Monday Morning Livestock Market Summary - Early Support Expected

GENERAL COMMENTS:

Limited cash cattle interest is expected over the next couple of days as showlist distribution and inventory-taking will likely consume most of the activity Monday. After continued pressure last week, the focus is on regaining market support while navigating the short- and long-term impacts of the beef market due to the coronavirus. Even though cash values have not had the aggressive losses that developed in futures trade, the potential move higher in futures early in the week could quickly spark renewed cash market stability through the first week of March. Futures trade is expected mixed to moderately higher. Given the overall uncertainty of the potential impact on the overall economy, it is still unclear how much widespread pressure will develop as traders are concerned of consumer buying habits changing quickly. But the aggressive losses last week that pushed April live cattle futures over $10 per cwt lower last week alone should bring buyers back into the live cattle and feeder complex. Monday slaughter is expected near 121,000 head.

Limited morning market volume is expected in lean hog trade early Monday as traders look for direction from outside trade indicators and renewed news of additional cases of coronavirus in the U.S, and other major trading partners continues to lead the focus of uncertainty through the complex. Compared to the total population, the number of coronavirus numbers is still extremely low, with 88 confirmed cases reported in the U.S as of Sunday. But the fact that two deaths have been reported is creating even more uncertainty when it comes to overall health concerns and market uncertainty. Even though new cases are being reported in China, the amount of new cases is slowing significantly, which is helping to control the spread of the virus, and many are getting back to a normal business schedule. With April lean hog contracts still holding above January support levels, there is limited technical pressure in the complex at this point, although the market remains oversold going into the month of March. Cash hog prices are called 50 cents lower to $1 higher with most bids expected steady to firm. Slaughter Monday is expected at 495,000 head.

	BULL SIDE		BEAR SIDE
1)	With the strongest beef demand season just around the corner, traders are looking for a speedy recovering to not only live cattle futures, but overall financial markets following last week's liquidation. This could create firm buyer momentum from commercial and investment traders over the near future.	1)	Live cattle futures continued to post aggressive losses late last week. This set new contract lows, creating growing uncertainty through the entire cattle market going into the month of March.
2)	Live cattle and feeder cattle futures remain technically oversold. Given the recent market losses have had little to do with fundamental market moves, the potential for aggressive triple-digit support to develop in the next few days is growing, especially if firm gains are seen in outside markets.	2)	The news focus on growing numbers of coronavirus in the U.S. could create even more pressure through meat markets as traders focus on the potential for short-term changes in buying habits as consumers remain concerned about the growing threat within the country.
3)	Coronavirus cases are still developing in most areas of the world. But the rate of increase (new cases reported) in China has slowed to the lowest level since January. This is a good indicator that renewed focus on returning to normal life in China could spark additional buying activity over the near future.	3)	Pork cutout values eroded late last week, limiting underlying fundamental support in the complex. This could add even more uncertainty to the livestock complex as traders try to build a sense of stability during early March
4)	Pork demand in the U.S. continues to remain strong through the last several weeks, helping to limit the downward pressure in pork prices. This may limit further early week losses in nearby and deferred lean hog contracts.	4)	Continued strong pork production is expected to continue through most of the year despite the strong trend lower over the last two months. This could continue to add significant losses to many producers through much of 2020.

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Friday Closing Livestock Market Summary - Livestock Prices Still Haven't Hit Bottom

GENERAL COMMENTS:

Cattle futures trade resembled a game of "whack-a-mole" Friday as short bursts of buying posted gains. But this was followed by a firm beat down as sharp losses developed in most contracts at the closing bell. The narrative has not changed through the week, with the focus on potential coronavirus impact to domestic and global economies and buying habits heavily affecting livestock trade. Hog prices are higher on the National Direct Afternoon Hog Report, up $0.25 with a weighted average of $50.59. May corn is up 1/4 cent per bushel and May soybean meal is up $2. The Dow Jones Industrial Average is down 797.94 points and NASDAQ is down 153.62 points.

From Friday to Friday, livestock futures scored the following changes: Feb Live cattle off $7.02, Apr Live cattle off $10.68; Mar Feeder cattle off $8.92, Apr Feeder cattle off $9.40; Apr Lean hogs off $4.75, May Lean hogs off $5.00.

LIVE CATTLE:

Glimmers of hope developed through the Friday trading session as traders adjusted positions at the end of the month despite remaining on the "coronavirus fear" roller coaster. February futures expired, sparking single-digit gains, while the rest of the complex posted sharp losses. Markets closed $2.90 lower to 7 cents higher Friday afternoon. The lack of understanding of how or when any impact from coronavirus will have on beef demand or overall consumer habits kept most markets with active losses at the end of the week. April live cattle are down $1.90 at $107.57, June live cattle are down $2.72 at $101.20 and August live cattle are down $2.20 at $102.27. Following early week trade in all areas, little to no interest was seen Friday in cash cattle markets. Given the strong downward pressure seen in cash trade -- while futures continue to wither away -- is limiting both sides incentive to step into the market. Activity is not expected to be significant until midweek next week as Monday's focus will be on show list distribution and inventory needs, while trying to assess the overall market direction going forward.

Boxed beef prices closed lower: choice down $0.24 ($205.30) and select down $0.78 ($198.91) with a movement of 104 loads (58.22 loads of choice, 14.86 loads of select, 8.67 loads of trim and 21.97 loads of ground beef). Thursday's slaughter is estimated at 115,000 head, 6,000 lower than a week ago and 2,000 head lower than a year ago.

MONDAY'S CASH CATTLE CALL: Steady. Even if continued pressure develops in futures trade, Monday activity is expected to be reserved for inventory taking and show list distribution as both sides assess further market direction during early March.

FEEDER CATTLE:

Feeder cattle contracts recovered a little piece of the market as the day's end neared. Contracts closed $1.30 to $2.02 lower Friday. March feeders are down $1.30 at $131.27, April feeders are down $1.37 at $132.70 and May feeders are down $2.02 at $133.52. Friday trade posted back and forth moves as traders focused on the general underlying bearish tone that has continued all week, but attempts to cover positions at the end of the week and month allowed for momentums of higher trade during the day. With sharp losses seen at the closing bell, the underlying pressure remains strong through cattle trade going into the month of March.

Lexington livestock market in Lexington Ne, reported 2,394 head for the week with steers selling $1 to $6 per cwt lower than last week, while heifers sold $1 to $4 per cwt lower. The CME feeder cattle index 2/27/2020: not available at this time.

LEAN HOGS:

Lean hog futures were the most stable of all livestock markets with nearby futures holding the best; the complex ranging from $0.27 to $1.30 per cwt losses. The most aggressive pressure developed in summer and fall contracts as traders continue to feel that the most aggressive global demand pressure will develop in the last half of 2020. April lean hogs are down $0.27 at $62.27, June lean hogs are down $0.82 at $77.22 and July lean hogs are down $1.10 at $78.30. The continued ability for cash hog prices and pork values to remain generally stable through the end of February is an impressive feat given widespread moves in futures trade through the end of the month. Pork cutouts values are unavailable at this time due to reporting delays. Friday's slaughter is estimated at 486,000 head, 6,000 head less than a week ago and 3,000 head less than a year ago. Estimated weekly slaughter is 2.65 million head. The CME lean hog index 2/26/2020: down $0.05, $56.36.

MONDAY'S CASH HOG CALL: Steady to firm. Limited direction is expected in cash hog prices as traders return from the weekend. The need to fuel a full week of aggressive packer activity will likely keep prices steady to firm. 

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Friday Midday Livestock Market Summary -Trade Follows Week's Trend Lower

General Comments

Continued weakness quickly swept through the livestock complex Friday morning as aggressive follow-through pressure developed in the stock market and most outside commodity markets. Although there is little more information from a physical or economic model that would support the recent market losses over the last week, emotions continue to be the major factor in traders backing away from recent price levels. The mentality by most commercial and investment traders is that they would rather err on the bearish side and be willing to step back into the market, rather than to not sell until it may be too late. This mentality could keep prices subdued for an extended period of time. May corn is down 1/2 cent per bushel, and May soybean meal is up $2.00. The Dow Jones Industrial Average is down 704.42 points, and the NASDAQ is down 124.14 points.

LIVE CATTLE

Live cattle futures have led the livestock market lower with triple-digit losses seen through most of the morning. Although the expiring February futures contract is trading on either side of unchanged at midday and has rallied over $2 from morning lows, the focus on spot April trade still holding sharp losses is creating additional technical pressure across the complex. The moves lower are creating psychological damage, as April futures have fallen below $110 per cwt, while June futures inch closer to the $100 threshold. In an emotionally driven market like has been seen this week, even numbers (Example: $100, $110) seem to have a significant role in maintaining or losing market momentum. April live cattle are down $1.92 at $108.55, June live cattle are down $1.30 at $102.60 and August live cattle are down $0.70 at $103.82. Cash cattle markets are likely done for the week with bids unavailable Friday morning. Feeders took their lumps in the cash market early in the week and are now hoping that the month of March will be kinder to them than last week. At this point, that would likely be a good bet.

Boxed beef prices are mixed: choice down $0.24 ($205.30) and select up $0.86 ($200.55) with a movement of 62 loads (36.41 loads of choice, 7.75 loads of select, 5.65 loads of trim and 12.66 loads of ground beef).

FEEDER CATTLE

Moderate to firm losses have held in feeder cattle trade Friday morning. Although prices have quickly bounced off morning lows with March feeder cattle futures trading nearly $4 per cwt over session lows, the weaker tone in outside markets and especially continued pressure in live cattle trade is limiting any additional buyer activity. It is expected that traders will hold moderate losses going into the weekend and the end of the month. The hope is that the weekend break will help ease the emotional pressure from livestock trade. But overall market uncertainty may remain active early next week. March feeders are down $0.47 at $132.12, April feeders are down $0.60 at $133.50 and May feeders are down $1.10 at $134.42.

LEAN HOGS

Lean hog futures have been the most stable of the livestock trade Friday morning with losses limited to 50 to 90 cents per cwt in most contract months. The underlying pressure through the commodity and financial complex is still creating weakness concerning uncertain short- and long-term changes in pork demand. The focus of domestic markets continues to be if and when significant coronavirus cases are seen in the U.S and how the economy will handle it. April futures continue to hold near $62 per cwt, which remains above support levels set at the end of January. The ability to hold these levels through early next week will be huge in sustaining a sense of technical foothold in the complex. April lean hogs are down $0.40 at $62.10, June lean hogs are down $0.77 at $77.27 and July lean hogs are down $0.67 at $78.72.

The projected lean hog index for 2/27/2020 is down $0.03 at $56.33, and the actual index for 2/26/2020 is down $0.05 at $56.36. Hog prices are higher on the National Direct Morning Hog Report, up $0.27 with a weighted average of $50.61, ranging from $45.00 to $51.12 on 4,846 head with a five-day rolling average of $50.17. Pork cutouts totals and values are unavailable at this time due to reporting delays.

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Friday Morning Livestock Market Summary - Market Weakness Continues

GENERAL COMMENTS:

Thursday cash cattle trade posted a few scattered trades at steady-to-lower money than was seen earlier in the week. For the most part, cash business wrapped up, but some clean-up trade trickled into the market over the last couple of days. It is likely that there may not be bids on Friday, but given the market freefall through the week, it is also possible that packers may offer a few low-ball bids in the case that some feeders with cattle still on showlists will bite rather than waiting until next week. The weaker tone of cash markets will be huge going into early March. Fundamental supply levels have had little to do with cash market prices through the last week with the focus based on the plummeting of futures trade and concerns about further weakness in the near future. The fact that cattle futures pulled away from early limit losses Thursday is a good sign that may bring a sense of stability at the end of the week. But live cattle market trade once again will likely be at the whims of outside market direction. With the Dow Jones Index falling 1,190 points at the end of the day Thursday, there still seems to be some strong underlying concerns that further general market pressure may develop before traders back away from the panic button. Friday slaughter is expected near 121,000 head.

Sharp triple-digit losses through the end of trade Thursday sparked renewed technical pressure in the entire lean hog futures trade. Even though lightly traded, and not a good indicator of price direction, May lean hog futures broke through long-term support levels, setting contract lows. Although April and June futures are still holding above lows set in late January, the underlying focus is being placed on widespread demand pressure based on the spread of coronavirus through the world. Market impact has moved away from the virus impact on other countries' economies and their ability to maintain normal daily schedules, and more on the potential impact it would be in the U.S. This is the basis for the widespread market losses through nearly all commodity and financial markets as traders continue to look for long-term indicators of how coronavirus will affect everyday life in their neighborhoods. Long-term demand is not likely to be as heavily impacted as the recent market pressure would indicate, but if outbreaks do continue, the greatest impact is likely to be seen on short-term demand in many areas. Cash hog prices are called 50 cents lower to $1 higher with most bids expected steady to firm. Slaughter Friday is expected at 489,000 head. Saturday runs are expected at 90,000 head.

	BULL SIDE		BEAR SIDE
1)	Beef market fundamentals have yet to see significant pressure with boxed beef values holding generally stable through the week. This could bring underlying support to the entire market as traders move away from the "panic button."	1)	Sharp losses in live cattle futures Thursday once again set contract lows. April futures broke through support levels last week in September, creating renewed technical bearishness through the live cattle futures complex.
2)	Open interest in live cattle trade continues to hold surprisingly well through this latest round of market pressure. This indicates that active commercial and noncommercial support remains interested in cattle markets and will likely step back to the plate once the dust settles. The potential of late-month positioning may help spark renewed interest late Friday.	2)	The sharp cash market losses this week will be difficult to regain in the near future as packers are starting to look toward larger supplies in the next several weeks. This could change the overall trend of cash cattle markets through the first half of the year.
3)	Cash hog values once again posted light-to-moderate support. This continues to put the focus on the packers need to gain access to market-ready hogs even with currently large production levels.	3)	April futures led the livestock market lower Thursday with losses of $2.60 per cwt. This underlying weakness in the complex puts even more focus on potential widespread late week liquidation through the entire pork complex
4)	With all the immediate focus on coronavirus and the potential impact to global and domestic demand, it is important to remember that the issues with African swine fever in China and other Asian countries continues to be a major issue. This will continue to create the need for pork supplies that will outlast the recent coronavirus outbreaks.	4)	Continued strong pork production is expected to continue through most of the year despite the strong trend lower over the last two months. This could continue to add significant losses to many producers through much of 2020.

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