.60 at $118.87. Favoring the cash market's position is once again the strong, continued support that boxed beef prices are seeing. There's been a little interest develop in the cash cattle market as bids of $173 are on the table in Nebraska -- which is mostly steady with last week's trade. Asking prices are around $115 in the South and $182 to $185 in the North. If packers want to get cattle procured this week, they are going to need to up their ante. Trade could develop as soon as this afternoon, but if feedlots are going to get their fully asking prices it's more likely that trade waits until Thursday if not even until Friday. But remember, all good dealings take time!

The Fed Cattle Exchange Auction listed a total of 1,570 head, of which 1,128 actually sold, 442 head were listed as unsold, as they did not meet the reserve prices that ranged from $112.50 to $115. Opening prices were at $111 to $112, high bids ranged from $112.75 to $113. The state by state breakdown looks like this: Kansas 150 total head, all of which went unsold; Texas 1,193 total head, with 901 head sold at $112.75-$113, 292 head went unsold; Oklahoma 227 total head, all of which sold at $113.

Boxed beef prices are higher: choice up $0.73 ($229.79) and select up $1.44 ($218.77) with a movement of 73 loads (40.95 loads of choice, 9.32 loads of select, 11.06 loads of trim and 11.34 loads of ground beef).

FEEDER CATTLE

It's another day of lower trade for the livestock contracts as the livestock sector neglects to draw the trader interest necessary to rally the complex higher. March feeders are down $0.72 at $140.75, April feeders are down $0.70 at $143.57 and May feeders are down $0.82 at $145.12. Even though feeders would obviously like to see the feeder cattle contracts trading higher, Wednesday's weakness thankfully isn't stemming for higher corn prices as the corn contracts are too trading lower. If the cash cattle market can indeed secure higher profits this week, the momentum will help the overall moral of the feeder cattle contracts.

LEAN HOGS

With the vast support that the lean hog contracts have seen over the last week, the contracts are taking a breather and trading modestly lower into Wednesday's afternoon. February lean hogs are down $0.10 at $70.35, April lean hogs are down $0.45 at $76.50 and June lean hogs are down $0.17 at $87.75. Slaughter speeds were down slightly on Tuesday which is understandable due large amount of snow that parts of the Midwest endured, but hopefully by Wednesday afternoon packers are back to processing at higher levels.

The projected lean hog index for 1/26/2021 is up $0.72 at $66.96, and the actual index for 1/25/2021 is up $0.36 at $66.24. Because hog prices were unavailable Tuesday due to confidentiality on the National Direct Morning Hog Report there is no comparison for Wednesday's price levels but Wednesday's market has traded with a weighted average of $55.86, ranging from $51.00 to $58.50 on 4,076 head and a five-day rolling average of $55.38. Pork cutouts total 177.00 loads with 149.25 loads of pork cuts and 27.74 loads of trim. Pork cutout values: up $2.70, $83.63.




Wednesday Morning Livestock Market Update - Surging Beef Values Spark Additional Market Optimism

General Comments:

The heavy blanket of snow covering most of northern Midwest created a delay in cash market activity from both the packer and feeder side. With many areas setting records for daily snow amounts, feed yard operators continue getting pens cleared and cattle fed. Packers will focus on keeping plant speeds up with already committed cattle on route to plants the priority during the first few days of the week. Now that it appears the bulk of the storm is behind us, both sides are likely to become more active in cash cattle negotiations over the next couple of days. It is expected that asking prices will remain around $114 per cwt live basis, but still hard to pin down on a dressed basis in the North. Bids could start to slowly develop through the day Wednesday, but it is more likely that bids will be more readily available Thursday or early Friday. Given the stalled status of the week, it would not be surprising if active cash trade is delayed until sometime Friday. Live cattle futures contracts continue to regain underlying buyer support as technical support redevelops in the complex. With April contracts moving above $123 per cwt through the week, the focus on establishing a more secure trading range at the new market highs continues to offset growing concerns of higher feed prices. Boxed beef values continue to surge higher, with choice cuts gaining over $24 per cwt in the last three weeks with buyers focusing more on potential and expected demand growth, rather than the fundamental direction in the cash cattle market. Although the underlying support in beef values is expected to be well supported, the concern is that a moderate price correction could quickly develop over the next few days, creating a widespread shift in buyer support, which would limit additional gains in live cattle trade. Feeder cattle futures on the other hand, have started to once again be heavily affected by surging corn prices. With corn prices retracting last week's losses and moving near market highs once again, the focus on higher feed prices is heavily impacting the feeder cattle complex midweek.

Active outside market support continues to be a significant driving force in lean hog futures with traders focusing on the ability to draw commercial and noncommercial buyer support to lean hog futures. That is sparking further technical buying factors as the week continues. Increased momentum is expected in nearby lean hog futures, although the pace at which prices have rallied higher over the last two weeks is starting to open the door for a light-to-moderate price correction. The wide shifts in individual pork cuts continue to develop with ham cuts falling $7.22 per cwt. The tone of the rest of the cuts remained firm, although this shift lower in ham prices put pressure on the overall pork cutout value. Cutout values remain above $80 per cwt, creating additional underlying support in the complex as overall domestic and export demand for pork remains seasonally strong. Cash hog bids are expected $1 lower to $1 per cwt higher with most bids expected steady to lower. Wednesday slaughter numbers are expected near 485,000 head, but this is still uncertain based on weather and road conditions through the upper Midwest. Saturday runs are expected at 224,000 head.

BULL SIDE BEAR SIDE
1)

Active gains continue to develop in boxed beef values, creating additional underlying support through beef values and futures trade. The focus on active movement of beef product and strong underlying choice and select values has sparked renewed buyer interest in all nearby live cattle contracts.

1)

Corn values have regained most of last week's losses as aggressive China corn purchases sparked an early week rally. This is moving prices back near market highs, which is weighing heavily on feeder cattle prices as the week continues.

2)

Cattle feeders are expected to aggressively price cattle during the week given the wide-ranging support in futures and beef values over the last week. Anything except moderate-to-strong cash market gains will be viewed extremely disappointing through the end of January.

2)

Despite the strong upward movement in boxed beef values during the month of January, a concern that buyer support may cool in the near future could bring about a moderate price correction. This would cause a ripple effect through the entire cattle market, causing potential widespread volatility in live cattle prices.

3)

Strong technical support continues to drive additional buyer support into all spring and summer lean hog contracts. This has moved April contracts to year-long highs, while other summer contracts continue to set contract highs through the month of January.

3)

The weather conditions limiting plant operations and hauling hogs and pork difficult over the past few days has limited plant output and likely kept market-ready hogs backed up through the system. This is likely to further pressure cash values midweek.

4)

The ability to continue to aggressively move pork product in export and domestic channels has sparked renewed commercial buying in all segments of the market, as well as quickly drawing noncommercial investment buying back into the market.

4)

The expectation that China pork production continues to rebuild will put long-term uncertainty in the domestic pork market. This could impact the ability to move pork product to China over the coming months.





Tuesday, January 26, 2021

Tuesday Closing Livestock Market Update - Corn Prices Continue to Stress Feeders

GENERAL COMMENTS:

It was a good day for most of the livestock sector as both the live cattle and lean hog contracts saw excellent movement and their contracts were able to close higher as well. Meanwhile, with the corn market's re-found support, feeders tumbled lower worried again about input costs. Hog prices closed higher on the National Direct Afternoon Hog Report, up $0.87 with a weighted average of $56.17 on 5,490 head. March corn is up 20 3/4 cents per bushel and March soybean meal is up $6.90. The Dow Jones Industrial Average is down 22.96 points and NASDAQ is down 9.93 points.

LIVE CATTLE:

If you haven't been paying attention to the market's boxed beef prices, movement and overall trend -- now would be a good time to start. With day after day being able to add another $1.00 here and there in both the choice and select cutout levels, the live cattle contracts are relishing in the support and the cash market is beaming over the fact that feedlots finally have the opportunity to move the cash market higher. February live cattle closed $0.47 higher at $117.00, April live cattle closed $0.15 higher at $123.10 and June live cattle closed $0.65 higher at $119.47. The snowfall in the Midwest has helped the cash market's timing as trade will get delayed into the later part of the week. Consolidated Beef Producers Cash Pool was able to sell 1,187 head at $112.55. As of now there have yet to be any other bids hit the marketplace and asking prices in the South have been posted at $114 to $115. Feedlots will hear packers grumble about their cattle packing mud, but they need to stay strong and push this week's cash market higher as the timing is ripe to recover some leverage.

Tuesday's slaughter is estimated at 117,000 head, steady with a week ago and 1,000 head less than a year ago. Monday's cattle slaughter was revised to 115,000 head.

Boxed beef prices closed higher: choice up $2.33 ($229.06) and select up $1.12 ($217.33) with a movement of 131 loads (75.68 loads of choice, 20.73 loads of select, 13.45 loads of trim and 21.21 loads of ground beef).

WEDNESDAY'S CASH CATTLE CALL: Higher. Feedlots know that they sit on an opportunity to move the cash market higher. Packers will use their committed inventory to the best of the ability so that they don't have to jump too deep into this week's market, but even they know that higher cash prices are coming.

FEEDER CATTLE:

It was a less than desirable day for the feeder cattle contracts. Upon the corn market's surge to regain lost ground, the feeder cattle contracts tremored in fear of what feed costs could amount to and closed mostly $1.00 to $2.00 lower. Nearby corn contracts were able to secure gains upward of $0.17 to $0.20 higher. March feeders closed $2.37 lower at $141.47, April feeders closed $1.97 lower at $144.27 and May feeders closed $1.70 lower at $145.95. With live cattle contracts steaming higher -- and confidence that cash cattle prices will trade higher thanks to a roaring boxed beef market -- the feeder cattle contracts only hurdle are input costs. At Oklahoma National Stockyards in Oklahoma City, Oklahoma, compared to a week ago, feeder steers sold steady while feeder heifers sold steady to $2.00 higher. Steer and heifer calves traded steady to $4.00 lower. With the moisture that's lined the countryside, buyers are leery of taking any calves that would be sickness prone and are especially looking for calves with a full vaccination history. Not only will the stress of being hauled to and from the sale barn affect the calves, but with more moisture on its way the calves will need to bounce back after multiple storms. The CME feeder cattle index for Jan. 25: $0.48, $134.96.

LEAN HOGS:

The lean hog contracts took ahold of Tuesday's support and rallied throughout the day, managing to close with a plethora of new contract highs. February lean hogs closed $0.17 lower at $70.45, April lean hogs closed $0.32 higher at $76.95 and June lean hogs closed $0.42 higher at $87.92. Pork cutouts had impressive movement Tuesday afternoon, moving upward of 438 loads, but prices unfortunately fell with the large movement. The cash market was supportive of the market's willingness to trade higher and cash prices actually closed higher as well, even though it was on a small movement of only 5,490 head for the day. Pork cutouts total 438.05 loads with 410.74 loads of pork cuts and 27.30 loads of trim. Pork cutout values: down $1.20, $80.93. Tuesday's slaughter is estimated at 455,000 head, 43,000 head less than a week ago and 38,000 head less than a year ago. The CME lean hog index for Jan. 22: up $0.33, $65.88.

WENDESDAY'S CASH HOG CALL: Lower. With snow making some trucking difficult, packers may be leery of diving into the cash market until weather permits better travel conditions, and with last week's aggressive buying, packers don't necessarily need to jump in headfirst into the cash market.




Tuesday Midday Livestock Market Summary - Corn Regains Support Leaving Feeders to Scale Lower

General Comments

The livestock complex continues to trade with live cattle and lean hog contracts continuing their upward quest, while the higher trading corn contracts push the feeder cattle contracts lower. Meanwhile the countryside has yet to see any developments on the cash cattle front as most of the countryside is blanketed in snow and waiting until the latter part of the week to ignite business. March corn is up 18 3/4 cents per bushel and March soybean meal is up $9.10. The Dow Jones Industrial Average is up 21.50 points and NASDAQ is up 8.37 points.

LIVE CATTLE

The live cattle contracts are enjoying another day of stronger boxed beef prices and flourishing energy that's allowing the contracts to continue to trade higher. February live cattle are up $0.52 at $117.05, April live cattle are up $0.32 at $123.27 and June live cattle are up $0.62 at $119.45. The strength that continues to build throughout the complex is music to feedlot's ears as they are hopeful to add at least $2.00 to this week's market. The snow that fell Monday afternoon and through the evening will slow the week's trade and push business into the latter half -- which is ideal again for feedlots. Early asking prices of $114 to $115 have been noted in the South but the North has yet to share their asking prices for the week. The industry is waiting anxiously for Friday as the Bi-Annual Cattle Inventory Report will be released. The report is expected to unveil a smaller cowherd which would be incredibly bullish for cow-calf producers.

Boxed beef prices are higher: choice up $2.40 ($229.13) and select up $0.65 ($216.86) with a movement of 58 loads (38.60 loads of choice, 10.29 loads of select, 3.24 loads of trim and 6.02 loads of ground beef).

FEEDER CATTLE

The pressures of rising corn prices are putting the feeder cattle market's aspirations of higher prices on hold. Nearby corn contracts have been able to post a stellar rally Tuesday morning, gaining anywhere from $0.10 to $0.17 higher. Meanwhile the feeder cattle contracts are scaling anywhere from $1.00 to $2.00 lower as balancing the expense of feed costs is vital. March feeders are down $1.70 at $142.15, April feeders are down $1.30 at $144.95 and May feeders are down $0.90 at $146.75. Feeder cattle sales this week will be met with strong challenges -- some sales have canceled due to the road conditions and others are hoping that by the end of the week buyers and trucks will be able to make it in without too much difficulty.

LEAN HOGS

The coolers are calling for pork products as Monday's Cold Storage Report shared that frozen pork supplies are still at a ten-year low. There's opportunity sitting in front of the lean hog complex and luckily the futures market has responded positively so far this week. February lean hogs are down $0.50 at $70.12, April lean hogs are up $0.22 at $76.85 and June lean hogs are up $0.30 at $87.80.

The projected two-day lean hog index for 1/25/2021 is up $0.36 at $66.24 and the actual index for 1/22/2021 is up $0.33 at $65.88. Hog prices are not available on the National Direct Morning Hog Report due to confidentiality, there were 3,945 head sold Tuesday morning though. Pork cutouts total 239.38 loads with 219.72 loads of pork cuts and 19.67 loads of trim. Pork cutout values: down $0.77, 81.36.




Tuesday Morning Livestock Market Update - Futures Defend Technical Buying as Week Continues

General Comments:

Cash cattle activity remains quiet Tuesday with packers and feeders first priority is the major snowstorm, which has moved through most of the region over the last day. This has moved the focus away from trade negotiations early in the week, as feeders dig out and packers focus on getting access to already committed cattle. Weather conditions are likely to delay active cash cattle trade to the last half of the week, although given the underlying support in futures and beef values, feeders are expected to aggressively price cattle in order to regain basis levels lost over the last couple of weeks. Bids and asking prices are likely to be hard to pin down early in the day, although more asking prices will likely develop as the day continues, although bids may not actively surface until Wednesday or Thursday, with a late Friday trade very possible this week. The 5-Area Weekly Average price released Monday posted an average price of 109.23 per cwt. This is 29 cents per cwt lower than week-ago levels and continues to be disappointing that cash values are unable to keep pace with the support seen through the rest of the complex. Firm underlying buyer support remains well rooted in cattle futures following a bounce higher live cattle trade. Traders continue to focus on the strong technical support seen the past two trading sessions with April live cattle futures expanding the gap above $119 per cwt. Although nearby futures, which are hovering near $123 per cwt are still below contract highs set in early 2020, the ability to quickly and aggressively draw additional buyer support back into the market given new highs for the market cycle has solidified further buyer support. The ability to hold recent gains in feeder cattle futures despite the renewed buyer support moving back into corn markets. Traders remain focused on the reprieve from higher feed prices, but as buyer interest appears to be redeveloping in both corn and soybean markets, this could quickly change and limit the recent support across feeder cattle futures. Limited early activity is expected Tuesday morning with traders closely monitoring outside market shifts through the week.

Firm follow-through support developing in lean hog futures has added increased optimism to the entire complex. April futures have continued to shift steadily higher, focusing on underlying support in pork values and the expectation that additional demand support will further develop across the rest of the complex. Pork in cold storage decreased once again in Monday's report, moving to 10-year lows, as significant shifts continue to develop in pork belly cuts. Although underlying support is seen in all pork cuts, the seasonal support of pork bellies and rib cuts continues to be a main focus for lean hog futures. Despite the pull lower in the overall pork cutout value driven by a strong one day shift lower in pork belly cuts, firm buyer support is seen in all other pork cuts early in the week. The expectation is that the firm underlying tone in the market will continue to keep prices firm, although the recent price swings will bring about increased market volatility over the next few weeks as individual pork cuts will gyrate higher and lower within a wild pattern. This has been the pattern over the past few weeks and may continue most of the spring. Cash hog bids are expected $1 lower to $1 per cwt higher with most bids expected steady. Tuesday slaughter numbers are expected near 491,000 head, but this is still uncertain based on weather and road conditions through the upper Midwest.

BULL SIDE BEAR SIDE
1)

April live cattle futures continue to defend a strong technical price gap above $120 per cwt following increased technical buyer support flooding into the market over the last two trading sessions. This has the potential to spark renewed interest at or above current price levels.

1)

Beef products in cold storage posted strong gains once again in Monday's cold storage report. This puts overall beef inventory levels in cold storage at a three-year high and creates significant concern about the ability to keep pace with current production levels in the coming weeks and months.

2) Cattle feeders are expected to aggressively price cattle during the week given the wide-ranging support in futures and beef values over the last week. Anything except moderate-to-strong cash market gains will be viewed as disappointing through the end of January. 2)

Corn buying has quickly redeveloped during early week trade as traders offset last week's losses. Although at this point, the buyer momentum in cattle trade associated with the previous corn losses is holding, the focus on higher production costs is expected to curb further cattle market support.

3)

Nearby lean hog futures have finally been able to break above pre-pandemic highs following the consistent and strong buyer support seen across the complex over the last few trading sessions. The ability to sustain current price levels appears to be drawing new buyer activity back into the lean hog complex.

3)

Cash hog values have been hesitant to shift higher, following the current support through the rest of the complex. The ability for packers to gain access to market-ready hogs without increasing spending could challenge recent support in futures prices in the coming days.

4)

Pork cuts in cold storage continued to aggressively decline through the month of December. Pork inventory levels in cold storage now remains the lowest level in over 10 years, creating further focus on the ability to aggressively move pork through domestic and export channels.

4) Wide price swings in pork cuts on a daily basis based on market interest continues to add uncertainty to the entire complex. This is likely to continue over the near future but will likely limit market support based on the increased market volatility.






Monday, January 25, 2021

Monday Closing Livestock Market Update - Contracts Secure Gains

GENERAL COMMENTS:

Monday ended up treating the livestock contracts far better than anticipated as the contracts were able to close mostly higher. The snowstorm that is moving across the nation's feeding regions could push this week's cash cattle trade into waiting until later in the week, which would help feedlots entice packers into pay more. Hog prices closed lower on the National Direct Afternoon Hog Report, down $0.16 with a weighted average of $55.30 on 6,373 head. March corn is up 11 cents per bushel and March soybean meal is up $8.00. The Dow Jones Industrial Average is down 36.98 points and NASDAQ is up 92.93 points.

LIVE CATTLE:

With a large portion of feeding country getting blasted by Monday's snowstorm, opportunity continues to linger in the live cattle market. The live cattle contracts had a successful day continuing to add to their position and closing higher once again. February live cattle closed $0.20 lower at $116.52, April live cattle closed $0.42 higher at $112.95 and June live cattle closed $0.02 higher at $118.82. With both the board and boxed beef prices trudge higher, the market's now looking to the cash cattle market and yearning for it to make its mark at higher prices. It's unlikely that trade will be aggressive early this week with the snow passing through, but after the midweek point trade is expected to be at least $2.00 higher this week. Monday's cash cattle trade was at a near standstill with bids yet to develop and asking priced still unknown. Monday's slaughter is estimated at 118,000 head, 6,000 head more than a week ago and 4,000 head less than a year ago.

Monday's cold storage report did share some alarming news for the beef sector. Total pounds of beef in freezers were up 4% from the previous month and up 11% from last year. This amounts to be the most frozen beef the industry has seen in the last three years.

Boxed beef prices closed higher: choice up $3.91 ($226.73) and select up $2.87 ($216.21) with a movement of 91 loads (54.06 loads of choice, 17.57 loads of select, 7.68 loads of trim and 12.06 loads of ground beef).

TUESDAY'S CASH CATTLE CALL: Higher. It's unlikely that trade will develop as early as Tuesday, but once the market does decide to trade cattle, feedlots have a grand opportunity to move the cash market at least $2.00 higher this week.

FEEDER CATTLE:

The corn market took a slight run at regaining some of what the market lost late last week but for the most part the feeder cattle contracts traded relentlessly, keeping their profits secured through closing. March feeders closed $0.30 lower at $143.85, April feeders closed $0.12 higher at $146.25 and May feeders closed $0.62 higher at $147.65. The biggest gains were seen in the deferred contracts (August 2021 through November 2021), which closed anywhere from $1.12 to $1.87 stronger. At midsession at Joplin Regional Stockyards, in Carthage, Missouri, compared to a week ago, steers under 600 pounds sold steady while steers over 600 pounds sold $2.00 higher. Heifers were trade mostly steady with last week's prices. Meanwhile at West Point Livestock Auction in West Point, Nebraska, the auction hosted a special preconditioned sale and both steers and heifers sold phenomenally. Compared to last week, steers weighing 500 to 600 pounds sold mostly $6.00 to $9.00 higher and 700-pound steers sold steady to $2.00 higher. Heifers weighing 500 to 600 pounds sold $5.00 to $8.00 higher. The snow moving across Kansas and Nebraska may hinder some of the feeder cattle sales early this week as large amounts of snow are accumulating in those regions. The CME feeder cattle index for Jan. 22: up $0.49, $134.48.

LEAN HOGS:

The lean hog contracts had another impressive day, but were left unsupported from the cash and pork cutout sector. February lean hogs closed $0.70 higher at $70.62, April lean hogs closed $0.47 higher at $76.62 and June lean hogs closed $0.70 higher at $87.50. Monday's Cold Storage report shared that again frozen pork supplies remain critically low as frozen pork supplies were down 3% from the previous month and down 30% from last year, which remain the lowest that the market's seen in the last ten years. Pork cutouts total 307.79 loads with 279.85 loads of pork cuts and 27.93 loads of trim. Pork cutout values: down $0.70, $82.13. Monday's slaughter is estimated at 486,000 head, 59,000 head more than a week ago and 13,000 head less than a year ago. The CME lean hog index for Jan. 21: up $0.15, $65.55.

TUESDAY'S CASH HOG CALL: Steady to somewhat higher. Monday's cash hog trade may have been somewhat lower, but it wouldn't be surprising to see packers steps into the market again at some point this week and buy up a hogs to secure inventory. 




Monday Midday Livestock Market Summary - Back to Securing Profits

General Comments

The livestock complex is rolling into Monday's trade far more optimistic than many anticipated. The bearish resistance that loomed over the nearby contracts in the live cattle, feeder cattle and lean hog markets has dissipated and is now allowing for the markets to trade mostly higher which continues to reignite the supportive nature that building in the entire livestock complex. March corn is up 14 1/2 cents per bushel and March soybean meal is up $11.50. The Dow Jones Industrial Average is down 207.33 points and NASDAQ is down 34.14 points.

LIVE CATTLE

After last week's somewhat disappointing cash cattle trade, opportunity lingers for this week's cash cattle trade. As packers continue to reap the benefits of a strong boxed beef market, feedlots should be keenly aware that they have an opportunity to price their cattle higher and should be willing to wait until later in the week if need be. The live cattle contracts are back to securing higher prices Monday morning as the complex continues to be supported even after a bearish Cattle on Feed Report from Friday. February live cattle are down $0.07 at $116.65, April live cattle are up $0.50 at $123.02 and June live cattle are up $0.22 at $119.02. Showlists this week are larger in Texas but lighter in Kansas, Nebraska and Colorado.

Last week's negotiated cash cattle trade totaled 88,895 head. Of that 64,836 head are committed for delivery in the next two weeks while the remaining 24,059 head are scheduled for delivery in the following 15 to 30 days.

Boxed beef prices are higher: choice up $2.96 ($225.78) and select up $2.03 ($215.37) with a movement of 46 loads (25.14 loads of choice, 10.46 loads of select, 4.81 loads of trim and 5.56 loads of ground beef).

FEEDER CATTLE

A modest Monday morning rally will gladly be taken seeing that the feeder cattle complex was somewhat worried about what Monday's trade will pan out to be. With corn prices back on the gain, the feeder cattle contracts don't seem overly concerned as the support that's built the complex higher over the last 10 days remains strong from both technical and fundamental indicators. Now if the corn market regains a substantial footing the contracts may begin to be pressured but at this point the contracts seems unscathed. March feeders are up $0.17 at $144.32, April feeders are up $0.37 at $146.50 and May feeders are up $0.57 at $147.60.

LEAN HOGS

The lean hog contracts weren't lackadaisical last Friday and made sure to close sharply higher along with the cattle contracts. Upon Monday's arrival, the lean hog contracts have had no problem continuing a modest rally and will most likely be able to do so as resistance thresholds aren't a looming concern at the time being. Pork cutout values are down slightly but the cash market continues to show support for the contracts upward progression and continue to show that packers are interested in keeping vigorous their slaughter speed elevated.

The projected lean hog index for 1/22/2021 is up $0.33 at $65.88 and the actual index for 1/21/2021 is up $0.15 at $65.55. Hog prices are higher on the National Direct Morning Hog Report, up $0.16 with a weighted average of $55.72, ranging from $48.00 to $55.95 on 3,448 head and a five-day rolling average of $55.59. Pork cutouts total 174.94 loads with 157.83 loads of pork cuts and 17.11 loads of trim. Pork cutout values: down $0.37, $82.46.




Monday Morning Livestock Market Update - Extreme Market Volatility Expected

General Comments:

Last week's cash cattle trade, which came in generally steady with the previous week, carried a general market disappointment to the complex. But the combination of aggressive Friday gains in futures trade and extremely disappointing gains in cattle placements in the afternoon Cattle on Feed report, is expected to create uncertainty through most of the morning. Cash cattle trade itself is expected to remain at a standstill through the next couple of days. Given that showlist distribution and inventory taking generally consume Monday's cash market activity anyway, the intense winter storm moving through a large portion of Northern cattle country will add even more delays to cash market developments this week. Feedlots will turn the focus to cleaning lots, and moving already scheduled cattle to plants if available, potentially pushing any focus on additional cash cattle trade toward the end of the week. Friday's Cattle on Feed report posted total on feed numbers at 100% year-ago levels. This is fractionally above the pre-report estimates of 99.3%. But the biggest surprise was seen in placement levels. Analysts expected a 3% drop in placement levels, although total placements in December increased 1% from 2019 levels. This is not only a significant shift from the average estimate, but it is outside of the estimated range, which was for steady-to-lower placements. This will likely get the attention of traders early Monday morning. Market uncertainty is expected to develop early Monday morning with additional limited trade likely early in the session. The overall lack of direction in the market given so much of the market volume is driven by computer trade, is creating significant concerns on the intensity levels and direction of the market through the first hour of trade Monday. Following significant market pressure in grain trade Friday, live cattle futures posted significant market support. This not only broke to new market highs but pushed March feeder cattle futures to limit gains Friday. The close at limit highs Friday enacted expanded trading limits in both live cattle and feeder cattle futures, with live cattle trade not able to stop trade until prices move $6 per cwt. Feeder cattle market stops are set at $7.50 per cwt for the Monday session. The increased placement levels in Friday's Cattle on Feed report is expected to carry a significantly bearish tone to the market, but at this point, no one knows if it is enough to significantly overshadow the change in feed prices that has created buyer support in the complex.

Late week, widespread support in the hog market continues to develop as traders focus on the aggressive pressure in feed prices and changes in overall production costs as corn and soybean meal prices are quickly adjusting lower. Triple-digit gains in all nearby lean hog trade has helped to instill longer-term market support, putting more attention on further technical support developing. February lean hog futures remain well below early January highs, although the focus in the complex has moved away from February contracts with April market moves being traded as the spot market. At this point, April futures have not yet set contract highs, but Friday's move has pushed prices well above last spring's market support and past pre-pandemic price levels. The ability to hold spring futures prices above $75 per cwt over the next couple of weeks is expected to instill additional buyer support in the complex. Continued support in all pork cuts Friday helped to further expand the pork cutout values at the end of the week. Unlike trade in recent days, Friday trade saw positive price moves in all cuts, bringing additional market support to the complex. Cash hog bids are expected $1 lower to $1 per cwt higher with most bids expected steady to 50 cents higher. Monday slaughter numbers are expected near 492,000 head, but this is still uncertain based on weather conditions through the upper Midwest.

BULL SIDE BEAR SIDE
1)

Aggressive reversals in grain trade Friday has quickly sparked underlying support in all cattle markets. The ability to adjust to the change in short- and long-term production costs could quickly stimulate active buyer support, which has been subdued for an extended period of time.

1)

Cattle placement levels in December remained disappointing given following Friday's report. The increase in placements while most traders were looking for a firm decrease could quickly spark active market pressure Monday.

2) Expanded trading limits in live cattle and feeder cattle futures opens the door for even further market support Monday. Friday's gains have triggered further technical support possible, as traders focus on expanding trading ranges to long-term highs. 2)

Despite the aggressive shift lower in grain prices, it is still essential to remember that corn prices remain well above average levels and will continue to cause significant long-term concerns to production costs for the near future. This could limit further price support in all cattle prices if grain markets do not continue to shift lower.

3)

Strong underlying fundamental support continues to develop across the pork market with active gains developing in pork cutout values as traders focus on aggressively and actively moving current supplies, seemingly with no problem at all.

3) Winter weather conditions moving across the upper Midwest is expected to create significant disruptions in hog movements and plants abilities to keep up the aggressive procurement pace over the next couple of days. This could quickly shrink the overall slaughter levels for the week.
4)

Active triple-digit gains in all nearby contracts has moved April futures to 16-month highs. This move not only sparked technical triggers through the entire complex, but for the first time in nearly a year, has moved past COVID-19 related losses seen last spring.

4)

Cash hog values continue to significantly lag the moves in futures and pork cutout trade. This indicates that packers continue to remain content with the availability of market-ready hogs despite the upward tick in the market, further limiting cash market support.





Friday, January 22, 2021

Friday Closing Livestock Market Update - What Will Monday Bring?

GENERAL COMMENTS:

If you thought you were going to be able to skip into the weekend, happy-go-lucky, without a care in the world from the massive gains livestock futures made this past week think again friend! Good analysts make sure to give credit where credit is due but don't turn a blind eye to what's lurking around the corner. With both live and feeder cattle futures able to trade with expanded limits come Monday morning, there could be some volatility with the new week, unfortunately. Hog prices closed higher on the National Direct Afternoon Hog Report, up $0.56 with a weighted average of $55.46 on 4,960 head. March corn is down 23 3/4 cents per bushel and March soybean meal is down $16.60. The Dow Jones Industrial Average is down 179.03 points and NASDAQ is up 12.14 points.

From Friday to Friday livestock futures scored the following changes:

February live cattle up $3.95, April live cattle up $4.33; January feeder cattle up $2.68, March feeder cattle up $8.33; February lean hogs up $2.00, April lean hogs up $3.50.

LIVE CATTLE:

Live cattle futures were on the front line of Friday's important business as the market wanted to secure stronger trade and was waiting patiently for the Cattle on Feed Report to be shared. Live cattle contracts performed with robust support and led some months to new contract highs. The disappointing factors of this week come from the cash cattle market and Friday's Cattle on Feed Report. If feedlots would have been able to wait until Thursday to start marketing their cattle instead of selling out earlier in the week, they most likely could have pushed packers into paying at least $1.00 more as packing margins are exceptional with strong boxed beef prices. But this week's cash cattle business started Wednesday and ran through Thursday. Northern dressed cattle traded from $166 to $176, mostly from $172 to $173, which is steady to $1.00 lower than last week's trade. Southern live cattle traded from $108 to $111, mostly at $110, which is steady to slightly weaker than last week. Friday's slaughter is estimated at 119,000 head -- 4,000 head more than a week ago and 2,000 head less than a year ago. Saturday's slaughter is estimated at 69,000 head.

Friday's Cattle on Feed Report came as an utter surprise. Placements were projected to be 3% lighter than a year ago, but instead came in 1% greater. Cattle and calves on feed totaled 12.0 million head, which was slightly above year ago levels. Placements totaled 1.84 million head which was 1% above year ago levels. And marketings totaled 1.85 million head, 1% greater than a year ago. Click on the link here to read DTN's COF comments:

Beef net sales of 24,500 metric tons (mt) were reported for 2021, increases were primarily for Japan (4,900 mt, including decreases of 500 mt), China (4,300 mt, including decreases of 100 mt) and South Korea (3,500 mt, including decreases of 600 mt).

It was a stellar week for boxed beef prices! Choice cuts jumped $8.27 from last week to average $219.09 and select cuts jumped $9.23 to average $208.64. The week's total movement of cuts, grinds and trim totaled 664 loads.

Boxed beef prices closed higher Friday: choice up $1.62 ($222.82) and select up $3.06 ($213.34) with a movement of 143 loads (82.29 loads of choice, 21.57 loads of select, 22.21 loads of trim and 16.91 loads of ground beef).

MONDAY'S CASH CATTLE CALL: Steady. There's a lot that could happen with Monday's trade. Bears would like to push the relevance of Friday's Cattle on Feed Report and question how secure the market is with expanded limits. Meanwhile bulls will look at the market's continued support from boxed beef prices and will wait until later in the week to sell their cattle, knowing packers want to process cattle with their margins as strong as they are right now.

FEEDER CATTLE:

Friday was an exceptional day for the feeder cattle contracts and upon Monday's arrival expanded limits will be offered, allowing for the contracts to trade with a $7.50 range. There's a lot on the line this weekend and heading into Monday's trade and with the new contract limits being so wide. Volatility becomes a concern, depending on what the corn market does and simply given the fact that the contract can trade in such a large price span. Nevertheless, the feeder cattle contracts had an outstanding Friday and were able to secure noteworthy gains as the day's closing bell rang. Thankfully these gains weren't only absorbed throughout the futures market but also throughout the countryside as buyers continue to be aggressive despite higher feed costs than many had grown used to in the last couple of years. January feeders closed $1.37 higher at $137.25, March feeders closed $5.00 higher at $144.15 and April feeders closed $4.25 higher at $146.12. At Mitchell Livestock Auction in Mitchell, South Dakota, higher undertones were noted on steers weighing up to 550 pounds compared to a week ago, steers weighing 550 to 700 pounds traded steady to $3.00 higher and steers weighing 700 pounds or more sold $1.00 to $4.00 stronger. An unevenly steady undertone was noted on heifers up to 550 pounds, heifers weighing 550 to 900 pounds sold steady to $2.00 higher and heifers weighing 900 to 950 pounds traded $6.00 higher. The sale showed excellent demand and had a strong offering of true yearling heifers in load lot sizes; they were sought with exceptionally strong demand. The CME feeder cattle index 1/21/2021: up $0.80, $133.99.

LEAN HOGS:

The lean hog complex didn't drift to the backburner and miss out on Friday's supportive behavior but instead saw strong interest in its nearby contracts while some deferred contracts traded only mildly lower. February lean hogs closed $1.82 higher at $69.92, April lean hogs closed $2.25 higher at $76.15 and June lean hogs closed $1.52 higher at $86.80. The market's advancements weren't only seen throughout the futures but were widespread and were seen throughout the cash market and closing pork cutout values. Pork cutouts totaled 428.15 loads with 399.74 loads of pork cuts and 28.42 loads of trim. Pork cutout values: up $2.57, $82.83. Friday's slaughter is estimated at 490,000 head -- 112,000 head more than a week ago and steady with a year ago. Saturday's slaughter is anticipated to be around 327,000 head. The CME lean hog index 1/20/2021: down $0.27, $65.40.

Pork net sales of 45,200 mt were reported for 2021, increases primarily for Mexico (13,200 mt, including decreases of 800 mt), China (9,700 mt, including decreases of 1,100 MT), Canada (5,000 mt, including decreases of 400 mt) and the Philippines (4,500 mt, including decreases of 800 mt).

MONDAY'S CASH HOG CALL: Steady. Packers have been slaughtering hogs aggressively but through their purchases this past week they most likely won't have to dive into the cash market enough to push prices higher.




Friday Midday Livestock Market Summary - Contracts Burst with Support

General Comments

Traders are pouring the coals to the livestock contracts as the market's fundamental backing is helping ignite this impressive rally through Friday's trade. The strength in the feeder cattle market continues to grow and grow. Some nearby contracts are capturing gains $3.00 to $4.00 higher than Thursday's levels. With this much support filtrating throughout the marketplace, it would be the icing on the cake to have Friday's afternoon Cattle on Feed Report come out bullish and help this positive movement roll into next week's business. March corn is down 17 1/2 cents per bushel and March soybean meal is down $10.70. The Dow Jones Industrial Average is down 83.71 points and NASDAQ is down 5.40 points.

LIVE CATTLE

We've been hoping to see the April live cattle contract trade at $120 for the last month but seeing the contract trade at $122.30 is even sweeter! February live cattle are up $2.50 at $116.60, April live cattle are up $2.37 at $122.30 and June live cattle are up $1.57 at $118.70. As the market shoots to either long-term highs or completely new contract highs, the live cattle market is being met with extraordinary demand from all sides of the market other than this week's cash cattle trade. If the Cattle on Feed Report that is scheduled to come out this afternoon can lend an additional hand in the market's current upward swing by showing lighter placements - the market stands a good chance to carry this strength into the weeks to come. The countryside remains lackadaisical without bids surfacing and its looking like the bulk of the week's cash cattle trade is done and over.

Beef net sales of 24,500 mt reported for 2021, increases were primarily for Japan (4,900 mt, including decreases of 500 mt), China (4,300 mt, including decreases of 100 mt) and South Korea (3,500 mt, including decreases of 600 mt).

Boxed beef prices are higher: choice up $1.85 ($223.05) and select up $3.24 ($213.52) with a movement of 85 loads (45.14 loads of choice, 18.24 loads of select, 8.05 loads of trim and 13.67 loads of ground beef).

FEEDER CATTLE

The feeder cattle contracts had a long and grueling, painful entrance into 2021 but low and behold the momentum that has become available this week is powerful for the feeder cattle contracts. January feeders are up $1.60 at $137.47, March feeders are up $4.30 at $143.52 and April feeders are up $3.55 at $145.42. Some of the market's support is stemming from the correction in corn prices, but then again, the technical support the market has mustered up is nothing to overlook as contract highs are being made in all of the feeder cattle contracts from April 2021 through November 2021. If Friday can keep this momentum through closing the feeder cattle complex stands a great chance carrying this supportive trend into next week's trade.

LEAN HOGS

Thankfully while the cattle contracts leap higher, the lean hog contracts are met with strong acquisition in their nearby contracts too. February lean hogs are up $1.17 at $69.27, April lean hogs are up $1.60 at $75.50 and June lean hogs are up $1.00 at $86.27. Packers may have bought a plethora of hogs midweek, but they've came back to the cash market willing to buy more hogs and even willing to give higher prices for them. and last but certainly not least, the support from the strong pork cutout value is incredibly helpful again as the board is met with strong signals to trade higher and no hesitant is weighing the contracts down.

Pork net sales of 45,200 mt reported for 2021, increases primarily for Mexico (13,200 mt, including decreases of 800 mt), China (9,700 mt, including decreases of 1,100 MT), Canada (5,000 MT, including decreases of 400 mt) and the Philippines (4,500 mt, including decreases of 800 mt).

The projected lean hog index for 1/21/2021 is up $0.15 at $65.55, and the actual index for 1/20/2021 is down $0.27 at $65.40. Hog prices are higher on the National Direct Moring Hog Report, up $0.87 with a weighted average of $55.56, ranging from $50.75 to $56.00 on 3,300 head and a five-day rolling average of $55.56. Pork cutouts total 229.29 loads with 208.76 loads of pork cuts and 20.52 loads of trim. Pork cutout values: up $3.64, $83.90.