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Monday, May 17, 2021

Monday Closing Livestock Market Update - Feeder Cattle Contracts See an Opportunity

GENERAL COMMENTS:

All in all, it was a mostly quiet day throughout the livestock complex as the lean hog contracts didn't find enough fundamental support to close higher and the live cattle contracts continue to trade in a pressured manner. Meanwhile, as the corn market closed mixed, the feeder cattle contracts saw the market's uncertainty as an opportunity to close higher and did so with ease. Hog prices closed lower on the National Direct Afternoon Hog Report, down $2.51 with a weighted average of $110.10 on 5,910 head. July corn is up 8 3/4 cents per bushel and July soybean meal is down $3.60. The Dow Jones Industrial Average is down 54.34 points and NASDAQ is down 50.93 points.

LIVE CATTLE:

With packers only buying 68,950 head last week, the futures market didn't feel fully confident in closing higher when slaughter speeds are running meekly, and this week's cash market is bound to be pressured once again. June live cattle closed $0.05 higher at $115.35, August live cattle closed $0.40 lower at $118.42 and October live cattle closed $0.15 higher at $123.40. Monday's boxed beef prices were able to close higher, which is a positive note as here in the next week or two the market is most likely going to set a seasonal high as buying tends to lessen after the Memorial Day weekend. New showlists appear to be mixed, higher in Kansas, somewhat lower in Nebraska/Colorado, but lower in Texas. There was just a handful of trade that developed in parts of Kansas and Iowa for $119 to $120, but it certainly wasn't enough to say that the market was genuinely tested. Monday's slaughter is estimated at 115,000 head, 3,000 head more than week ago.

Last week's negotiated cash cattle movement totaled 68,950 head. Of that 74% (50,690 head) were purchased for the nearby delivery, while the remaining 26% (18,260 head) were purchased for the deferred delivery in the next 15 to 30 days.

Boxed beef prices closed higher: choice up $2.68 ($319.62) and select up $3.70 ($296.89) with a movement of 85 loads (38.03 loads of choice, 13.24 loads of select, 20.29 loads of trim and 13.42 loads of ground beef).

TUESDAY'S CASH CATTLE CALL: Steady to $1.00 lower. Packers didn't show much interest in last week's market and it's likely that they will only mildly support this week's market as well. As they continue to run slaughter speeds well below full capacity, supplies of market-ready cattle will soon grow and favor their position once again.

FEEDER CATTLE:

The feeder cattle contracts were cautious about their attitude early Monday morning, but as the day progressed and the corn market didn't soar significantly higher, the feeder cattle contracts grew more and more confident in their upward quest. May feeders closed $0.37 higher at $137.92, August feeders closed $1.60 higher at $152.75 and September feeders closed $1.55 higher at $154.22. With the May contract set to expire next week, most of the market's attention now lies on the August feeder cattle contract, which was finally able to close above the 100-day moving average. At the midsession point at the Oklahoma National Stockyards Feeder Cattle Sale in Oklahoma City, Oklahoma, where they have an offering of 8,000 head for Monday's sale, feeder steers and heifers are both trending at steady prices. While steers calves are trading $2.00 to $4.00 lower and heifer calves are trading steady. The CME Feeder Cattle Index for May 14: up $2.17, $133.90.

LEAN HOGS:

The lean hog market buzzed with anxiousness around the noon hour when the midday pork cutout value showed a lofty advancement of $10.08. But knowing too well the feeling of "putting the cart before the horse," we sat back and knew that we needed to see the day's afternoon pork cutout close before thinking that the market was headed to the moon again. Pork cutout values closed slightly higher for the day, but the afternoon's final printing of being up $0.87 is a whole different story than the midday's price of being up a whopping $10.08. The futures market continues to look for fundamental support from both the pork cutout value and the cash hog market, but if neither market shows groundbreaking advancements, the market could very easily continue in its downward trend. Pork cutouts totaled 303.53 loads with 281.89 loads of pork cuts and 21.64 loads of trim. Pork cutouts closed higher: choice up $0.87, $116.57. Monday's slaughter is estimated at 478,000 head, 5,000 head less than a week ago. The CME Lean Hog Index for May 13: down $0.01, $110.93.

­­­­­TUESDAY'S CASH HOG CALL: Steady to somewhat lower. Seeing that hogs from Canada continue to work their way into the U.S., packers have more supplies to choose from, and with reducing slaughter speeds, their need to be aggressive in the cash hog market lessens.




Monday Midday Livestock Market Update - Contracts Trade Meekly

GENERAL COMMENTS:

The livestock complex has been slow to start Monday morning with the market not sure where its fate lies. The lean hog market is looking to the market's fundamentals to shine light and support that demand is still exceptional and that consumers are still yearning for more product. The cattle contracts are leery of what the corn market may do and are trading cautiously until more stability is found. July corn is up 3 1/2 cents per bushel and July soybean meal is down $2.00. The Dow Jones Industrial Average is down 129.55 points and NASDAQ is down 124.23 points.

LIVE CATTLE

The live cattle market's pressure continues to send most of the contracts lower heading into Monday's afternoon. June live cattle are down $0.17 at $115.17, August live cattle are down $0.20 at $118.65 and October live cattle are up $0.30 $123.52. The discrepancy between the futures market, cash cattle prices and boxed beef prices continues to be mind boggling. Looking at the week ahead, the cash cattle market has its work cut out for itself. With boxed beef prices expected to make a season top here in the next week or two, it's only a matter of when packers start to work the cash cattle market lower again. New showlists appear to be mixed, higher in Kansas, somewhat lower in Nebraska/Colorado, but lower in Texas.

Last week's negotiated cash cattle movement totaled 68,950 head. Of that 74% (50,690 head) were purchased for the nearby delivery, while the remaining 26% (18,260 head) were purchased for the deferred delivery in the next 15 to 30 days.

Boxed beef prices are higher: choice up $2.10 ($319.04) and select up $4.17 ($297.36) with a movement of 36 loads (16.51 loads of choice, 4.74 loads of select, 6.37 loads of trim and 8.21 loads of ground beef).

FEEDER CATTLE

With the corn market posing a mostly lower trajectory for the day, the feeder cattle contracts are cautiously trading higher. It's hard to trade wildly higher when the live cattle market is skeptical and the corn contracts could turn higher with a blink of an eye, but thankfully, with some much-needed moisture, feeder cattle buyers were testing last week's market again and the futures complex is dying to trade higher. May feeders are down $0.35 at $137.20, August feeders are up $0.70 at $151.85 and September feeders are up $0.70 at $153.37. The feeder cattle market will continue to be subject to harsh price movements as both the corn and live cattle/cash cattle markets trade on shaky ground.

LEAN HOGS

Hold on, simmer down, and remember that we can't put too much faith into the morning's pork cutout value. Before determining that weather prices are truly higher or lower, it's essential that we see how the day concludes. With the futures market scaling steadily lower, cash hog prices trailing lower and yet the morning's pork cutout prices being up a staggering $10 -- the market has some business to iron out. It wouldn't be surprising to see the day's afternoon pork cutout value close higher given that packers ran slower processing speeds last week but closing $10.00 higher seems a little steep. Thankfully, time will tell, and if the market does hold its vast $10.00 advancement, that may be enough to encourage traders to trade higher yet again. June lean hogs are down $0.22 at $108.50, July lean hogs are down $0.40 at $108.60 and August lean hogs are up $0.25 at $105.02.

The projected lean hog index for May 13 is down $0.01 at $110.93 and the actual index for May 12is down $0.01 at $110.94. Hog prices are lower on the National Direct Morning Hog Report, down $0.47 with a weighted average of $107.64, ranging from $103.00 to $119.00 on 4,236 head and a five-day rolling average of $110.17. Pork cutouts total 137.89 loads with 121.82 loads of pork cuts and 16.08 loads of trim. Pork cutout values: up 10.08, $125.78.




Monday Morning Livestock Market Update - Facing a Tough Week

GENERAL COMMENTS:

It seemed last week was a brutal week in cattle futures, but overall, that was not the case. Feeders closed substantially higher for the week helped immensely by falling corn prices. Live cattle really did not change much for the week after significant volatility. Live cattle were driven lower after rallying during the first half of the week by the disappointment of cash, dismal export sales, and a plant not running on Saturday. It certainly was different for boxed beef prices as they exploded higher, gaining $10.55 for choice and $8.57 for select cuts for the week. That certainly increases the frustration for those who raise cattle. The bright spot is that corn prices fell dramatically since the World Agricultural Supply Demand report. But that is little consolation when the outlook for cash this week does not look any better than last week. It may be a victory if cash can hold steady with last week, but the potential for lower prices are also a possibility.

Hog futures took a beating last week, retracing similarly to the price retracement we had in mid-April. Futures rebounded then with prices making new highs. That may be difficult to achieve a second time. Product prices have been volatile, which at times may indicate a market top. Cash prices have been choppy as well. On top of that, low weekly export sales resurrected the concern over China potentially slowing imports. That was talked about in the market in the past, but now is coming to the forefront again when seeing lower sales. Futures may bounce Monday due to fund selling possibly having found its course as well as the fact that all chart gaps are now closed to the downside. This may gain buying interest from traders to buy this break due to tightening hog supplies.

BULL SIDE BEAR SIDE
1) Lower corn prices may provide some confidence to hold for steady-to-higher cash prices this week. Packers need to continue to purchase cattle to satisfy strong demand. 1) Packers are not expected to bid cash higher this week and may actually start with lower bids due to reduced slaughter levels.
2) The fact that live cattle futures were no worse for the wear from the previous week and feeder cattle posted stellar gains, bodes well for the market. 2) Slower processing speeds with cattle already purchased ahead, might back up supplies of market-ready cattle. That is never a good thing.
3) Saturday hog slaughter numbers are becoming less and are expected to continue to do so. Supply continues to tighten, which may eventually be evident in total slaughter numbers. 3) Packers may be wary of being too aggressive to begin the week and will see what is available for purchase and how cutouts will perform.
4) Chart gaps were closed in futures contracts with the price decline sufficient to relieve the overbought market. Technical traders should step back in. 4) There is no solid indication the selling of hog futures has subsided. Traders will need to buy this break or further downside is possible.


**

Friday, May 14, 2021

Friday Closing Livestock Market Update - Contracts Know Next Week Will Pose Challenges

GENERAL COMMENTS:

This past week was far from perfect and, if anything, the market fell short of being able to rally amid new developing surprises like beef plants slowing their processing speeds. July corn is down 31 cents per bushel and July soybean meal is down $2.90. The Dow Jones Industrial Average is up 402.32 points and NASDAQ is up 315.64 points.

From Friday to Friday livestock futures scored the following changes: June live cattle down $0.73, August live cattle down $0.02; May feeder cattle up $5.83, August feeder cattle up $6.88; June lean hogs down $4.12, July lean hogs down $4.55.

LIVE CATTLE:

Heading into next week's trade, the live cattle market knows that it has a mountain ahead of it. With processing speeds being cut back, feedlots are beginning to worry about front end currentness, and after last year we all know too well what a backlog in the supply chain does to prices. Mix weaker processing speeds with the fact that boxed beef prices are mostly likely going to find a top in the next week or two -- and that very few cash cattle traded this past week -- the markets weren't left with a rosy outlook for the weeks ahead.

June live cattle closed $0.30 lower at $115.30, August live cattle closed $0.57 lower at $118.82 and October live cattle closed $0.80 lower at $123.25. The market didn't see much trade develop Friday on the cash cattle front, as only a few clean=-p purchases were made here and there. This week's trade had a range of, $119 to $120 live in the South, while Northern dressed deals had a range of $187.50 to $192.50, mostly $190 to $191.Friday's slaughter is estimated at 115,000 head, 4,000 head more than a week ago. Saturday's kill is projected to be around 62,000 head, 5,000 head more than a week ago. Thursday's kill was revised to only 115,000 head, 3,000 head less than the originally stated 118,000 head.

This week boxed beef prices showed stellar advancements once again. Throughout the week choice cuts averaged $314.55 (up $10.55 from last week) and select cuts averaged $295.27 (up $8.57 from last week) with a total movement of cuts, grinds and trim only totaling 488 loads.

Boxed beef prices closed mixed: choice up $0.16 ($316.94) and select down $2.72 ($293.19) with a movement of 107 loads (62.62 loads of choice, 13.53 loads of select, 21.87 loads of trim and 8.98 loads of ground beef).

MONDAY'S CASH CATTLE CALL: Lower. With packers having committed supplies booked out until the second week of June and reducing processing speeds this past week, the likelihood that the cash cattle market is stronger next week is slim.

FEEDER CATTLE:

With the May corn contract set to expire Friday afternoon, the market's full attention will now belong to the July corn contract. The corn contracts endured another tough day closing anywhere from $0.15 to $0.34 lower, and thankfully their bearish close allowed for the feeder cattle contracts to close modestly higher. May feeders closed $0.10 higher at $137.55, August feeders closed $0.65 higher at $151.15 and September feeders closed $0.70 higher at $152.67. The feeder cattle market should have been able to rally to the moon and back this past week, but with the uncertainty surrounding the live cattle and cash cattle markets, some feeder cattle buyers were still hesitant and traders weren't going to get caught putting the cart before the horse. Even though lower input costs through feed expenses make feeding cattle more appealing, feedlots still have to be able to sell them for more than $119 when corn prices are on the upper end of $6.00. At Farmers and Ranchers Livestock Commission in Salina, Kansas, compared to last week, steer calves under 550 pounds were $8.00 to $10.00 higher, steers weighing 550 to 700 pounds were $2.00 to $8.00 higher, steers weighing 700 to 750 pounds were $6.00 to $7.00 lower and steers weighing 850 to 1,000 pounds were steady to $1.00 higher. Heifers weighing under 850 pounds sold $2.00 to $7.00 higher and heifers over 850 pounds traded $2.00 to $3.00 lower. The CME Feeder Cattle Index for May 13: up $0.72, $131.73.

LEAN HOGS:

Other than the slight dip in prices that the market saw early in April, the lean hog contracts have gotten accustomed to trading fully higher until this past week. With traders leery about how much higher the market could truly go, they wanted to see solid advancements made from the market's fundamentals. With the choppy trade in both cash prices and pork cutout values, traders let the market wane lower. June lean hogs closed $1.37 lower at $108.72, July lean hogs closed $1.10 lower at $109.00 and August lean hogs closed $0.95 lower at $104.77. If pork cutouts can continue to chop sideways, the downward progression may be done slowly, but if pork cutout prices gush lower, then the futures complex will most likely follow. Favoring producer's position is the fact that supplies of market ready hogs continue to remain extremely low. Pork cutouts totaled 340.34 loads with 308.79 loads of pork cuts and 31.55 loads of trim. Pork cutout values: down $0.49, $115.70. Friday's slaughter is estimated at 461,000 head, 1,000 head less than a week ago. Saturday's kill is projected to be around 14,000 head, 1,000 head less than a week ago. The CME Lean Hog Index for May 12: down $0.01, $110.94.

­­­­­MONDAY'S CASH HOG CALL: Steady to somewhat lower. Seeing that slaughter speeds are trending lower leads one to believe that packers aren't going to dive "hog wild" into Monday's cash market.




Friday Midday Livestock Market Summary - Contracts Pray Damage is Minimal

GENERAL COMMENTS:

This week has been anything but predictable and the livestock future s are counting down the minutes until Friday's last bell. After Thursday's depressing trade, traders seem to be content to let the weekend come before doing much more in the contracts. July corn is down 13 3/4 cents per bushel and July soybean meal is up $1.40. The Dow Jones Industrial Average is up 286.87 points and NASDAQ is up 267.88 points.

LIVE CATTLE:

After Thursday's depressing trade, the live cattle market was hoping to simply skate by Friday and head into the weekend without any more damage. The contracts are mostly lower, but as of now the losses aren't vast, as only modest pressure looms above the market heading into Friday afternoon trade. June live cattle are up $0.15 at $115.75, August live cattle are down $0.40 at $119.00 and October live cattle are down $0.42 123.62. Seeing how boxed beef prices close Friday afternoon will be interesting as at midday the market is showing both choice and select cuts lower. The cash cattle market hasn't sold many cattle this week and there's yet to be any bids renewed as of Friday morning. It's looking like this week's business is mostly done with, though a little clean-up trade could develop here and there before the weekend.

Boxed beef prices are lower: choice down $0.64 ($316.14) and select down $2.97 ($292.94) with a movement of 74 loads (39.53 loads of choice, 9.38 loads of select, 18.09 loads of trim and 7.22 loads of ground beef).

FEEDER CATTLE:

It feels like feeder cattle futures only trade adversely to the corn market when corn prices are trading lower. As the feeder cattle complex sits back and tries to gain a grasp on what's going on in the live cattle, cash cattle and corn markets to determine what its own trajectory should be next, a puzzling situation presents itself. With corn prices down hard Friday morning, one would think feeder cattle contracts would be rallying with joy! But unless the live cattle market shows more promising outcomes for fat cattle. It's hard to add much pep in your step when cash cattle seem to be topped out at $119 to $120 amid $6.00 corn. May feeders are down $0.35 at $137.10, August feeders are down $0.22 at $150.27 and September feeders are down $0.25 at $151.72.

LEAN HOGS:

Lean hog futures are starting to move lower as traders are not willing to support the complex unless a sure sign from either starkly higher pork cutout values arises or wildly higher cash hog prices. It's been a mostly lower-trending week for the contracts and it's not looking like Friday will round out the day any higher than steady at this point. June lean hogs are down $0.15 at $109.95, July lean hogs are down $0.05 at $110.05 and August lean hogs are up $0.15 at $105.87. Seeing that it's Friday and packers have been running extremely light Saturday kills as a shortage of labor continues to be troubling, Friday will most likely round out the week without any crazy developments.

The projected CME Lean Hog Index for 5/13/2021 is down $0.01 at $110.93 and the actual index for 5/12/2021 is down $0.01 at $110.94. Hog prices are lower on the National Direct Morning Hog Report, down $1.95 with a weighted average of $108.11, ranging from $103.12 to $121.00 on 2,862 head and a five-day rolling average of $110.56. Pork cutouts total 204.01 loads with 182.64 loads of pork cuts and 21.37 loads of trim. Pork cutout values: up $0.21, $116.40.




Friday Morning Livestock Market Update - Livestock Futures Could Bounce

GENERAL COMMENTS:

It was an ugly day Thursday with futures falling in all categories of the livestock complex. Live cattle were hit hard, eliminating basically all of the gains of the week. Plummeting grain prices had no influence as the cattle market was trumped by the rumor of a major beef plant not running a Saturday slaughter schedule. This is a bit confusing due to strong boxed beef prices and slaughter weights declining. One would think packers would want to process cattle in order to meet demand and take advantage of the phenomenal price spread between cash and boxed beef. Maybe the substantial profits being made are allowing them to take some time off. Prior to that rumor surfacing, the dismal exports sales report of only 13,100 metric tons of sales, which were down 22% from last week and down 35% from the four-week average, set the stage for lower futures. The drop in futures will be difficult to regain as those traders who recently bought into the market got burnt and may remain sidelined.

Hogs again took a beating, but not to the extent of cattle, but significant losses nonetheless. Lower weekly export sales had a large influence of the selling pressure with sales of 14,700 metric tons, down 69% from last week and down 25% from the four-week average. China was the second largest buyer, but they have trimmed their purchases quite noticeably over the past number of weeks. Cash also was down Thursday with the National Direct Hog report showing cash down $2.28. There is an unfilled price gap in the August futures contract. Saturday slaughter is projected to be 15,000 head.

BULL SIDE BEAR SIDE
1) June cattle have a substantial discount to cash, which should bring futures back up. Cash is expected to be no worse than it currently is moving forward. 1)

The failure of the cattle market Thursday in the face of falling grain prices is not a good sign. It may indicate the inability of prices rising is not just the result of high feed prices.

2) The knee-jerk reaction of the trade based on the rumor of a beef plant not running on Saturday might have run its course. It should have little lasting impact on the whole of the industry. 2) If less cattle will be processed due to a major plant closing on Saturday and another possibly next week, there may be limited reason for packers to be aggressive with purchases in the near-term, limiting cash potential.
3) The good news is that both the June and August hog futures contracts closed their chart gaps that were left in the market on May 3. Technical traders can now put that behind them. 3) The bad news is that July hog futures have not closed their price gap that was left on May 3. Unfortunately, price will need to drop 85 cents to accomplish that task.
4) Pork cutouts was significantly higher Thursday offsetting lower cash. Packers will need to remain aggressive to purchase the hogs to fill demand. 4) If demand from China continues to taper off and exports decline as a whole, it may allow for more pork to be available domestically.



Thursday, May 13, 2021

Thursday Midday Livestock Market Summary - Pressure is Building Even Though Corn Trades Lower

GENERAL COMMENTS:

Seeming to want to better understand if the corn market intends to fall lower just through Thursday trade or continue to decline, traders have stepped away from not only corn futures but also the livestock contracts. July corn is down 40 cents per bushel and July soybean meal is down $26.20. The Dow Jones Industrial Average is up 425.25 points and NASDAQ is up 88.15 points.

LIVE CATTLE:

The cash cattle market is a tricky one this week as half the market seems to be set on holding out and demanding higher prices amid stellar boxed beef profits, but the other half was willing to trade cattle on Tuesday with delayed delivery extending into the second week of June. As feedlots look at the corn market and see prices finally starting to remember that gravity eventually pulls everything back down to earth, some feedlots are hopeful and are tired of the market's steady to lower prices and want to see more offered. Unfortunately, the board isn't helping feedlots' quest to demand higher prices as the market tumbles at least $3.00 lower in most of the contracts. June live cattle are down $3.70 at $114.90, August live cattle are down $4.00 at $118.32 and October live cattle are down $3.85 at $122.70. The cash cattle market is still quiet with only one bid renewed in Nebraska at $119.

Beef net export sales of 13,100 metric tons (mt) reported for 2021 were down 22% from the previous week and 35% from the prior four-week average. The three largest buyers were Japan (4,100 mt), China (2,400 mt) and South Korea (2,000 mt).

Boxed beef prices are mixed: choice up $2.00 ($317.08) and select down $0.71 ($296.45) with a movement of 50 loads (21.94 loads of choice, 7.16 loads of select, 5.31 loads of trim and 15.59 loads of ground beef).

FEEDER CATTLE:

Even though corn futures are mostly 31- to 40-cents lower, the feeder cattle contracts are lower too. Early Thursday morning the contracts were reveling in the fact that for another day it looked like traders were going to support higher trade as the rising cost of inputs had subsided for the time being. But I guess that teaches us not to put the cart before the horse. As the corn market plunges lower, traders seem to be growing more and more aware of how volatile the market can be when prices are as exuberant as they've become in corn t and have consequently stepped away from the market all together. May feeders are up $0.40 at $137.15, August feeders are down $0.85 at $149.67 and September feeders are down $0.85 at $151.20.

LEAN HOGS:

Lean hog futures continue to trade lower, not seeming to care one way or another what the market's fundamentals do. June lean hogs are down $2.17 at $109.87, July lean hogs are down $2.35 at $109.57 and August lean hogs are down $2.20 at $105.45. The morning's export report was lower, but still China continues to be one of the market's three largest buyers, which is always encouraging. Given that it's only the middle of May and the peak of grilling season remains ahead of the market, pork demand should continue to thrive. Since the market has jumped to abnormally high prices, we must remember that volatile price swings are expected.

Pork net export sales of 14,700 mt reported for 2021 were down 69% from the previous week and 25% from the prior 4-week average. The three largest buyers were Mexico (5,300 mt), China (3,000 mt) and Japan (2,000 mt).

The projected CME Lean Hog Index for 5/12/2021 is down $0.01 at $110.94, and the actual index for 5/11/2021 is up $0.22 at $110.95. Hog prices are lower on the National Direct Morning Hog Report, down $1.55 with a weighted average of $110.06, ranging from $104.44 to $121.00 on 2,134 head and a five-day rolling average of $110.82. Pork cutouts total 139.09 loads with 121.30 loads of pork cuts and 17.80 loads of trim. Pork cutout values: up $6.34, $120.45.




Thursday Morning Livestock Market Update - Strength in Futures to Continue

GENERAL COMMENTS:

Live cattle futures were mixed, but generally higher despite the significant weakness of corn futures. The beneficiaries of the decline of corn were the feeder cattle, which posted triple-digit gains. Further pressure on grains overnight should again benefit the cattle complex. Some cash business took place Wednesday in the South at $119 to $120 with dressed cattle in the North at $191. Further business should unfold Thursday as packers will need to keep purchasing ahead. Boxed beef continues to escalate seeing no price resistance and continually widening the price gap between cash and boxed beef. USDA forecast beef production to reach 27.970 billion pounds this year with production next year slightly lower at 27.405 billion pounds. Exports are estimated this year at 3.227 billion pounds and 3.225 billion pounds in 2022. The estimate for steer price is forecast at $116.30 this year with an increase to $122 next year.

The selling fiasco seems to have run its course despite weakness on the National Direct Hog report Wednesday. Packers were more aggressive Wednesday, remaining intent on purchasing supplies. Tightening supply of hogs will require packers to be more willing write larger checks to obtain those supplies, providing demand continues to remain as strong as it has. The overall futures trend is higher, but there is a technical concern that the break of futures since the end of last week was not enough to close the chart gaps remaining under the market. USDA forecast pork production at 28.236 billion pounds this year, raising production to 28.560 billion pounds for 2022 on the World Agricultural Supply and Demand report. Exports this year are estimated to reach 7.427 billion pounds and 7,425 billion pounds next year. Slaughter Thursday is estimated at 482,000 head. Saturday slaughter is estimated at 15,000 head.

BULL SIDE BEAR SIDE
1) Higher cash cattle would do wonders for the market and it appears that may be accomplished. The limited amount of cattle sold this week indicates the potential for something better than last week. 1) Beef export sales may be the key to continued strength Thursday as steady-to-higher cash may already be factored in. Weak sales could eliminate some of the gains.
2) Cattle futures were able to hold its gains Wednesday supported by weakness of corn futures. Further weakness overnight should provide some confidence to both feedlots and traders alike. 2) Packers have cattle already on hand and may not need to be very aggressive with their purchases this week, which may leave cash prices steady to $1.00 higher at best. Not what feedlots want to see with high feed prices.
3) Selling pressure seems to have subsided for now. Packers were aggressively looking for hogs Wednesday. Even though cash was lower, cutouts were higher. 3) Hog futures were higher in closer months, but just could not hold the triple-digit gains of the day. Traders were cautious to buy back into the break in futures.
4) Continued strong export sales would possibly provide further support to futures Thursday as it would mean both export and domestic demand would need to be met with higher cash to obtain the needed supplies. 4) Export sales will need to be strong or the market could see some continued weakness. It could indicate high prices might have reached international buyer resistance.




Wednesday, May 12, 2021

Wednesday Midday Livestock Market Summary - Cattle Feeling Confident Amid Weaker Corn Prices

GENERAL COMMENTS:

Even though corn prices are still plenty high for feedlots liking, any downward trade is a good day in their books. Both the live cattle and feeder cattle contracts are soaking up the day's opportunity to trade higher while the corn market is pressured to trade lower. If the market can keep this progression through the day, it may have a positive effect on the cash cattle market. July corn is down 1 3/4 cents per bushel and July soybean meal is up $3.40. The Dow Jones Industrial Average is down 472.60 points and NASDAQ is down 318.74 points.

LIVE CATTLE:

Live cattle futures are battling for higher prices. Even though the market faced some minor resistance through midmorning, the market is now back to trading fully higher. June live cattle are up $0.70 at $119.30, August live cattle are up $0.60 at $122.65 and October live cattle are up $0.50 at $126.65. Even though the morning's online auction is done, the market is still quiet without any bids placed by packers and without feedlots seeming to be in too big of a hurry as they sit back and watch the corn market trade lower. The market will see more cash cattle trade develop but it could wait until potentially Thursday to break loose. Asking prices are noted in the South at $120 and in the North at $193.

The Fed Cattle Exchange Auction listed a total of 2,749 head, of which 1,458 actually sold, 82 head were scratched from the auction and 1,209 head were listed as unsold, as they did not meet the reserve prices, which ranged from $118.25 to $120. Opening prices ranged from $117.50 to $119, high bids ranged from $118.50 to $120.25. The state-by-state breakdown looks like this: Texas 1,712 total head, with 82 head scratched from the auction, and 1,158 head sold at $119.25-$120.25, 472 head unsold; Nebraska 783 total head, with 232 head sold at $120, 551 head unsold; Kansas 254 total head, with 68 head sold at $120.00, 186 head unsold.

Boxed beef prices are higher: choice up $2.34 ($314.71) and select up $1.39 ($297.73) with a movement of 67 loads (39.12 loads of choice, 6.34 loads of select, 12.22 loads of trim and 9.09 loads of ground beef).

FEEDER CATTLE:

As the corn market trades mostly lower, the feeder cattle contracts are hoping corn will keep in a mostly downward spiraling trend. May feeders are up $0.75 at $136.07, August feeders are up $0.77 at $149.62 and September feeders are up $0.97 at $151.45. There's still a lot that could develop Wednesday, but currently the lower corn prices mixed with the fact that fat cattle are seeing a slight increase in price, all while be accompanied by stronger boxed beef prices, encourages the feeder cattle market. But, as always, if the corn market makes a turn and scales for higher ground, the feeder cattle contracts will face a tough fight once again.

LEAN HOGS:

Lean hog futures are trying to hold a rally in the nearby contracts while the deferred contracts trade lower. Some of the deferred contracts pressure could be stemming from the WASDE report as the second quarter of 2021 is forecast to be the highest earning quarter for the year and from there the market sees a gradual decline all the way until year's end. June lean hogs are up $0.92 at $112.10, July lean hogs are up $0.62 at $112.05 and August lean hogs are up $0.80 at $107.55.

The projected CME Lean Hog Index for 5/11/2021 is up $0.22 at $110.95, and the actual index for 5/10/2021 is up $0.63 at $110.73. Hog prices are lower on the National Direct Moring Hog Report, down $0.10 with a weighted average of $111.61, ranging from $105.76 to $124.00 on 5,550 head and a five-day rolling average of $110.97. Pork cutouts total 168.41 loads with 142.79 loads of pork cuts and 25.62 loads of trim. Pork cutout values: up $4.90, $118.10.




Wednesday Morning Livestock Market Update - Cattle Futures Will Need to See Higher Cash

GENERAL COMMENTS:

Live cattle put in a strong day Tuesday, fueled mostly by continuing higher boxed beef prices. Some cattle being traded in the North at slightly higher prices for deferred delivery helped as well. This sets the potential for possible higher cash this week. It is Wednesday and bids and offers should surface, testing the resolve of both packers and feedlots. Packers do not want to bid higher and are hoping the increase of grain prices again Tuesday and overnight might push feedlots to sell cattle. Feedlots will decide if it is worthwhile holding out for higher prices only to pay higher prices for the feed they need to feed them for a few more weeks. Live cattle futures have made more than a 50% price retracement and have accomplished that with a vengeance. That level of support from futures could translate over into stronger cash.

Hogs took a beating again with the dip of futures deeper than many expected. Technically, the price gaps may be the magnet with June nearly able to close its gap Tuesday. July and August have a greater distance before that will be accomplished. Generally, a fund liquidation phase lasts two to three days before it runs its course, and Tuesday was day three. The National Direct Afternoon hog price was supportive, posting a solid increase of $5.18. This could stem the selling tide from a fundamental standpoint. Cutouts were only slightly higher.

BULL SIDE BEAR SIDE
1)

Cattle futures have increased substantially even in the face of rising grain prices again Tuesday. There may be more to come.

1) Cattle futures have accomplished a 50% price retracement and more, which may make technical traders settle back to see if underlying cash is going to follow.
2) There is a strong potential for cash to trade higher this week as there was some stronger trade in the North Tuesday. Strong demand needs to be met, possibly making packers more aggressive with purchases. 2) Higher cash trade is still not assured for the week. Wednesday should see bids and offers surfacing. Higher grain prices remain, and the USDA is releasing the World Agricultural Supply and Demand report Wednesday, which is not expected to be bearish.
3) The significantly higher National Direct Hog price could change the minds of traders, turning them into buyers of this break. 3) Hog futures having been moving to fill the chart gaps but have not yet accomplished that task. Those may be filled before contracts turn higher.
4) Three days of liquidation generally results in a market that runs out of aggressive selling. Fundamentals again take over and those fundamentals have not changed. Demand is strong and hog supplies are tight. 4) Hog supplies have remained high enough to keep chain speeds aggressive. Buyers continue to find market-ready hogs.


**

Tuesday, May 11, 2021

Tuesday Closing Livestock Market Update - Feeder Cattle Hold Onto Gains Amid Higher Corn

GENERAL COMMENTS:

Tuesday's trade wasn't kind to the lean hog market, but the cattle contracts had another strong day even though the corn market tried to pressure the contracts into trading lower early in the afternoon. Hog prices are unavailable on the National Direct Afternoon Hog Report due to technical issues at UDSA. July corn is up 10 1/2 cents per bushel and July soybean meal is up $4.70. The Dow Jones Industrial Average is down 473.66 points and NASDAQ is down 12.43 points.

LIVE CATTLE:

Feedlots lightly tested this week's market in the North and were able to capture higher prices, but a large portion of the cattle that sold Tuesday afternoon are for delivery in the weeks of 5/24/2021 and 6/7/2021. Feedlots are feeling an immense amount of pressure right now. From the outrageous expense of corn, to the pressure of selling cash cattle for dismal prices, they have more to manage and more decisions to weigh through than most could even handle. It's easy to look at feedlots and point your finger and complain they let cattle go early in the week, but with daily cost of gains eating away at margins there's some relief in knowing you've got a secured delivery date and forgoing anymore of the gamble.

The board closed fully higher Tuesday afternoon and continues to be supported by stellar boxed beef prices. June live cattle closed $0.40 higher at $118.62, August live cattle closed $1.70 higher at $122.05 and October live cattle closed $1.60 higher at $126.15. Aside from trying to decide if Tuesday's cash cattle trade was a smart move or if it stole the market's opportunity to rally significantly, the other disappointing element of the live cattle market was Monday's slaughter correction. Slaughter speeds are expected to push this week's kill past 650,000 head, but with Monday's kill backed down to 112,000 head, the rest of the week is going to have to run full bore. Tuesday's slaughter is estimated at 118,000 head -- 3,000 head less than a week ago. Monday's cattle slaughter was revised to 112,000 head, that's 7,000 head less than the originally stated 119,000 head.

Boxed beef prices closed higher: choice up $3.26 ($312.37) and select up $2.58 ($296.34) with a movement of 106 loads (73.46 loads of choice, 11.40 loads of select, 7.46 loads of trim and 13.21 loads of ground beef).

WEDNESDAY'S CASH CATTLE CALL: Higher. With packers looking to escalate processing speeds and feedlots hungry for stronger prices, the market shouldn't have difficulty trading higher. The big question will be if all the cattle that sell higher come with a deferred delivery or not.

FEEDER CATTLE:

Feeder cattle futures were able to redeem themselves after trading fully lower earlier Tuesday when the corn market shot $0.20 higher in some of the nearby contracts. As the afternoon played out, the corn market's rally cooled and even though corn still closed $0.10 to $0.11 higher in the May and July contracts, feeder cattle contracts bounced back and closed modestly higher. May feeders closed $0.12 lower at $135.32, August feeders closed $0.15 higher at $148.85 and September feeders closed $0.40 higher at $150.47. Wednesday's WASDE report will be big for the feeder cattle complex as the market looks to gain a stronger understanding on how the corn outlook looks. At Russell Livestock Auction in Russell, Iowa, compared to two weeks ago steer calves under 550 pounds sold steady to $2.00 lower, while the heavier steers sold sharply higher. Heifer calves under 600 pounds sold $5.00 to $8.00 lower but heifers over 600 pounds were steady to sharply higher. Demand was exceptionally strong for the heavier-weighted offerings. The CME Feeder Cattle Index 5/10/2021: not available at this time.

LEAN HOGS:

Even though pork cutouts closed higher and slaughter continues to run at an aggressive speed given the number of hogs available, traders are not quick to jump in and support this week's lean hog market. June lean hogs closed $0.92 lower at $111.17, July lean hogs closed $1.27 lower at $111.42 and August lean hogs closed $1.35 lower at $106.75. Pork cutouts totaled 310.83 loads with 291.75 loads of pork cuts and 19.09 loads of trim. Pork cutout values: up $0.04, $113.20. Tuesday's slaughter is estimated at 485,000 head - 2,000 head less than a week ago. The CME Lean Hog Index 5/7/2021: up $0.88, $110.10.

WEDNESDAY'S CASH HOG CALL: Higher. Even if the board is trading lower, that doesn't change the fact that consumers are hungry and they are willing to pay high prices for pork, which means packers are going to want to continue to secure supplies to feed the market.





Tuesday Midday Livestock Market Update - Feeder Cattle and Corn Keep Going Rounds

GENERAL COMMENTS:

The livestock complex heads into Tuesday's afternoon mixed as the market has support and pressure stemming from many different angles in the various contracts. The biggest change since Monday's trade is that the corn market has again decided that it's going to rally and has consequently sent feeder cattle contracts tumbling lower. July corn is up 18 3/4 cents per bushel and July soybean meal is up $7.10. The Dow Jones Industrial Average is down 491.62 points and NASDAQ is down 44.08 points.

LIVE CATTLE

Even though the feeder cattle contracts are diving lower, the live cattle contracts are keeping their gains. If this type of encouragement continues, the market may even be able to have a positive influence on this week's cash cattle trade. June live cattle are up $0.07 at $118.30, August live cattle are up $0.75 at $121.10 and October live cattle are up $0.90 at $125.45. The market has every reason to trade higher with soaring beef prices, loyal consumers and lots of room to trade before the market nears resistance again. The cash cattle market has yet to test the waters this week and maybe, just maybe, feedlots will have a chance at keeping prices at least steady if both the board and boxes continue to trade higher. Asking prices in the South have been noted at $120, and the North has yet to share their asking price.

Boxed beef prices are higher: choice up $2.84 ($311.95) and select up $2.59 ($296.35) with a movement of 58 loads (35.18 loads of choice, 5.75 loads of select, 3.63 loads of trim and 13.28 loads of ground beef).

FEEDER CATTLE

Signing up to keep tabs on the feeder cattle market feels a lot like signing up to test a never-ending roller coaster that has the biggest twists and turns ever seen. Corn prices shoot higher, feeder cattle crash lower; corn prices shoot lower, cattle scamper higher -- and the drastic nature of the changes is never mild. Earlier Tuesday morning, the feeder cattle contracts were trying to hold onto to the momentum that Monday's market successfully held, but as the corn market quickly gained traction and jumped to $0.18 to $0.22 higher in the nearby contracts, the feeder cattle market lost its gusto rather quickly. May feeders are down $0.60 at $134.85, August feeders are down $0.17 at $148.50 and September feeders are down $0.12 at $149.95.

LEAN HOGS

The lean hog market is still scaling lower as traders are slow to enter the market this week, but demand is roaring and it's showing through the market's fundamentals. June lean hogs are down $0.87 at $111.22, July lean hogs are down $1.27 at $111.42 and August lean hogs are down $1.30 at $106.80. With cash prices up a significant $2.41 on nearly 6,000 hogs at only the midday report, packers are back to buying up supplies and have intentions to run chain speeds so long as they have the pork to process. Some may look at the boards doggish trade and find it hard to believe that the market's fundamentals are doing one thing while the market's technical sector does another, but we must remember that when the prices get as lofty as they are, choppy up and down trade is expected.

The projected lean hog index for May 10 is up $0.63 at $110.73, and the actual index for May 7 is up $0.88 at $110.10. Hog prices are higher on the National Direct Moring Hog Report, up $2.41 with a weighted average of $111.71, ranging from $105.76 to $125.00 on 5,703 head and a five-day rolling average of $111.65. Pork cutouts total 199.65 loads with 189.61 loads of pork cuts and 10.04 loads of trim. Pork cutout values: up $0.55, $113.71.




Tuesday Morning Livestock Market Update - Cattle Futures Expected to Extend Gains

GENERAL COMMENTS:

Cattle finally found the support they needed from significant pressure on corn prices Monday. One day of the movement in futures contracts does not indicate a change in underlying cash, but it does provide some hope feed prices may become a bit less expensive. With corn prices a bit less expensive, it may provide feedlots with some ability to hold out for higher cash prices. However, it has just been one day and it may not translate yet into less expensive grain from feed suppliers. Grain prices will need to be consistently lower for an extended period. The upcoming World Agricultural Supply and Demand report and weather forecasts can change that quickly. There were no cash bids or offers Monday, but it is expected packers will not bid higher. Boxed beef was very strong again Monday as demand is on fire. Dressed cattle weights were down 2 pounds last week from the previous week, averaging 828 pounds, but up 8 pounds from the same week a year ago. The Commitments of Traders report showed funds as net sellers of 6,030 futures contracts, bringing their net-long positions down to 48,865 contracts.

Hogs just could not follow in the same footsteps as cattle. Cash on the National Direct Hog report again showed substantial weakness, down $1.48. Cutouts were also down, which added some pressure. Lower futures have not changed the trend of the market as it is solidly higher, but it does provide cause for concern. We know the market cannot move higher forever as higher prices will eventually reduce demand. However, tight supplies in the midst of strong demand will absorb any extra product that may carry over from one day or one week to the next leaving little opportunity for a build of supply. Packers may need to step back up to the plate again to obtain desired supply. The Commitments of Traders report showed funds were net buyers of 460 contracts, increasing their net-long position to 71,577 contracts.

BULL SIDE BEAR SIDE
1)

Cattle futures broke out of the sideways range they had been in. This may bring traders back to buy more aggressively.

1)

If the only reason cattle futures can rally is due to lower corn futures, the market may have limited upside potential. It needs more than that.

2)

Continued strength of boxed beef will require packers to continue to satisfy demand. If sufficient cattle are not being offered for sale, they may need to increase bids to entice feedlots to sell.

2)

Packers will not bid higher this week unless they have to. With cattle forward purchased, they can afford to wait and see if there is continued willingness of feedlots to sell.

3)

The uptrend in hog futures is still intact and a price correction was needed to relieve a technically overbought market. Traders may buy the break.

3)

Lower cash is of some concern. One has to wonder if some price resistance is beginning to surface.

4)

There is no indication demand has slowed or hogs have become more abundant. Market fundamentals remain bullish.

4)

A price correction could be deeper this time due to the lofty futures prices. Further weakness of cash or cutouts could pressure the market.




Monday, May 10, 2021

Monday Closing Livestock Market Summary - Break in Corn Prices Allows for Cattle to Move Higher

GENERAL COMMENTS:

It was a great day for the cattle contracts as a surprising break in the corn market's rally allowed for the cattle contracts to close higher. Meanwhile, the lean hog contracts neglected to attract traders and closed the day mixed, but with slaughter speeds continuing to run at respectable levels, traders most likely were quiet through Monday's trade to see if the market's fundamentals were going to shine through before they support the market any further. Hog prices closed lower on the National Direct Afternoon Hog Report, down $1.48 with a weighted average of $112.22 on 4,695 head. July corn is down 20 1/2 cents per bushel and July soybean meal is up $0.50. The Dow Jones Industrial Average is down 34.94 points and NASDAQ is down 350.38 points.

LIVE CATTLE:

The live cattle contracts weren't as aggressive throughout Monday's trade as the feeder cattle contracts were, but the complex did close fully higher. June live cattle closed $2.20 higher at $118.22, August live cattle closed $1.50 higher at $120.35 and October live cattle closed $1.10 higher at $124.50. Thankfully, Monday's slaughter is estimated at a snappy 119,000 head, which is far better than the 114,000 head that the market saw last week. In order to keep the market current and to get enough product into the hands of consumers, the market needs to see daily processing speeds at or near 120,000 head each and every day. The cash cattle market was at an utter standstill without any business developing. Asking prices have yet to be released but should be known by midmorning Tuesday. New showlists appear to be mixed, higher in Texas, somewhat lower in Kansas, and lower in Nebraska and Colorado. Monday's slaughter is estimated at 119,000 head, 5,000 head more than a week ago.

Last week's negotiated cash cattle trade totaled 83,883 head. Of that 64% (54,064 head) were bought with delivery in the next two upcoming weeks, while the remaining 36% (29,819 head) are scheduled for delivery in the following 15 to 30 days.

Boxed beef prices closed higher: choice up $3.23 ($309.11) and select up $3.49 ($293.76) with a movement of 71 loads (35.02 loads of choice, 13.83 loads of select, 13.30 loads of trim and 9.15 loads of ground beef).

TUESDAY'S CASH CATTLE CALL: Steady. Packers are going to be hard to deal with again this week as they have a plethora of cattle already committed for this time in their forward bought purchases. But if processing speeds continue to run at a vigorous pace, they may need to work the cash cattle market a little bit more aggressively than they have in weeks past.

FEEDER CATTLE:

The corn complex had a strenuous day and saw losses anywhere from $0.17 to $0.27 lower, which allowed for the feeder cattle contracts to have a gain-busters type of day. May feeders closed $3.72 higher at $135.45, August feeders closed $4.42 higher at $148.70 and September feeders closed $4.02 higher at $150.07. At Oklahoma National Stockyards in Oklahoma City, Oklahoma, compared to last week at midsession, feeder steers sold steady and feeder heifers sold steady to $2.00 higher with the most advancements on the heavier weights. Steer calves traded $2.00 to $4.00 higher and heifer calves sold steady. Demand was moderate to good and the countryside has been recently blessed with moisture, which is helping grass come along. The CME Feeder Cattle Index for May 7: down $0.68, $130.15.

LEAN HOGS:

The lean hog contracts struggled throughout the day and the nearby contracts never were able to summon enough support to close higher but the deferred contracts did round out the day mildly higher. June lean hogs closed $0.75 lower at $112.10, July lean hogs closed $0.85 lower at $112.70 and August lean hogs closed $0.92 lower at $108.10. Pork cutout values closed slightly lower, but the day's slaughter ran aggressively again, which is a continued positive sign for pork demand. Pork cutouts total 259.95 loads with 238.36 loads of pork cuts and 21.59 loads of trim. Pork cutout values: down $0.63, $113.16. Monday's slaughter is estimated at 483,000 head, 5,000 head more than a week ago. The CME lean hog index 5/6/2021: up $0.67, $109.22.

TUESDAY'S CASH HOG CALL: Steady to somewhat higher. Sure, Monday's cash hog market closed slightly weaker, but with supplies as thin as they are for market-ready hogs, packers are having to support the market regardless of its prices level.




Monday Midday Livestock Market Update - Weaker Corn Prices Give Cattle Contracts Hope

GENERAL COMMENTS:

Monday's pressure on the corn contracts has come as a beaming hope of joy for the feeder cattle contracts. Both the live and feeder cattle contracts are rallying into Monday's afternoon trade, but the feeder cattle contracts are making the most of the day's opportunity and are trading upward of $3.00 higher. July corn is down 19 1/4 cents per bushel and July soybean meal is down $1.40. The Dow Jones Industrial Average is up 264.80 points and NASDAQ is down 177.84 points.

LIVE CATTLE

The live cattle contracts aren't jumping into Monday's market as boldly as the feeder cattle contracts are. but still, higher trade is higher trade! June live cattle are up $2.00 at $118.02, August live cattle are up $0.95 at $119.80 and October live cattle are up $0.62 at $124.07. Following last week's cash cattle market, where prices traded anywhere from $1.00 to $2.00 lower, feedlots are praying that this week is better. With rewarding boxed beef prices and consumer demand that seems to be relentless, packers should be willing to dive into the cash cattle market, but feedlots know that, unfortunately with packers' forward boughten supplies, their eagerness will still be minute. This week's showlists are somewhat higher in Texas, fully higher in Kansas but lighter in Nebraska and Colorado.

Last week's negotiated cash cattle trade totaled 83,883 head. Of that 64% (54,064 head) were bought with delivery in the next two upcoming weeks, while the remaining 36% (29,819 head) are scheduled for delivery in the following 15 to 30 days.

Boxed beef prices are higher: choice up $1.64 ($307.52) and select up $3.28 ($293.55) with a movement of 33 loads (14.63 loads of choice, 5.59 loads of select, 4.74 loads of trim and 7.70 loads of ground beef).

FEEDER CATTLE

It's not a bird, it's not a plane, and no it's not superman -- the corn market is just trading lower, which has given the feeder cattle contracts the opportunity to trade sharply higher. May feeders are up $3.02 at $134.75, August feeders are up $3.57 at $147.85 and September feeders are up $3.15 at $149.20. The feeder cattle contracts have suffered a long, sharp decline thanks to the onset of wildly high corn prices and so, if the market extends any opportunity to climb out of the recently dug pit of sorry cattle prices, the market is jumping with joy. Looking at the countryside this week, the market doesn't expect to see a large number of calves and feeder cattle trade as most of the yearlings have already been worked through and there are a couple of weeks still to pass before producers begin to test the this year's feeder cattle market.

LEAN HOGS

The lean hog complex isn't breaking doors down to run bullishly into this week's trade like last week's market did. Instead, its seeming as if traders are curious as to how much the market's fundamentals are going to support these higher prices and want to be certain that the market will indeed continue to support these levels before scaling the market even higher. June lean hogs are down $0.82 at $112.02, July lean hogs are down $0.72 at $112.82 and August lean hogs are down $0.47 at $108.55. We know better than to put the cart before the horse, or in this case, maybe we should say to put the report in front of the hogs, but the morning's pork cutout is extremely light. Seeing how the afternoon report prints will be vital in trying to understand what the rest of the week's trajectory looks like.

The projected lean hog index for May 7 is up $0.88 at $110.10, and the actual index for May 6 is up $0.67 at $109.22. Hog prices are lower on the National Direct Morning Hog Report, down $0.51 with a weighted average of $109.30, ranging from $105.77 to $125.00 on 3,495 head and a five-day rolling average of $111.62. Pork cutouts total 98.59 loads with 83.97 loads of pork cuts and 14.62 loads of trim. Pork cutout values: up $1.98, $115.77.




Monday Morning Livestock Market Update - Lower Grain Futures May Provide Support

GENERAL COMMENTS:

Cattle have a lot of head wind to move against to begin the week. Traders will have no bids or offers in the cash market to provide any direction. The failed action of futures on Friday also may keep a negative tone in the market. What looked like strong follow-through from Thursday, ran out of buyer interest and fell back. There was nothing to go on in the cash market as business had mostly been accomplished for the week. Boxed beef prices moved substantially higher, but that did not translate to cash prices. I hate to say it, but much of the same may be in store for this week. You can be assured packers are not going to look at higher boxed beef prices and strong demand and decide to bid significantly higher this week just to be nice. They have some cattle purchased ahead and will see no need to throw out bids early. This week will test the resolve of feedlots. However, lower grain futures may relieve some pressure.

Hog have had a lot going for them with higher cash and cutouts keeping futures making new highs prior to Friday. However, the weakness of futures in closer months may have been in response to decline in the cash price. Another factor may have been an overbought market and the desire of traders to take a profit going into the weekend. The pattern has been that any retracement of futures has been a buying opportunity. Tightening hog supplies should bring packers back into the market aggressively as it is becoming more difficult to find market-ready hogs. Just how deep the weakness of Friday will continue is anyone's guess. The concern is the price gaps below the market in the June, July and August contracts.

BULL SIDE BEAR SIDE
1)

Packers may be willing to purchase cattle at steady money this week as the liquidation phase of feedlots might have run its course.

1)

Cattle futures could not hold the highs Friday, possibly indicating it was only a short-covering rally before the weekend and nothing more. Once buying was accomplished, the markets had nothing more to support them.

2)

Live cattle futures seem to have broken out of the sideways trading range they had been in for about two weeks. Higher futures could provide optimism for steady to higher cash this week.

2)

Cash does not look too promising this week due to packers not needing to be aggressive and able to afford to wait and see if cattle will be offered aggressively.

3)

August and later hog futures made new contract highs again Friday, keeping the uptrend intact despite the weakness of closer months.

3)

Chart price gaps in the June, July and August hog contracts at lower levels will remain formidable until closed.

4)

Cash weakness Friday is expected to be short-lived as packers should be aggressive early, looking for market-ready hogs.

4)

The significant decline in the National Direct Hog report Friday could be a foreshadow of what is to come in the near term. Traders may be apt to bank some profits until they see stronger cash.




Friday, May 7, 2021

Friday Closing Livestock Market Update - Mostly Higher Summarize Developments

 GENERAL COMMENTS:

It was another week of strong advancements in the lean hog market, but plenty of challenging hurdles to dodge in the cattle market. Hog prices closed lower on the National Direct Afternoon Hog Report, down $2.72 with a weighted average of $113.70 on 5,116 head. July corn is up 13 1/2 cents per bushel and July soybean meal is up $14.50. The Dow Jones Industrial Average is up 229.23 points and NASDAQ is up 119.40 points.

From Friday to Friday livestock futures scored the following changes: June live cattle down $0.55, August live cattle up $0.23; May feeder cattle down $1.88, August feeder cattle down $2.47; June lean hogs up $3.13, July lean hogs up $4.30.

LIVE CATTLE:

The live cattle contracts managed to close mostly higher as traders were feeling generous in Friday's markets. June live cattle closed $0.55 higher at $116.02, August live cattle closed $0.37 higher at $118.85 and October live cattle closed $0.02 lower at $123.45. There wasn't much development that happened in the cash cattle market Friday, as the week's business was already concluded and all that was left to trade was some clean-up pens here and there. This week Southern live cattle traded for $117.50 to $119, though mostly at $118 to $119, and Northern dressed cattle traded from $187 to $192, but mostly $190.

As I sit back and take in the market's developments this past week, one can't help but notice that there are undeniable problems in the cattle market. How can it be that when boxed beef prices are rallying upward of $11.72 for the week in choice cuts and $7.56 in select cuts, and that cash cattle are trading at a measly $118 to $119 live? And better yet, when demand is as evident as it is, how can this week's movement of cuts, grinds and trim only total a mere 492 loads? To say that American feedlots aren't getting their fair share of the market is a repulsive understatement.

Friday's slaughter is estimated at 111,000 head, 4,000 head less than a week ago and only 22,000 head more than a year ago when packing plants were dealing with COVID-19. Saturday's slaughter is projected to be around 57,000 head, steady with a week ago.

Throughout the week, the boxed beef market soared higher again, showing just how hungry Americans are for beef. On average for the week, choice cuts sold for $303.51 (up $11.72 from last week) and select cuts sold for $286.70 (up $7.56 from last week) and the market's total movement of cuts, grinds and trim totaled a sparse 492 loads.

Boxed beef prices closed mixed: choice down $0.49 ($305.88) and select up $0.91 ($290.27) with a movement of 64 loads (36.44 loads of choice, 9.82 loads of select, 8.62 loads of trim and 8.64 loads of ground beef).

MONDAY'S CASH CATTLE CALL: Steady. With packers having ample supplies of forward bought cattle, their need to dive wildly into the cash cattle market is going to be slim.

FEEDER CATTLE:

The feeder cattle contracts roared into Friday's trade, as early in the day the corn market couldn't gather enough trader interest to drive prices higher. But as the day went on, the corn contracts mustered up the support they needed to close fully higher. But thankfully, the feeder cattle contracts were able to still close moderately higher. May feeders closed $1.25 higher at $131.72, August feeders closed $0.87 higher at $144.27 and September feeders closed $0.50 higher at $146.05. Largely, the feeder cattle buyers have their hands tied in the current market. With inputs continuing to rise and fat cattle prices at less than profitable price points, feeders are having a hard time buying cattle as it's a tough business to pencil at this point. At Winter Livestock Auction in Pratt, Kansas, compared to last week, feeder steers weighing 775 to 1,000 pounds sold $3.00 to $5.00 lower. Steer calves weighing 425 to 775 pounds sold $5.00 to $10.00 lower. Feeder heifers weighing 575 to 975 pounds sold $2.00 to $5.00 lower, and heifer calves weighing 400 to 575 pounds sold $7.00 to $10.00 lower. The CME Feeder Cattle Index for May 6: down $0.73, $130.83.

LEAN HOGS:

At this time last week, we were all wondering what was going to happen Monday morning when the markets opened to another week of opportunity and/or potential heartache. Would the lean hog contracts have enough gusto to surpass the resistance at $110.00? Or would traders dig their heels in the ground and say enough is enough, I'm not jumping to the moon over pork? Needless to say, as another week has come and gone, the lean hog market did it again -- onward and forward, folks -- higher ground is what the market is after. The nearby lean hog contracts felt a little pushback through Friday's trade, but the deferred contracts closed fully higher. June lean hogs closed $1.62 lower at $112.85, July lean hogs closed $1.10 lower at $113.55 and August lean hogs closed $0.90 lower at $109.02. Pork cutouts totaled 366.76 loads with 337.53 loads of pork cuts and 29.23 loads of trim. Pork cutout values: down $0.07, 113.79. Friday's slaughter is estimated at 462,000 head, 8,000 head less than a week ago. Saturday's kill is projected to be around 15,000 head, 36,000 head less than a week ago. The CME Lean Hog Index for May 5: up $0.66, $108.55.

­­­­­MONDAY'S CASH HOG CALL: Higher. Packers will most likely be active again in Monday's cash hog market, as they need to secure supplies for the weeks ahead and finding market ready hogs isn't getting any easier; if anything, it's getting harder.




Friday Midday Livestock Market Summary - Modest Corn Rally Allows Feeders to Rally

GENERAL COMMENTS:

If anything, the live cattle contracts should be encouraging the feeder cattle contracts to trade higher as the market has had the supportive nature of an exceptional boxed beef market. But Friday's developments aren't panning out to be quite that. Instead, the feeder cattle contracts are taking the lead while the corn market posts mild gains, and consequently, the live cattle market is rallying in its footsteps. July corn is up 12 cents per bushel, and July soybean meal is up $9.30. The Dow Jones Industrial Average is up 152.22 points, and the NASDAQ is up 162.66 points.

LIVE CATTLE:

The live cattle contracts are taking Friday's support with caution as the market rallies close to $1 higher but isn't willing to push the market much beyond that. June live cattle are up $1.07 at $116.55, August live cattle are up $0.97 at $119.45 and October live cattle are up $0.80 at $124.30. Even though the market's got the entire rest of the afternoon to tend to, the market is seeming all but checked out for the weekend already. Packers have bought the cattle they're going to buy, the boxed beef market has already made huge leaps and bounds throughout the week, and now it's just time to let traders trade until the day's final bell.

Boxed beef prices are mixed: choice down $0.41 ($305.96) and select up $3.04 ($292.40) with a movement of 47 loads (27.39 loads of choice, 5.30 loads of select, 8.17 loads of trim and 6.60 loads of ground beef).

FEEDER CATTLE:

Earlier in the day, the corn market was dancing on both sides of steady, seeming unsure if the market could pull off another day of higher gains. But, nevertheless, the complex is back to feeling like its normal self and is climbing modestly higher. The feeder cattle contracts have found ample support in Friday's market and are trending anywhere from $1 to $2 higher. And, earlier in the day, it was closer to $2 to $3 higher. Even with the corn market's modest rally, the feeder cattle contracts seem fairly confident in their rally, and unless corn takes a jump for the moon, the feeder cattle contracts may be able to end the week on a positive note. May feeders are up $2.30 at $132.77, August feeders are up $2.60 at $146 and September feeders are up $2.17 at $147.72.

LEAN HOGS:

The nearby contracts are feeling some modest pressure throughout Friday morning's trade, but largely, the lean hog complex is still trading higher as the deferred contracts aren't being set back from the same lack of trade support. June lean hogs are down $1.42 at $113.07, July lean hogs are down $0.62 at $114.02 and August lean hogs are down $0.57 at $109.35. The cash hog market is trending lower thus far into Friday's trade. But understanding that kill schedules are light over the week without having enough hogs to run a full schedule will obviously mitigate packers' needs at the end of the workweek.

The projected two-day lean hog index for 5/5/2021 is up $0.66 at $108.55, and the actual index for 5/4/2021 is up $0.52 at $107.89. Hog prices are lower on the National Direct Morning Hog Report, down $1.47 with a weighted average of $109.81 ranging from $108.00 to $123.00 on 2,570 head and a five-day rolling average of $111.46. Pork cutouts total 274.53 loads with 252.12 loads of pork cuts and 22.41 loads of trim. Pork cutout values: up $3.36, $117.22.




Friday Morning Livestock Market Update - Uncertainty to Dominate Markets

GENERAL COMMENTS:

It stands to reason live cattle futures would have closed higher Thursday due to ever increasing boxed beef prices. However, the disconnect between cash and boxed beef is large with packer profits around $719 per head. Yet, they have been able to procure cattle this week at mostly steady prices averaging $119.12. Consumers want beef and packers need to keep the market supplied. They are using the advantage of ever-increasing feed prices to their benefit. However, high prices may be having an impact on the export market. Weekly exports showed net sales of only 16,900 metric tons (mt). This was 28% below the previous week and 18% below the four-week average. Price might be getting too high for the international appetite. This may make more beef available to the domestic market. Technically, live cattle futures are attempting to build a level of support with futures moving in a fairly sideways pattern over the past two weeks.

Hog futures struggled for a while Thursday, but, like a child outside a candy store, traders eventually had to come in and buy. Lower futures were too enticing. Only the October contract closed slightly lower. This sets the stage for higher futures Friday. Weekly pork exports were supportive to the market with net sales of 48,200 mt. This was 38% above the previous week and higher than the four-week average. Pork exports for the month of March totaled 728.84 million pounds compared to 591.4 million pounds and February and 701.58 million pounds a year ago. Saturday slaughter is estimated at 15,000 head.

BULL SIDE BEAR SIDE
1)

Live cattle futures were able to close higher despite significant pressure on feeder cattle futures. Follow-through buying might take place Friday.

1)

Continued pressure on feeder cattle and higher feed prices do not provide much hope for a significant price rally anytime soon.

2)

Packers will need cattle and increasing demand and higher boxed beef prices may require them to raise bids and be a bit more aggressive next week.

2)

Cattle futures have not been able to break out of the sideways trading pattern they have remained in over the past two weeks. Traders remain concerned of another leg down.

3)

New highs again were seen in most hog contracts after rejecting selling pressure early Thursday. Traders continue to buy the break.

3)

It is the end of the week and some profits could be taken just in case fundamentals change over the weekend.

4)

Higher cutouts offset lower cash Thursday. Tightening supplies will keep packers searching and bidding aggressively for hogs.

4)

Futures are overbought and due for another price correction. Technical traders are becoming increasingly cautious.




Thursday, May 6, 2021

Thursday Closing Livestock Market Update - Lean Hogs, Live Cattle Lean Forward

GENERAL COMMENTS:

It was a relatively quiet day for the livestock complex with both the lean hog and live cattle contracts seeing modest support carry the contracts higher into the day's close, while the feeder cattle complex continued to sway lower as corn prices kept rallying. Hog prices closed lower on the National Direct Afternoon Hog Report, down $0.51 with a weighted average of $116.42 on 6,533 head. May corn is up 6 1/4 cents per bushel and May soybean meal is up $3.40. The Dow Jones Industrial Average is up 318.19 points and NASDAQ is up 50.42 points.

LIVE CATTLE:

The live cattle contracts managed to close fully higher and Thursday's boxed beef prices continued to soar, but the cash cattle market neglected to see any more bids renewed, and even more depressing, Thursday's slaughter is only estimated at a sorry 115,000 head. Absorbing the stark difference in the live cattle market right now is a big job to manage and it nearly makes your head spin right off your shoulders. Boxed beef prices continue to scale higher and higher as consumers are faced with short supplies amid the nation's prime grilling season. All while feedlots have cattle to sell, and packers could (keyword there being "could") run faster chain speeds -- but instead feedlots are left without bids and consumers are faced with higher beef prices once again.

June live cattle closed $1.05 higher at $115.47, August live cattle closed $0.75 higher at $118.47 and October live cattle closed $0.37 higher at $123.47. Thursday's slaughter is estimated at 115,000 head, 4,000 head less than a week ago.

Beef net sales of 16,900 mt reported for 2021 were down 28% from the previous week and 18% from the prior four-week average. The three primary buyers were Japan (4,600 mt), Mexico (3,000 mt) and Taiwan (2,900 mt).

Thursday's actual slaughter data share that for the week ending April 24, both steer and heifer carcass weights saw decreases. Steers averaged 896 pounds (down 2 pounds from the previous week) and heifers averaged 825 pounds (down 12 pounds from the previous week).

Boxed beef prices closed higher: choice up $1.59 ($306.37) and select up $3.18 ($289.36) with a movement of 100 loads (64.71 loads of choice, 16.69 loads of select, 3.98 loads of trim and 14.45 loads of ground beef).

FRIDAY'S CASH CATTLE CALL: Steady. It's most likely that Friday won't see much for cash cattle trade as it's looking like the week's business is essentially done.

FEEDER CATTLE:

The $0.06 to $0.10 rally in the nearby corn contracts didn't allow for a kind closes in the feeder cattle contracts Thursday afternoon. May feeders closed $1.00 lower at $130.47, August feeders closed $1.82 lower at $143.40 and September feeders closed $1.92 lower at $145.55. All in all, Thursday's market once again fell victim to high corn prices and depressed fat cattle prices, which is an ugly, ugly reality for the feeder cattle market to stomach. At Mitchell Livestock Auction in Mitchell, South Dakota, compared to last week, there were very few light steers for sale. Feeder steers weighing 800 to 850 pounds sold steady, and lower undertones were seen on steers weighing 850 pounds and up. There was an unevenly steady undertone on heifers up to 850 pounds, while heifers weighing 850 to 950 pounds sold $1.00 to $3.00 lower. The CME Feeder Cattle Index for May 5: down $0.99, $131.56.

LEAN HOGS:

Truthfully, I didn't think the lean hog contracts would close higher Thursday afternoon, as the market has had a full speed ahead attitude this week, so it seemed logical that traders may want to let the market trade steady before taking prices any higher. However, the lean hog market decided to do what it has recently become quite accustomed to -- and that's trading higher. June lean hogs closed $0.05 higher at $114.47, July lean hogs closed $0.17 higher at $114.65 and August lean hogs closed $0.12 higher at $109.92. Thursday's pork cutout value closed higher with nearly every cut seeing $2.00 advancements, other than the picnic ham, which closed $2.50 lower and the rib, which only saw an advancement of $0.58 Thursday afternoon. Pork cutouts totaled 215.77 loads with 183.75 loads of pork cuts and 32.02 loads of trim. Pork cutout values: up $1.95, $113.86. Thursday's slaughter is estimated at 481,000 head, steady with a week ago. The CME Lean Hog Index for May 4: up $0.52, $107.89.

Pork net sales of 48,200 mt reported for 2021 were up 36% from the previous week and up noticeably from the prior four-week average. The three primary buyers were Mexico (19,400 mt), China (15,000 mt) and Japan (4,700 mt).

Thursday's actual slaughter data shared that for the week ending May 24, live carcass weights fell by 1 pound to average 290 pounds and dressed carcass weights remained stead at 217 pounds.

­­­­­FRIDAY'S CASH HOG CALL: Steady to somewhat lower. As packers look to the weekend, they may back off on their cash hog buying sprees and let the weekend pass before jumping wildly into the market again.