Thursday Closing Livestock Market Update - Livestock Board Higher, Cash Trade Heads Lower

GENERAL COMMENTS:

Thursday was a positive day for the board as all three markets closed higher, but the two cash markets teetered lower. Hog prices closed lower on the National Direct Afternoon Hog Report, down $0.82 with a weighted average of $32.97 on 6,617 head sold. July corn is up 5 cents per bushel and July soybean meal is up $3.50. The Dow Jones Industrial Average is up 11.93 points and NASDAQ is down 67.10 points.

LIVE CATTLE:

Live cattle contracts closed higher throughout the complex but deferred contracts closed substantially higher than nearby. June live cattle closed $0.27 higher at $95.72, August live cattle closed $0.57 higher at $97.92 and October live cattle closed $0.90 higher at $100.87. Adversely, the cash cattle market had another round of light trade Thursday afternoon for lower money than earlier in the week. Full trade ranges thus far have been from $105 to $118 live in the South and dressed cattle in the North have traded for $170 to $187. Thursday's slaughter is estimated at 117,000 head, 7,000 head more than a week ago and 5,000 head less than a year ago.

Every Thursday USDA shares the Actual Slaughter Under Federal Inspection (SJ_LS711), which shares actual slaughter data from two weeks ago. The latest report released Thursday afternoon shared data for the week ending May 23. That week slaughter totaled 571,506 head; up 10% from the previous week. The actual live cattle weight averaged 1,370 pounds and dressed steer weights averaged 894 pounds, down 7 pounds from the week before.

Boxed beef prices closed lower: choice down $23.64 ($272.26) and select down $16.37 ($260.41) with a movement of 166 loads (110.72 loads of choice, 26.22 loads of select, 13.19 loads of trim and 16.24 loads of ground beef).

FRIDAY'S CASH CATTLE CALL: Steady. Friday will most likely be a day of clean trade at the lower end of the trading range.

FEEDER CATTLE:

Feeder cattle contracts closed Thursday afternoon with a modest rally in nearby contracts and with gains over $1.00 in deferred contracts. August feeders closed $0.50 higher at $134.72, September feeders closed $0.72 higher at $136.50 and October feeders closed $0.70 higher at $137.27. Thankfully the board closed higher, which gives salebarns the green light to keep calves and feeders steady to higher like they have been through the last couple of weeks. At OKC West Livestock Auction in El Reno, Oklahoma, compared to a week ago, feeder steers traded $2.00 to $3.00 higher. Feeder heifers sold steady and demand throughout the whole sale was good. Steer and heifer calves were too lightly tested to develop accurate trends, but lower undertones were noted. The CME feeder cattle index 6/3/2020: steady, $128.65.

LEAN HOGS:

Lean hog contracts were able to rally like the rest of the livestock contracts and close Thursday almost fully higher. The spot June contract fought resistance and closed slightly lower, but the rest of the complex closed $0.10 to $1.57 higher. June lean hogs closed $0.22 lower at $48.42, July lean hogs closed $0.10 higher at $53.57 and August lean hogs closed $0.87 higher at $55.77. Pork cutouts total 481.44 loads with 451.34 loads of pork cuts and 30.11 loads of trim. Pork cutout values: down $0.16, $74.85. Thursday's slaughter is estimated at 437,000 head, 15,000 head more than a week ago and 33,000 head less than a year ago. The CME lean hog index 6/2/2020: down $2.17, $57.06.

Thursday's USDA Actual Slaughter Under Federal Inspection shared that for the week ending May 23 hog slaughter totaled 2,173,162 head, up 1.85% from the previous week. The actual live hog weight averaged 293 pounds, and barrows and gilts averaged 216 pounds, down 1 pound from the previous week.

FRIDAY'S CASH HOG CALL: Lower. Seeing that there's an abundance of hogs available takes the competition out of the market for packers, which drives prices higher

#completeherdhealth

Thursday Midday Livestock Market Summary - Optimism Through Livestock Complex

General Comments

Thursday has rallied some modest support throughout the entire livestock complex and contracts are trading steadily higher at midday. The marketplace seems to be rather accepting of the upward movement and Thursday morning's export report only helped boost the market's morale as China did buy some U.S. pork and beef sales were higher. July corn is up 5 cents per bushel and July soybean meal is up $4.20. The Dow Jones Industrial Average is down 14.67 points and NASDAQ is down 39.98 points.

LIVE CATTLE

Live cattle contracts are rallying with the rest of the marketplace except for the spot June contract, which is faced with some resistance. June live cattle are down $0.05 at $95.40, August live cattle are up $0.10 at $97.45 and October live cattle are up $0.55 at $100.52. As Thursday approaches the noon hour, the bids that are on the tables are significantly lower than prices earlier in the week. In Kansas, live cattle are bid at $105, and in Nebraska, dressed cattle are bid at $175.

Beef net sales of 12,300 mt were reported for 2020, which was up 7% from the previous week and up 97% from the prior four-week average. The three main increases were from South Korea (4,300 mt including decreases of 300 mt), Japan (4,200 mt including decreases of 500 mt) and Canada (1,500 mt).

Boxed beef prices are lower: choice down $19.00 ($276.90) and select down $11.82 ($264.96) with a movement of 71 loads (43.02 loads of choice, 11.57 loads of select, 6.97 loads of trim and 9.75 loads of ground beef).

FEEDER CATTLE

Feeder cattle contracts are enjoying Thursday's rally as the market moves $0.65 to $0.85 higher. August feeder cattle are up $0.72 at $134.95, September feeder cattle are up $0.70 at $136.47 and October feeder cattle are up $0.72 at $137.30. As the market continues to trend higher, the 40-day moving average sits at $124.30 and the 100-day moving average sits at $128.58.

LEAN HOGS

The lean hog contracts are rallying along cattle contracts taking Thursday's boost as a midweek surprise. The spot June contract fights some pressure but the rest of the contracts trade steadily higher with ease. June lean hogs are down $0.32 at $48.32, July lean hogs are up $0.72 at $54.22 and August lean hogs are up $1.20 at $56.05.

Pork net sales of 17,300 mt were reported for 2020 and were down 16% from the previous week and down 5% from the prior four-week average. The three main increase were from Mexico (8,500 mt including decreases of 100 mt) China (3,400 mt including decreases of 1,400 mt) and Japan (3,100 mt including decreases of 300 mt).

The projected lean hog index for 6/3/2020 is down $1.68 at $55.38 and the actual index for 6/2/2020 is down $2.17 at $57.06. Hog prices are lower on the National Direct Afternoon Hog Report, down $0.87 with a weighted average of $32.92, ranging from $28.00 to $35.12 on 3,910 head and a five-day rolling average of $34.63. Pork cutouts total 220.22 loads with 202.72 loads of pork cuts and 17.50 loads of trim. Pork cutout values: up $4.02, $79.03.

#completecalfcare

Thursday Morning Livestock Market Summary - Cattle Futures Search for Stability at Lower Threshold

General Comments:

Cash cattle trade continues to trickle into the market through the week with at least some trade developing each day this week. The "dribs and drabs" style the market has taken on the last couple of weeks is unusual, but starting to become a familiar pattern. It is uncertain if this will continue once packers get into a more stable rhythm as they keep production levels elevated post-COVID-19, but for now, larger amounts of cattle are purchased in the negotiated cash cattle trade, leading to activity through the entire week. Prices are generally steady with last week's weighted average price levels, but have fallen $1 per cwt from where most of the trade was reported on Monday. The biggest change this week in the cash cattle trade from previous weeks is that the overall trading range of cattle reported sold is much narrower than during most of May. This will help to create a better idea where the market will end up by late Thursday or Friday, rather than having to wait for final numbers on Monday. Continued strong pressure in boxed beef values is likely to continue as the focus on increased slaughter levels combined with the sharply higher retail prices limiting overall beef disappearance. This could subdue overall beef demand long after prices move back to a normal pattern, and given the continued double-digit losses, this could only take days. Futures trade is likely to remain subdued early Thursday morning with increased underlying follow-through support likely to develop across the complex. This may not add significant price support through the end of the week, but the ability to add a sense of stability to nearby and deferred futures trade while wholesale beef prices continue to tumble lower would help to instill more widespread confidence through the complex. Thursday slaughter is expected at 115,000 head.

Expanded trading limits are available in lean hog futures trade Thursday morning, following limit losses of $3.75 per cwt in lightly traded June contracts. Although the June contracts remain sluggish and active trade is already shifted to July through October contracts, limit moves in just one contract is enough to spark expanded trading limits. The lean hog market has continued to see a split personality with nearby weakness being offset by limited to moderate support longer term. This is expected to once again be the case with traders looking for the potential to regain buyer support in late 2020 and early 2021 contracts once the production glut works through the system and tighter supplies are expected. But for now, there still continues to be ample hogs available for processing, and packers seem to be reaching a sustainable threshold of 430,000 head per day. The fact that average hog weights have not moved higher over the last several weeks as most have expected is somewhat confusing but is starting to indicate that the market remains more current than previously expected, at least for the time being. There still remains growing concern about short-term pork demand, with the weekly export sales report Thursday morning helping to shine light on product movements to China. Cash hog bids are expected $1 lower to $1 per cwt higher with most bids steady to $1 lower. Slaughter Thursday is expected at 428,000 head. Saturday runs are expected at 327,000 head.

	BULL SIDE		BEAR SIDE
1)	Cash cattle trade continues to slowly develop through the week. Prices midweek are generally steady with last week's average prices, and given the turn lower in beef values, steady money seems to be a good sign.	1)	Sharp double-digit losses have once again moved through wholesale beef values. This not only is sparking significant losses in beef prices but is also eroding the live cattle equivalent and likely will have trickle down impact on future cash cattle prices.
2)	Increased packing plant levels continue to focus on regaining a sense of normalcy following the challenges in April and early May. Slow but steady gains continue to develop in daily slaughter rates, helping to offset concerns of scarce meat supplies.	2)	Nearby live cattle futures have tumbled nearly $5 per cwt over the last week. The inability to hold recent gains and keep prices above the $100 per cwt level in nearby contracts is creating additional concern of further market losses.
3)	Firm buyer support in deferred lean hog futures trade through early June is helping to spark some underlying activity as traders slowly trickle back into the lean hog complex, focusing more on long-term direction, rather than short-term market shifts.	3)	Nearby live cattle futures have tumbled nearly $5 per cwt over the last week. The inability to hold recent gains and keep prices above the $100 per cwt level in nearby contracts is creating additional concern of further market losses.
4)	Wholesale pork cutout value bounced slightly higher midweek. Although the gains themselves are not greatly significant, the ability to break away from the price weakness in beef values, and build some market price stability could help to regain additional support over the near future.	4)	The weekly Export Sales report will be released Thursday morning, creating concerns that additional sluggish pork sales may be seen to China. The continued concerns of China's ability to remain active in the market over the coming weeks is sparking underlying weakness through nearby contracts.

#completeherdhealth

Wednesday Closing Livestock Market Update - Lean Hog Contracts Fight Nearby Pressure

GENERAL COMMENTS:

As the week looks to round the midway point and head towards the later part of the week, contracts have traded mostly lower thus far, although cattle contracts were able to close higher Wednesday afternoon. With boxed beef prices continuing to weaken at an exponential rate, weakness may be how the week ends too. Hog prices closed lower on the National Direct Afternoon Hog Report, down $0.77 with a weighted average of $33.96 on $7,827 head. July corn is down 1/4 cent per bushel and July soybean meal is up $2.60. The Dow Jones Industrial Average is up 527.24 points and NASDAQ is up 74.53 points.

LIVE CATTLE:

Live cattle contracts had a mostly uneventful day as the complex closed mostly higher other than in a couple deferred contracts. June live cattle closed $0.15 higher at $95.45, August live cattle closed $1.15 higher at $97.35 and October live cattle closed $0.55 higher at $99.97. Another round of light trade transpired Wednesday afternoon in both the North and South. Southern live cattle sold for $117, which is steady with last week's trade but $1.00 lower than Monday's trade. Northern cattle sold dressed for $185, which was steady with last week. Wednesday's slaughter is estimated at 114,000 head, 4,000 head more than a week ago and 6,000 head less than a year ago.

Boxed beef prices closed lower: choice down $22.83 ($295.90) and select down $13.80 ($276.78) with a movement of 141 loads (76.65 loads of choice, 24.91 loads of select, 18.89 loads of trim and 20.55 loads of ground beef).

THURSDAY'S CASH CATTLE CALL: Slightly lower. As boxed beef prices jump lower, the cash market is bound to follow. The question is how will it follow: Will it be in major moves that take $5.00 chunks out of the market at a time or will it trade on the lower end of the previous week's weighted average, week after week, so that the decline isn't as hasty? Time will tell. As packer's margins dwindle due to boxed beef prices correcting, how cash cattle are bid in the next two weeks will be insightful as to how the market will ease into summer.

FEEDER CATTLE:

Feeder cattle contracts closed $0.77 to $0.90 higher all throughout the complex. August feeder cattle closed $0.80 higher at $134.22, September feeders closed $0.87 higher at $135.77 and October feeders closed $0.90 higher at $136.57. At Wednesday's close the stronger month is the November contract, which closed at $137.05. At Winter Livestock in Dodge City, Kansas, compared to last week, feeder steers weighing above 800 pounds sold steady to $2.00 higher and 600- to 650-pound steers sold steady. All other feeder steer weights were not accurately tested, though lower undertones were noted. Feeder heifers weighing 450 to 700 pounds sold $1.00 to $2.00 lower while heifers weighing more than 700 pounds sold steady to $3.00 stronger. The CME feeder cattle index 6/2/2020: up $0.40, $128.65.

LEAN HOGS:

The lean hog complex fought some major pressure in nearby contracts but was able to close fully higher in deferred contracts. June lean hogs closed $3.75 lower at $48.65, July lean hogs closed $1.40 lower at $53.47 and August lean hogs closed $0.65 lower at $54.90. Working through the backlog of hogs is a blessing but adds immense pressure to the current market, and not knowing if China is going to support U.S. agriculture products in the upcoming weeks and months adds even more nearby uncertainty. Pork cutouts total 505.83 loads with 461.02 loads of pork cuts and 44.81 loads of trim. Pork cutout values: up $0.64, $75.01. Wednesday's slaughter is estimated at 429,000 head, up 8,000 head from a week ago and 47,000 head less than a year ago. The CME lean hog index 6/1/2020: down $0.73, $59.23.

THURSDAY'S CASH HOG CALL: Lower. The backlog of hogs is seeming like a never-ending curse to the lean hog market as producers are overwhelmed with the number of hogs they need to market.

#completeherdhealth