Tuesday Morning Livestock Market Summary - Cattle Trade Looking for Support

GENERAL COMMENTS:

Cash cattle trade activity is expected to remain sluggish through most of the week with bids and asking prices undeveloped Monday. Showlists are generally larger with Texas the only region posting lighter offerings for the week. Bids and asking prices may not develop until late Tuesday or Wednesday, with trade likely to be pushed off to the end of the week. Strong price pressure ratcheted markets back from the top edge of the trading range following increased cattle on feed numbers. Although the increase in placements and overall on feed numbers is not likely enough to push prices lower in itself, the uneasiness through the entire livestock complex added to the overall market pressure. Early trade is expected to remain under pressure, although nearby contracts are expected to still hold short-term support levels, allowing markets to hover in the currently wide sideways pattern in the next couple of weeks.

Strong pressure developed through the lean hog complex with traders pulling away from contracts highs. The volatility in Friday's market lead to additional underlying pressure through the entire complex. Deferred lean hog futures were impacted by the lack of follow-through support in the complex, allowing for increased overall weakness and triple-digit losses. April futures have held onto moderate gains, with a 32-cent price bounce in late-day trade. This allowed for increased overall stability in spot trade, while the rest of the complex remains under light pressure, but still sustaining a generally bullish market direction. Cash hog values are expected to redevelop steady to $2 per cwt higher with most bids $1 per cwt higher Monday morning. Expected slaughter Tuesday is at 477,000 head.

	BULL SIDE		BEAR SIDE
1)	Summer and winter live cattle trade still remains well above 40- and 100-day moving averages, despite the strong triple-digit pullback in price levels. This continues to spark underlying buyer activity in the complex.	1)	Live cattle futures have turned lower, breaking the two-week market surge in the complex. This could add follow-through pressure in the complex.
2)	Seasonal beef demand is expected to pick up through the spring and summer, with increased temperatures and outdoor grilling activity making up for lost time over the cold winter and spring.	2)	Beef values continue to add uncertainty to the complex with narrowly mixed trade developing across the entire complex. This could limit follow-through support through the near future.
3)	Aggressive buyer support continues to flood into cash hog trade. This continues to spark increased underlying support in the entire complex, maintaining buyer interest in futures trade.	3)	Strong pressure in deferred lean hog trade has added to the lack of support in the hog complex. This has the potential to pull prices lower in the near future, limiting underlying buyer support in the entire complex.
4)	Pork values have continued to surge higher with increased overall buyer interest in the entire complex. Expected strong demand growth is sparking widespread primal market price support.	4)	Little details concerning overall export market support the last couple of weeks is adding increased overall pressure to the entire complex.

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Monday Closing Livestock Market Summary - Cattle Futures End Lower

GENERAL COMMENTS: Strong pressure developed throughout livestock trade following continued weakness in lean hog futures Monday. Cattle trade softened on increased placements in February. Cash cattle activity was undeveloped following generally smaller trade levels late last week. Bids and asking prices were not available and may not be active until midweek. Showlist distribution and inventory-taking were the main activities Monday. Showlists appear generally larger. Offerings increased in Nebraska, Colorado and Kansas, but decreased in Texas. It is likely to be the last half of the week again before active trade develops. The National Daily Direct afternoon hog report was $2.55 higher ($60-$74, weighted average $68.82) on 7,248 head sold. Corn futures were higher in light activity with May up 1 1/2 cents per bushel. The Dow Jones Index was 14 points higher while the Nasdaq was down 5 points.

LIVE CATTLE: Nearby live cattle futures saw triple-digit losses Monday. Overall, futures closed $0.40 to $2.35 lower. All spring and summer contracts were $2 per cwt lower at closing bell. The softness in feeder cattle trade, combined with an increased number of cattle on feed, added uncertainty to the market, which already seemed to be teetering toward a pullback. Additional softness could be seen throughout the cattle complex, although live cattle futures are expected to hover within the same sideways pattern seen over the last couple of months. Beef cut-outs: mixed, up $0.09 (select, $218.73) to down $0.09 (choice, $229.09) with light demand and light-to-moderate offerings of 109 loads (70 loads of choice cuts, 17 loads of select cuts, 6 load of trimmings, 16 loads of coarse grinds).

TUESDAY'S CASH CATTLE CALL: Steady. Limited interest is expected Tuesday with bids and asking prices most likely not seen until Wednesday or later.

FEEDER CATTLE: The feeder cattle market was also under pressure Monday as traders focused on increased cattle placements. Futures closed $0.82 to $2.60 lower. Though the market was generally steady through most of the morning, strong pressure developed late in the day as traders focused on larger-than-expected placements and the pullback in lean hog trade. This pushed most contracts to triple-digit losses. CME cash feeder index for 3/21 is $141.02, up $1.90.

LEAN HOGS: Traders tried to find some stability in the lean hogs market, resulting in a mixed close of $1.45 lower to $$0.32 higher. Strong buyer support was seen early as traders moved back into the complex, but the support slowly eroded as deferred losses became more evident. Although the lean hog trade is expected to firm through the end of the spring and summer and growing pork demand is likely to firm cash markets, traders are quickly pulling back from previously aggressive gains. Wholesale pork values saw triple-digit gains in most primal cuts. Pork cutout values added $2.41 per cwt, moving to $80.20 per cwt on 243 loads. CME cash lean index for 3/20 is $60.75, up $1.53. DTN Projected lean index for 3/21 $62.41, up $1.66.

TUESDAY'S CASH HOG CALL: Steady to $2 higher. Moderate-to-firm bids are expected again Tuesday morning with most bids $1 to $1.50 per cwt higher as continued cash buying develops. Tuesday slaughter is expected at 477,000 head.

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Monday Midday Livestock Market Summary - Uniform Price Pressure Seen

General Comments

Firm losses continue to hold through the entire livestock complex. Despite moderate early gains in lean hog trade, the inability to bring consistent buyer interest back into the market has allowed prices to soften through morning trade. Cattle trader remains under pressure based on increased cattle placement levels last month, creating underlying supply concerns. Corn futures are higher in sluggish trade. May corn futures are 1 1/2 cent higher. Stock markets are lower in light trade. Dow Jones is 50 points lower with Nasdaq down 24 points.

LIVE CATTLE:

Triple-digit losses have moved through nearby live cattle trade Monday morning as traders assess feedlot growth through the month of February and how this will affect short- and long-term supplies. The inability to show consistent support in boxed beef values through the last week is causing some uncertainty through the entire market. April live cattle futures are leading the complex lower with a $1.35 per cwt. Even though moderate losses are likely to hold through the near term, prices are expected to continue to hover within the sideways $3 per cwt trading range seen over the last month. The inability to push prices above $130 per cwt at the end of last week continues to cap price levels at this point. Cash cattle activity remains sluggish with inventory taking and show list distribution likely to spark additional interest through the rest of the week. At this point, bids and asking prices are not expected to be seen until midweek with trade likely to be pushed off to the last half of the week. Boxed Beef cut-outs at midday are mixed, $0.69 higher (select) and down $0.27 per cwt (choice) with light movement of 32 total loads reported (18 loads of choice cuts, 9 loads of select cuts, no loads of trimmings, 6 loads of ground beef).

FEEDER CATTLE:

Light to moderate losses have moved through cattle futures with April thorough November contracts holding uniform losses of 60 to 70 cents per cwt. The early-morning pressure based on increased February cattle placements posted triple-digit losses. But the inability for traders to contain the same level of bearishness through the morning is allowing buyers to slowly trickle back into the market based on expectations of firming demand through the upcoming weeks and months.

LEAN HOGS:

Early-market support has slowly eroded through the morning Monday with April contracts the only futures contract holding gains at midday, with a 20-cent gain holding midday. The remainder of the complex has started to back away from previous gains despite early-morning support. Deferred contracts have been hit the hardest, with losses of $1 to $2.25 per cwt seen in late 2019 and early 2020 contracts. The emotional support that has driven the market aggressively higher, is starting to fade, allowing traders to assess realistic fundamental moves over the near future. Cash prices are lower on the National Direct morning cash hog report. The weighted average price fell $0.04 at $66.23 per cwt with the range from $60.00 to $69.00, on 3,935 head reported sold. Cash prices are unreported due to confidentiality on the Iowa/Minnesota Direct morning cash hog report. Pork values have posted continued support with firm early week primal gains leading to additional support through the entire market. Pork cutouts gained $1.21 per cwt at $79.00 per cwt with 121 loads traded. Lean hog index for 3/21 is $62.41, up $1.66, with a projected two-day index is $64.97, up $2.56.

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Monday Morning Livestock Market Summary - Limited Volume Likely

GENERAL COMMENTS:

Early cattle trade is expected to be mixed to moderately lower with traders having the weekend to assess Friday's Cattle on Feed report. Feeder cattle trade is expected to be the most focused on the market following total placements through the month of February at 102%. This is a 6% jump from pre-report estimates and is expected to be viewed generally bearish through the overall complex. Cattle on feed numbers came in at 101% year-ago levels, still 1% over estimates. This is not expected to create a significant long-term shift in overall supply levels but could quickly cool the buyer support recently in feeder cattle trade the last couple of weeks. Cash cattle trade is expected to remain unchanged with limited interest Monday following the firming cash cattle price late last week. Showlist distribution and inventory taking is expected to be the main focus through the cash markets early in the week.

Early mixed trade is expected Monday following a volatile shift late last week that quickly broke markets out of the emotionally charged limit gains the past few days. With lean hog futures still trading at contract highs, the focus on continued strong fundamental and technical support remains well rooted through the entire complex. But the fact that this most recent market rally has been so emotionally driven, the potential for a strong market retraction still exists. Given the unchecked market rally through the month of March, there continues to be growing nervousness about the ability to sustain this type of market momentum, or price support through the rest of the spring. Cash hog values are expected to redevelop steady to $2 per cwt higher with most bids $1 per cwt higher Monday morning. Expected slaughter Monday is at 477,000 head.

	BULL SIDE		BEAR SIDE
1)	Strong cash cattle trade Friday developed with prices $1 to $4 per cwt higher than the previous week. This is helping to solidify additional buyer support through the entire complex.	1)	Feeder cattle placements in the month of February surged higher, with 102% year-ago levels placed in yards. This is well above estimates but also exceeded the expected range.
2)	Continued long-term beef market support is expected, helping to focus traders attention on upcoming summer demand and the ability to meet these demands with generally stable cattle supplies.	2)	Lack of active gains last week in wholesale beef values has created some additional questions if follow-through support will continue through the end of the month. This could lead to a moderate pullback in live cattle and feeder cattle trade.
3)	Continued strong gains in pork cutout values through the end of last week has helped to solidify demand needs as pork prices have continued to escalate higher based on growing domestic and export demand.	3)	Lean hog futures quickly broke away from limit gains Friday, creating increased uncertainty about short-term direction in the emotionally led market rally. This could open the door for aggressive selling in the next couple of trading sessions.
4)	Active cash buying continues to develop through the month of March with cash market moves of $1 to $2 per cwt expected to return early in the week. The need to secure needed end-of-month procurement numbers is expected to add increased underlying support to the entire complex.	4)	Limited new information surrounding any details of a trade agreement with China is causing uncertainty as talks are expected to take place this week in China.

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