Wednesday Midday Livestock Market Summary - Livestock Contracts Seen with Optimism

General Comments

Wednesday may have started the day off lower but has since rallied most of the livestock complex and heads into Wednesday's noon hour optimistically. After the Fed Cattle Exchange some cash cattle trade stared to develop just slightly lower compared to Monday's initial trade. July corn is down 1 cent per bushel and July soybean meal is up $1.20. The Dow Jones Industrial Average is up 379.87 points and NASDAQ is up 37.91 points.

LIVE CATTLE

Live cattle contracts have absorbed some of the industry's excitement and are now trading modestly higher. June live cattle are up $0.17 at $95.47, August live cattle are up $0.90 at $97.10 and October live cattle are up $0.32 at $99.77. After the Fed Cattle Exchange a light round of trade started to develop throughout most areas. Southern live cattle are trading mostly at $117, which is $1.00 lower than Monday's trade but mostly steady with last week's weighted average. Northern dressed cattle are trading mostly at $185, which is fully steady with last week.

The Fed Cattle Exchange Auction listed a total of 1,736 head, with 199 head actually sold, 1,537 head listed as unsold, and zero head listed as PO (Passed Offer). The state by state breakdown looks like this: KS 1,104 total head, with no sales; NE 284 total head, with no sales; TX 348 total head, with 199 head sold at $110.50, 149 head were unsold. The delivery date/weighted averages breakdown is as listed: 1-9 day delivery: 739 head total, no sales; 1-17 day delivery 997 head total, 199 head sold, with a weighted average price of $110.50.

It's strange that the August live cattle contract is trading higher than June live cattle contract considering that August is a tough month for cash cattle prices, the days are hotter and harder on cattle feeders and the industry is expecting and exuberant amount of fat cattle to be around still at that time.

Boxed beef prices are lower: choice down $18.72 ($300.01) and select down $10.92 ($279.66) with a movement of 69 loads (39.03 loads of choice, 14.45 loads of select, zero loads of trim and 15.55 loads of ground beef).

FEEDER CATTLE

Feeder cattle contracts may have started the day out lower but are nearing the noon hour fully higher. August feeders are up $0.47 at $133.90, September feeders are up $0.52 at $135.42 and October feeders are up $0.52 at $136.20. The country will continue to sell feeder cattle with gusto and excitement as buyers have been interested and willing to pay respectable prices for those cattle. The hiccup that could shake the feeder cattle market is if when cash cattle prices start to pull back that they do so abruptly.

LEAN HOGS

The lean hog market is ready to trade higher and is in deferred contracts but pressure from lower cutouts and uncertainty surrounding China and their willingness to buy pork remains bothersome for nearby contracts. June lean hogs are down $2.30 at $50.10, July lean hogs are down $0.65 at $54.22 and August lean hogs are up $0.02 at $55.57. Tuesday's closing pork cutouts totaled an enormous 571.70 loads, and with Wednesday already posting 305.79 loads, it could be another massive day for pork cutouts.

The projected lean hog index for 6/2/2020 is down $2.17 at $57.06 and the actual index for 6/1/2020 is down $0.73 at $59.23. Hog prices are lower on the National Direct Morning Hog Report, down $1.25 with a weighted average of $33.48, ranging from $28.00 to $37.00 on 5,312 head and a five-day rolling average of $35.29. Pork cutouts total 305.79 loads with 273.79 loads of pork cuts and 32.00 loads of trim. Pork cutout values: down $0.27, $74.10.

#completeherdhealth

Wednesday Morning Livestock Market Summary - Cattle Futures Weaken Following Beef Value Correction

General Comments:

Wholesale beef values are in "free-fall mode" with choice prices falling $45 per cwt in the last two days of trade. This is moving prices back to pre-coronavirus levels as packer capacity continues to return to a more-normal pattern and less focus on tight beef supplies to consumers will allow for further meat price reductions. The fact that retail ground beef values have more than doubled in the last month appears to have had a significant impact on consumer buying patterns, as the food service industry has still not recovered from the closures seen over the last couple of months. This could bring beef values lower much quicker than previously expected, especially if demand dries up at recent retail price levels. Cash cattle continue to trade within last week's range, but the fact that prices are quickly eroding with the rest of the market is causing some significant concern and could lead to weaker prices through the rest of the week. Moderate trade is still expected through the rest of the week, but the fact that prices may not be able to test early week highs or even get near last week's average price once all trade is finished is disappointing, and could lead to additional cash market pressure through June. Futures are likely to remain lightly traded early in the session, although the limit losses in June futures will allow for expanded trading limits through the complex. Even though August contracts remain the most active trade, June futures hitting limit losses at the end of Tuesday is more significant than the actual amount of trade in the contract month at this point. Cash cattle basis levels still remain extremely elevated, which has become the pattern through the spring and summer months. But this is a significant change from traditional basis levels, and at some point is likely to see a correction. Wednesday slaughter is expected at 115,000 head.

Mixed trade continues in lean hog futures with Wednesday expected to be no exception. This overall lack of support in nearby contracts continues to focus on the underlying weakness in pork values, while needed stability is attempting to hold in deferred contract months. The expectation is that summer lean hog contracts and overall cash values will continue to see the brunt of the pressure due to a backlog of hogs in the system and limited consumer demand due to food service closures and higher pork prices. Cash hog bids are expected $1 lower to $1 per cwt higher with most bids steady to $1 lower. Slaughter Wednesday is expected at 418,000 head. Saturday runs are expected at 327,000 head.

	BULL SIDE		BEAR SIDE
1)	Strong cash cattle trade continues with active numbers of negotiated trade expected again this week. The need for packers to gain access to short-term supplies to fill procurement needs could continue to spark buyer interest.	1)	Limit losses in lightly traded June live cattle futures sparked growing concern that the recent market gains could quickly evaporate due to the wholesale beef value correction developing during early June.
2)	Active price support is seen in cash feeder cattle trade in most areas of the country with growing interest from feeders in gaining access to calves and yearlings. This could help to offset futures pressure as the week continues.	2)	Boxed beef values have posted aggressive losses over the last two days. The expectation that recent price levels are not sustainable is clear, but it still remains very painful for prices to retreat lower this quickly, sparking widespread weakness through the entire complex.
3)	Firm cash market support developed Tuesday, flying in the face of lower pork values and tumbling futures trade. The focus on packers needing and gaining access to increased daily numbers of negotiated hogs is likely to spark underlying support through the upcoming days.	3)	Nearby lean hog futures have posted strong losses during early June, falling $4.45 per cwt in the past two trading sessions. This shift lower continues to put focus on further market weakness in the near future as prices continue to have little support within the wide trading range established over the last two months. June futures could fall another $8 to $9 per cwt without any significant technical resistance.
4)	Deferred lean hog futures trade continues to hold previous support levels, with increased buying interest moving into late 2020 and most 2021 contracts. The increased open interest in most lean hog contracts is helping put the focus on renewed long-term market support, as the industry moves past recent challenges associated with coronavirus.	4)	Sharp losses in pork cutout values are causing concern about the ability to move current pork supplies now that retail and food service prices have surged higher and more product is available to consumers. This could create additional pressure in wholesale and retail price levels during early June.

#completecalfcare

Tuesday Closing Livestock Market Summary - Cattle Sharply Lower, Lean Hogs Mixed

GENERAL COMMENTS:

Cattle contracts had a tough Tuesday as support seemed to be nearly impossible to find. Gauging how fast and how far the market will drop on the live cattle spectrum seems to be everyone's concern heading into June and nearing the dog days of summer. Hog prices closed higher on the National Direct Afternoon Hog Report, up $0.74 with a weighted average of $34.60 on 6,350 head sold. July corn is up 1 cent per bushel and July soybean meal is up $0.60. The Dow Jones Industrial Average is up 267.63 points and NASDAQ is up 56.33 points.

LIVE CATTLE:

Live cattle contracts closed sharply lower in nearby contracts and moderately lower in deferred. As the summer heat reminds us that summer is here, cattlemen know that, with the turning of the seasons, cash cattle prices are bound to weaken. June live cattle closed $3.00 lower at $95.30, August live cattle closed $2.77 lower at $96.20 and October live cattle closed $1.95 lower at $99.42. There was another round of light trade in the North were dressed cattle trade for $176 to $178, steady to $4.00 lower than the majority of Monday's trade. Tuesday's slaughter is estimated at 113,000 head, 7,000 head more than a week ago and 5,000 head less than a year ago.

Boxed beef prices closed lower: choice down $22.42 ($318.73) and select down $26.25 ($290.58) with a movement of 127 loads (66.48 loads of choice, 30.02 loads of select, 22.73 loads of trim and 8.21 loads of ground beef). Tuesday's close for boxed beef prices rings new record losses in a day's time for both choice and select products.

WEDNESDAY'S CASH CATTLE CALL: Lower. It's far from a bullish sign that, as of Tuesday, some Northern cattle have already traded $4.00 lower compared to Monday's trade. Seeing that the boxed beef values are tumbling lower and that the board is willing to take $2.00 to $3.00 losses, cash cattle trade will most likely be lower throughout the rest of week.

FEEDER CATTLE:

Feeder cattle contracts closed over $2.00 lower in nearby contracts and almost $2.00 lower in deferred contracts. August feeders closed $2.70 lower at $133.42, September feeders closed $2.30 lower at $134.90 and October feeders closed $2.10 lower at $135.67. The feeder cattle market is vulnerable to what the live cattle contracts and cash cattle market do in the near future. Tuesday's close is still above the 40-day moving average ($123.21) and above the 100-day moving average ($128.82) and a year ago the feeder cattle market closed at $133.50. At Ozarks Regional Stockyards, in West Plains, Missouri, compared to last week, steer and heifer calves trade steady to $3.00 higher with yearlings not well tested. Demand was good and continued to improve throughout the day on a heavy supply (4,500 head). The CME feeder cattle index 6/1/2020: down $0.71, $128.25.

LEAN HOGS:

The lean hog complex was the only livestock market able to close somewhat higher Tuesday afternoon. Nearby contracts struggled to rally with deferred contracts as the backlog of supply continues to pressure the futures market and cutout values. June lean hogs are down $2.20 at $52.40, July lean hog are down $0.27 at $54.87 and August lean hogs closed $0.45 higher at $55.50. Pork cutouts totaled a whopping 571.70 loads with 527.34 loads of pork cuts and 44.36 loads of trim. Pork cutout values are down $6.67, $74.37. Tuesday's slaughter is estimated at 417,000 head, 12,000 head more than a week ago and 61,000 head less than a year ago. The CME lean hog index 5/29/2020: down $1.29, $59.96.

WEDNESDAY'S CASH HOG CALL: Lower. Thankfully packers are continuing to process hogs at incredible speeds, but regardless of how much slaughter increases from the previous week, the backlog that has accumulated over the last two months is still going to take weeks to get through before the market is current again.

#completeherdhealth

Tuesday Midday Livestock Market Summary - Cattle Contracts Lower; Lean Hog Contracts Optimistic

GENERAL COMMENTS:

Livestock futures have fought some immense resistance Tuesday morning, but as the day progressed lean hog contracts rallied while cattle contracts remain suppressed. July corn is up 3/4 cent per bushel and July soybean meal is up $0.60. The Dow Jones Industrial Average is up 132.31 points and NASDAQ is down 21.89 points.

LIVE CATTLE:

Live cattle futures are notably lower in nearby contracts and modestly lower in deferred. June live cattle are down $2.05 at $96.25, August live cattle are down $1.22 at $97.75 and October live cattle are down $0.72 at $100.65. A light round of cash cattle trade developed Tuesday morning in eastern Nebraska where a regional packer bought dressed cattle for $178 with delivery set for June 15. Asking prices are $118 to $120-plus in the South and $190-plus in the North. As trade is expected to trickle in throughout the week, it will be interesting to see if delivery dates on most of the cattle purchases are for later or if packers want the cattle now.

Monday afternoon there was a light round of trade reported in Nebraska and Iowa. Dressed cattle sold for $178 to $187, mostly at $187, which is roughly steady to $3.00 lower than last week's weighted average.

Boxed beef prices are lower: choice down $18.79 ($322.36) and select down $21.31 ($295.52) with a movement of 65 loads (34.19 loads of choice, 16.65 loads of select, 11.40 loads of trim and 2.70 loads of ground beef).

FEEDER CATTLE:

Feeder cattle futures are lower Tuesday with greatest resistance in nearby contracts. August feeder cattle are down $1.77 at $134.35, September feeder cattle are down $1.27 at $135.92 and October feeder cattle are down $1.05 at $136.72. For cattle selling in the countryside, Tuesday's weakness shouldn't crater the recent momentum as the market has had a commendable rally over the last week and fat cattle are still selling within last week's price range.

LEAN HOGS:

Lean hog futures have been pressured over fears that China could stop purchasing ag products, which would greatly affect the lean hog market as the U.S. sits on an overabundance of hogs. But seeing export reports that China bought soybeans for the 2020/2021 marketing year Tuesday morning lightens some of that stress. June lean hogs are down $1.45 at $53.15, July lean hogs are up $0.12 at $55.27 and August lean hogs are up $0.85 at $55.95.

The projected lean hog index for 6/1/2020 is down $0.73 at $59.23 and the actual index for 5/29/2020 is down $1.29 at $59.96. Hog prices are unavailable on the National Direct Morning Hog Report due to confidentiality. Pork cutouts total 307.66 loads with 290.11 loads of pork cuts and 17.55 loads of trim. Pork cutout values: down $2.04, $79.00.

#completecalfcare