Tuesday Morning Livestock Market Update - Continued Price Uncertainty Likely

General Comments:

It appears the cash cattle trade will follow the lead of the last few weeks with trade developing Monday afternoon, signifying the potential of light trade trickling in during the week. The large amount of negotiated trade last week could spark additional momentum this week. Even though price ranges at this point are not as wide as in the past few weeks, there still remains a $9 per cwt range in dressed cattle. It is likely that additional trade may develop the next few days, but it is going to be hard to pinpoint a market trend before the last half of the week, and if wide price ranges develop once again, it may be hard to know where the market average lands until early next week. Futures trade is expected to be mixed. The strong price pressure in choice and select beef cuts Monday once again puts the emphasis on the inability to sustain previously high levels. Even with the sharp losses over the last few weeks, wholesale beef values are still trading well over $100 per cwt higher than seen in mid-April before the price surge started. As meat production moves back to a more normal level, it is likely that swift changes in wholesale values will continue to develop. The recent surge in retail beef levels is making local and national news, which has the potential to create bearish demand changes from consumers who are likely hit by "sticker shock" with ground beef prices at the same price and higher than they had traditionally paid for steak and roasts. Tuesday slaughter is expected at 115,000 head.

Widespread losses have continued to develop in all sectors of the hog market during early week trade, leaving concerns for further market pressure to develop as the week continues. June futures are still leading the complex lower with traders focusing on the large amount of market-ready hogs available to the market as production plants continue to ramp up processing levels and overall output of pork. Given the continued uncertainty with China and surging retail pork prices over the last three weeks, it is uncertain just how much overall pork will be moved through the system. This could quickly rebuild storage levels of pork, creating additional long-term pressure in the complex. Although spot lean hog futures are still holding to the sideways pattern seen the last two months, and hovering near the $55 per cwt price level. June futures have fallen nearly $11 per cwt from May highs as traders struggle to find short-term support levels, which could mean further losses. Cash hog bids are expected $1 lower to $1 per cwt higher with most bids steady to $1 lower. Slaughter Tuesday is expected at 428,000 head.

	BULL SIDE		BEAR SIDE
1)	Active negotiated cash cattle trade has continued to develop each of the last few weeks. With increased buying developing, there continues to be growing focus on the potential to develop cash cattle trade each day during the week.	1)	Sharp losses developed in boxed beef prices Monday. This is leaving uncertainty as to where retail prices will land in the coming days and weeks. Although most agree that prices this high are unsustainable, the question of how far will they move lower is still unable to be answered.
2)	Strong underlying price support in deferred live cattle and feeder cattle futures late Monday helped to break away from the early week pressure, which was feared. The focus on long-term supply tightness in the market is expected to help sustain buying through the end of the year and early 2021.	2)	Firm pressure in spot live cattle futures have moved futures prices below the $100 per cwt once again. The inability for nearby contracts to hold this threshold price level is likely to add increased market pressure in the coming days.
3)	Growing demand expectations for pork through the early summer months is expected to help bring some much needed stability to the market. This may not be seen as much in price support as overall product movement through domestic and export channels.	3)	Sharp losses in cash hog and pork cutout values early in the week has led to additional market weakness. This added uncertainty through the entire complex and could add increased pressure in the coming days.
4)	Lean hog futures continue to remain in the top half of the trading range established over the past two months. The ability to sustain prices at or near $55 per cwt in nearby contract months is expected to spark increased buyer support during early June.	4)	Triple-digit losses on the first day of June is creating concern that further market losses may develop in the near future. Concerns of export trade volume surrounding China tensions could a further weakness to the market.

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Monday Closing Livestock Market Summary - Cattle Contracts Ride the Fence; Lean Hogs Close Lower

GENERAL COMMENTS:

Monday came and went, and little commotion took place in the livestock market other than the strength that developed in the feeder cattle contracts. Feeder cattle contracts have been inching higher in the last week, and throughout the countryside feeders have sold exceptionally well.

Hog prices closed lower on the National Direct Afternoon Hog Report, down $2.95 with a weighted average of $33.97 and a five-day rolling average of $36.93. July corn is down 2 1/2 cents per bushel and July soybean meal is down $0.10. The Dow Jones Industrial Average is up 91.91 points and NASDAQ is up 62.18 points.

*Monday's slaughter figures are incomparable as last Monday was a holiday.

LIVE CATTLE:

Live cattle contracts stuck with momentum established earlier in the day -- tentative in nearby contracts, but modestly stronger in deferred contracts. June live cattle closed $1.42 lower at $98.30, August live cattle closed $0.62 at $98.97 and October live cattle closed $0.05 lower at $101.37. Cash cattle trade started to develop around the noon hour with several areas reporting light trade. Southern live cattle sold for $118, and Northern dressed cattle sold for $187.

The National Weekly Direct Slaughter Report shared that packers bought an enormous 119,726 head; 112,475 head are committed for delivery in the next two weeks while the remaining 7,251 head are for delivery are in the next 15 to 30 days.

Boxed beef prices closed significantly lower: choice down $22.19 ($341.15) and select down $23.24 ($316.83) with a movement of 166 loads (111.99 loads of choice, 26.10 loads of select, 9.67 loads of trim and 18.09 loads of ground beef). Choice cutouts fell a record lower for the market.

TUESDAY'S CASH CATTLE CALL: Slightly lower. Seeing that packers have been extremely aggressive in their acquisition of cash cattle the last couple of weeks leads one to think that soon they are going to back off the cash cattle market.

FEEDER CATTLE:

Feeder cattle contracts were able to rally stronger after the noon hour and closed higher throughout the complex. Deferred contracts closed $2.00 higher and nearby contracts closed higher but with the same gusto. August feeder cattle closed $0.77 higher at $136.12, September feeder cattle closed $1.45 higher at $137.20 and October feeder cattle closed $1.75 higher at $137.77. Last Friday, at Torrington Livestock Auction in Torrington, Wyoming, compared to the previous week, feeder steers and heifers over 750 pounds traded $3.00 to $5.00 higher. There was a phenomenal offering of cattle offered with long strings and reputation herds. Slaughter cows traded $2.00 to $4.00 higher and slaughter bulls traded $3.00 to $5.00 higher. The CME feeder cattle index 5/29/2020: up $0.60, $128.96.

LEAN HOGS:

Lean hog contracts closed lower throughout the complex. June lean hogs closed $2.25 lower at $54.60, July lean hogs closed $1.87 lower at $55.15 and August lean hogs closed $1.62 lower at $55.10. Pork cutouts total 331.76 loads with 307.89 loads of pork cuts and 23.87 loads of trim. Hog slaughter may be a touch lighter this week as the plant in Storm Lake, Iowa, was shut down last week and will take some time getting back up to full speed. Pork cutout values: down $7.16, $81.04. The CME lean hog index 5/28/2020: down $0.70, $61.25.

TUESDAY'S CASH HOG CALL: Lower. Supply and demand fundamentals are ringing true in the lean hog market. As the industry struggles to get the built-up supply processed, prices will most likely continue to be weaker as packers have an overabundance of hogs waiting to be processed.

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Monday Midday Livestock Market Summary - Cattle Contracts Mixed; Lean Hogs Solidly Lower

GENERAL COMMENTS:

As Monday rounds the halfway mark, cattle contracts are building some support, while lean hog contracts near $2.00 losses. Feeder cattle futures are rallying support in nearby contracts while the live cattle futures are more confident in the deferred issues. Dancing around the unknowns of live cattle circumstances, working through the backlog of cattle, wondering how cash cattle prices will hold and dwindling boxed beef prices all make perfect sense as to why the live cattle market is more tentative about rallying around nearby contracts. July corn is down 1 1/2 cents per bushel and July soybean meal is up $0.50. The Dow Jones Industrial Average is up 68.26 points and NASDAQ is up 52.36 points.

LIVE CATTLE:

Live cattle contracts have some nearby resistance that is both technical and industry driven. Once June and August fight resistance at $100. Knowing that cash cattle prices have to weaken in the near future, nearby contracts are reluctant to trade higher. How aggressive will packers be in their cash cattle acquisition this week? What will slaughter capacity look like? And are boxed beef prices going to tumble lower throughout the week, or merely stairstep back to normal ranges? June live cattle are down $1.17 at $98.55, August live cattle are down $0.47 at $99.15 and October live cattle are up $0.12 at $101.55.

New showlists appear to be higher in all major feeding areas, especially in Texas.

Boxed beef prices are lower: choice down $13.03 ($350.31) and select down $10.40 ($329.67) with a movement of 68 loads (41.20 loads of choice, 9.16 loads of select, 3.97 loads of trim and 13.85 loads of ground beef).

FEEDER CATTLE:

Feeder cattle contracts are starting to come around to the idea of trading higher in nearby months. August feeders are up $0.85 at $136.20, September feeders are up $1.15 at $136.90 and October feeders are up $1.35 at $137.37. It's interesting to compare prices of years past to this year's market, and despite the havoc that 2020 has brought, feeder cattle prices are just $1.00 lower than they were at this time a year ago. On June 3, 2019, the first Monday of the month, feeder cattle contracts were at $137.45.

LEAN HOGS:

Lean hog contracts continue to drift lower as Monday progresses and the industry seems to have no incentive for the market to trade higher. June lean hogs are down $2.22 at $54.62, July lean hogs are down $1.87 at $55.15 and August lean hogs are down $1.60 at $55.12. Despite typing time and time (and time and time) again that cutout values are lower and cash prices are down, as the market continues to work through the backlog of hogs it is one day closer to being current and being able to rally prices and find new price discovery again.

The projected lean hog index for 5/29/2020 is down $1.29 with a weighted average of $59.96, and the actual index for 5/28/2020 is down $1.70 at $61.25. Hog prices are down on the National Direct Morning Hog Report, down $1.69 with a weighted average of $35.23, ranging from $31.00 to $38.00 on 3,979 head and a five-day rolling average of $36.07. Pork cutouts total 177.41 loads with 165.21 loads of pork cuts and 12.20 loads of trim. Pork cutout values: down $4.87, $83.33.

#completeherdhealth

Monday Morning Livestock Market Summary - New Month Brings Hope of Continued Price Gains

General Comments:

Limited activity is expected early in the week as traders continue to look for additional direction of last week's cash cattle average prices once summaries are released Monday morning. Although cash cattle trade continued to develop at or near the high levels of the previous week, the wide trading range is creating uncertainty about what the overall price average for the week is. The wide ranges the last few weeks have skewed the overall movement of cash market prices given that there has been little consistency across the market as to what prices have been. Asking prices and bids are not likely early Monday with the focus on inventory-taking and showlist distribution during early June, but the trend of limited trade trickling in every day of the week the past couple of weeks, does create the potential for some cattle to be sold on Monday. Futures trade is expected to remain mixed. June futures posted a $13.77 per cwt rally in May, expecting to have established long-term support levels and testing short-term resistance levels. A wide gap between cattle prices in cash and futures trade and beef prices continues with the concern that the elevated retail beef values will quickly crush demand in both the food service industry and retail store outlets. Monday slaughter is expected at 114,000 head.

Despite the uncertainty through the market, societal and global political structure, lean hog futures enter the month of June with the hope and expectation that things are returning back to a sense of normal. Increased packing plant production levels are likely to continue on a daily and weekly basis, helping to reduce the backed up levels of market-ready hogs, but the concern of still weak overall domestic and export demand continues to cause some uncertainty through the complex. Food service demand for pork continues to be a large segment of the overall domestic demand levels. Even though some restaurants are reopening or expanding services to dine-in service once again over the last couple of weeks, there still remains a significant reduction in overall consumer demand. The recent surge in overall retail price levels of pork is likely to create some additional demand concerns given the overall economic issues seen through the spring months. Traders appear to be looking for increased price stability during early June, which has the potential to bring commercial and investment buyer support back to the market during the early summer months. Cash hog bids are expected $1 lower to $1 per cwt higher with most bids steady to weak. Slaughter Monday is expected at 432,000 head.

	BULL SIDE		BEAR SIDE
1)	Cattle slaughter numbers continue to see steady growth the past couple of weeks. Although there is still a backlog of market-ready cattle in some areas, the expectations that beef output will be able to meet consumer demand is helping to limit price pressure going into the month of June.	1)	Surging retail price levels of beef have started to create "sticker shock" for many consumers at both the meat counters and local restaurants as people return to a more normal routine. The higher prices could quickly curb beef demand growth that may last for weeks or months after price levels return to more normal levels.
2)	The expectation that cash cattle prices continue to ratchet higher even though the final overall price averages from last week have yet to be released is likely to set the bar even higher for cash prices during the first week in June.	2)	Recent protests and curfews put into place in many cities is expected to limit overall consumer buying activity in the near future. This will likely keep many businesses closing early, limiting buying opportunities as consumers have started to return to a more normal pattern over the last couple of weeks.
3)	Growing demand expectations for pork through the early summer months is expected to help bring some much needed stability to the market. This may not be seen as much in price support as overall product movement through domestic and export channels.	3)	Continued uncertainty with China over the Hong Kong issues is creating significant concern about the ability to continue gains in pork export to the country. This could significantly derail the ability to actively move additional pork product from the market, limiting upside price potential for prices during the summer and fall months.
4)	Continued strong gains in daily and weekly pork production is likely to be seen during the first week in June. This could help to put many of the recent fears of virus-focused production shutdowns and limited meat supplies in the rearview mirror as the industry looks forward to early summer support.	4)	Significantly higher pork price levels at retail and food service locations may continue to damage overall demand for pork, especially given the limited economic spending power of many consumers due to surging unemployment levels.

#completecalfcare