Monday Morning Livestock Market Summary - Limited Buyer Support Expected Following Pressure Late Last Week

General Comments:

Cash market trade is expected to remain sluggish Monday morning, although the trend of daily trade developing through the week over the past several weeks is not ruling out any cash sales by the end of the day. Morning activity will be focused on showlist distribution and inventory taking as both sides wait for confirmation of a market average from last week. Wide trading ranges once again developed last week. Even though price ranges were wide, markets eroded as the week continued last week. If prices start out where they left off Friday, the significant premium held by cash market trade over the last two months will quickly evaporate, creating additional concern of cash basis levels returning to more traditional levels of $2 to $4 per cwt above futures prices. Sharp losses in boxed beef values continue with cutout values falling $70.40 and $76.14 per cwt in respective choice and select markets last week. This has eroded the bulk of the rally during April and May, and could lead to even lower price levels in the coming days. Currently choice boxed beef cuts are priced nearly $40 per cwt above April 8 price levels (before the plant closure price surges started) and given the recent weakness, these price spreads could be evaporated in a matter of days. As plant production is moving back closer to pre-coronavirus levels, the focus on sustaining and rebuilding beef demand given food service demand is still struggling and retail consumers are still grappling with higher retail price levels. Monday slaughter is expected at 117,000 head.

Strong support in outside markets going into Monday's trading session is expected to help limit follow-through selling. This could lead to additional stability during the week as the livestock and meat industry returns to a more normal level. Plant production levels continue to steadily increase with additional focus on moving hogs through the system into the retail and food service industries. The growing questions in the coming days and months is if pork demand will be able to rebound quickly in order to not build a glut of pork in storage over the next several weeks. Food service remains well below pre-virus levels with some still closed, and many still not having full menus or maintaining normal business hours. Retail buying seems to have slowed significantly with retail prices still high based on previous gains in pork cutout values. This will continue to leave a backlash of price moves over the near future as wholesale and cash prices still remain under pressure during early June. The ability to hold July contracts at or near $55 per cwt through the upcoming days will be huge in helping to sustain buyer support during the month of June. Cash hog bids are expected $1 lower to $1 per cwt higher with most bids steady to $1 lower. Slaughter Monday is expected at 439,000 head.

	BULL SIDE		BEAR SIDE
1)	As boxed beef prices move back to a more normal price range additional consumer buying is expected as retail prices start to significantly fall.	1)	Sharp losses in beef cutout values continue. Last week, significant losses developed in choice and select cuts, falling $76.14 and $70.40 per cwt respectively during the week. Further price reductions are likely during the upcoming days as supplies start to increase.
2)	Cattle slaughter levels are steadily increasing on a daily basis with early-week output by packers expected to be within 1,000 to 3,000 head, less than year-ago levels. This has been an incredible recovery over the past few weeks, as schedules return to a more normal pattern.	2)	The wide range of cash cattle trade reported last week, and fact that prices steadily eroded as the week progressed points to the potential that any early-week cash trade may be near last week's lows. This could add further market pressure to futures and cash markets.
3)	Hog slaughter has steadily increased the past couple of weeks as packers continue getting back to more normal levels. This could continue to slowly improve over the next couple of weeks, cutting into the glut of market-ready hogs available to the industry.	3)	Cash hog values continue to steadily shift lower through the end of last week. Friday the national weighted average price was listed at $32.14 per cwt, down $0.83 from the previous day. Despite gains in futures prices, packers have abundant access to market-ready hogs.
4)	Firm triple-digit gains have steadily moved into deferred lean hog trade late last week. This continues to add support to long-term price support as traders expect hog numbers to tighten as the year continues.	4)	Struggling pork demand from domestic and export markets continues to be a growing concern through the industry. This may continue to add increased pressure through the entire complex through most of the summer months.

#completeherdhealth

Friday Closing Livestock Market Update - Cattle Contracts Slip Lower

GENERAL COMMENTS:

Livestock contracts closed the week mostly lower, and with anticipation that on the cattle side of things, prices are going to get cheaper before they go higher. Hog prices closed lower on the National Direct Afternoon Hog Report, down $0.83 with a weighted average of $32.14 on 5,626 head sold. July corn is up 2 1/4 cents per bushel and July soybean meal is down $0.70. The Dow Jones Industrial Average is up 829.16 points and NASDAQ is up 198.27 points.

From Friday to Friday, livestock futures scored the following changes: June live cattle down $5.82, August live cattle down $3.43; August feeder cattle down $1.17, September feeder cattle down $0.28; June lean hogs down $9.40, July lean hogs down $3.10.

LIVE CATTLE:

Live cattle contracts closed lower, near $2.00 lower in nearby contracts. June live cattle closed $1.82 lower at $93.90, August live cattle closed $1.75 lower at $96.17 and October live cattle closed $1.57 lower at $99.30. The 40-day moving average ($93.54) sits closely with where the markets closed this week, but the 100-day moving average sits at $104.12, almost $10.00 higher than where the market is now. Friday was a quiet day for the cash cattle market as the board veered lower and few were interested in trading cattle. Some cattle in Texas traded for $100 to $110, and a private source shared that some cattle also traded upwards of $114. Other than the trade in the South, the market was extremely quiet.

Friday's slaughter is estimated at 116,000 head, 5,000 head greater than a week ago and 3,000 head less than a year ago. Saturday's kill is projected to be around 63,000 head.

Boxed beef prices close lower: choice down $10.78 ($261.48) and select down $13.99 ($246.42) with a movement of 155 loads (101.08 loads of choice, 25.06 loads of select, 11.17 loads of trim and 18.02 loads of ground beef).

MONDAY'S CASH CATTLE CALL: Lower. But the real question is how much lower? Will the market teeter lower, taking a mere $2.00 next week, followed with another $2.00 the following week? Or will the market take a sizeable plunge lower as boxed beef prices correct and the board trends lower?

FEEDER CATTLE:

Feeder cattle contracts struggled all throughout Friday and ultimately closed substantially lower. August feeders closed $0.55 lower at $134.17, September feeders closed $1.02 lower at $135.47 and October feeders closed $1.20 lower at $136.07. The feeder cattle market is caught in a tough spot as the countryside would like to see the market rally as early summer sales are about to take place, but the live cattle market is regressing, which is bringing the futures market lower along with it. The South Dakota Weekly Cattle Auction Summary shared that, compared to last week, feeder steers under 800 pounds sold $1.00 to $2.00 higher, steers weighing over 800 pounds sold steady to $3.00 lower. Feeder heifers were unevenly steady. Demand was moderate to good on steers and heifers under 800 pounds, and only moderate on anything heavier. Big strings of backgrounded yearlings continue to be offered at the auctions throughout the state. Cattle feeders are apprehensive about pushing too hard when trying to get cattle bought as the futures contracts aren't supportive of higher feeder cattle prices. The CME feeder cattle index 6/4/2020: down $0.72, $127.93.

LEAN HOGS:

Lean hog contracts trended lower throughout the week, but support came Friday with gains well over $1.00 in most contracts. June lean hogs closed $0.97 lower at $47.45, July lean hogs closed $0.35 higher at $53.92 and August lean hogs closed $1.57 higher at $57.35. On a positive note, hog slaughter has been avid about getting back to a year ago levels and is on the brink of doing so. Although it will still take an exuberant amount of time to get the backlog of hogs processed, its positive that the industry won't be adding to the backlog here shortly.

Pork cutouts total 442.03 loads with 414.32 loads of pork cuts and 27.71 loads of trim. Pork cutout values: down $2.07, $72.78. Friday's slaughter is estimated at 438,000 head, 19,000 head greater than a week ago and 30,000 head less than a year ago. Saturday's kill is projected to be around 323,000 head. The CME lean hog index 6/3/2020: down $1.68, $55.38.

MONDAY'S CASH HOG CALL: Lower. Packers don't have to work hard at getting the hogs they need, and until the market is current, steady to lower trends will most likely be the case.

#completeherdhealth

Friday Midday Livestock Market Summary - Cattle Tumble Lower While Lean Hogs Rally

General Comments

Friday is shaping up to be a strong day for the lean hog market as contracts rally well over $1.00 but the cattle contracts unfortunately can't say the same. Both live cattle and feeder cattle contracts fight pressure in nearby contracts as uncertainty continues to plague the industry. July corn is up 2 cents per bushel and July soybean meal is down $0.80. The Dow Jones Industrial Average is up 876.30 points and NASDAQ is up 204.73 points.

LIVE CATTLE

Live cattle contracts are trading substantially lower as Friday nears the noon hour. Thursday afternoon cash cattle traded as low at $105 which hasn't helped the market's morale which is now engulfing Friday's trade. June live cattle are down $1.50 at $94.22, August live cattle are down $1.37 at $96.55 and October live cattle are down $1.10 at $99.77. The cash cattle market sits very, very quiet as bids and asking prices are obsolete. Seeing that trade has transpired all through out the week and then weakened come Thursday, business could be done for the week.

Boxed beef prices are lower: choice down $6.42 ($265.84) and select down $5.98 ($254.43) with a movement of 59 loads (43.80 loads of choice, 7.36 loads of select, zero loads of trim and 7.45 loads of ground beef).

FEEDER CATTLE

Feeder cattle contracts are feeling vulnerable to the live cattle market's weakness and the limited number of traders invested into the market isn't helping either. August feeders are down $0.95 at $133.77, September feeders are down $1.07 at $135.42 and October feeders are down $0.97 at $136.30. Heading into June and nearing the official summer season has welcomed warmer weather, which is bothersome to a lot of cattlemen as some pastures are already looking dry.

LEAN HOGS

The cattle contracts may be sliding backwards instead of rallying into the later part of the week but the lean hog contracts trade optimistically instead. The spot June contract is fighting a little pressure but for the most part the industry is rallying well over $1.00. June lean hogs are down $0.12 at $48.30, July lean hogs are up $1.12 at $54.70 and August lean hogs are up $1.75 at $57.50.

The projected lean hog index for 6/3/2020 is down $1.68 at $55.38 and the actual index for 6/2/2020 was down $2.17 at $57.06. Hog prices are lower on the National Direct Morning Hog Report, down $1.01 with a weighted average of $31.96, ranging from $28.00 to $34.00 on 4,221 head and a five-day rolling average of $33.93. Pork cutouts total 267.55 loads with 256.80 loads of pork cuts and 10.75 loads of trim. Pork cutout values: up $2.90, $77.75.

#completeherdhealth

Friday Morning Livestock Market Update - Light Trade Expected Ahead of the Weekend

General Comments:

Cash cattle prices have continued to erode through the week as the lower boxed beef prices are having more impact in overall packer willingness to offer steady money. An extremely wide trading range continues during the week with dressed cattle ranging from $170 to $187 per cwt, with live cattle trade from $105 to $118 per cwt. Any additional trade on Friday will likely show up in the lower end of the weekly trading range and could skew the overall average price levels, depending on just how many additional cattle are purchased at the end of the week. Given the expectation that wholesale beef values will continue to tumble lower in the near future, feeders are likely not going to become focused about holding out for higher money given the expected trend that cash value bids may be even lower next week. Futures trade is expected mixed but sluggish early Friday morning. The overall lack of support in futures or wholesale beef prices once again is likely to limit the upside market potential. But with futures trade at a significant discount, there is also limited downside potential in the complex, which has continued to spark renewed buyer support during early June. This could help to instill moderate to firm end of the week gains in live cattle and feeder cattle trade as volume increases Friday. Friday slaughter is expected at 113,000 head.

With the majority of the packer production problems expected to be behind the industry, the focus on regaining support and supplying the world with high quality pork supplies is sparking some underlying support through the complex. Lightly traded June contracts continue to show limited support, being the only contract trading under $50 per cwt, but the focus on the potential for July and August contracts to gain additional ground is helping to not only firm fundamental support but also could lead to technical buying through the upcoming days. The lean hog industry still remains well entrenched within the wide trading range established over the last two months, with many traders expecting this range to hold through most of the summer. But increased focus on firming pork values and gaining market share in the meat industry based on the elevated beef values is likely to limit further widespread losses in the lean hog complex. Cash hog bids are expected $1 lower to $1 per cwt higher with most bids steady to $1 lower. Slaughter Friday is expected at 434,000 head. Saturday runs are expected at 338,000 head.

	BULL SIDE		BEAR SIDE
1)	Firm underlying support is seen in feeder cattle trade through the last half of the week. The potential to test short-term resistance levels in the upcoming days of $136.12 per cwt in August contracts could spark renewed buying through the month of June.	1)	Sharp double-digit losses have once again moved through wholesale beef values. This not only is sparking significant losses in beef prices, but also quickly eroded the live cattle equivalent, and likely will have trickle down impact on future cash cattle prices.
2)	Firm growth in open interest has continued to develop in live cattle trade during the first week of June. This is putting the focus on additional trade interest returning to the cattle complex as traders focus on potential stability and long-term gains possible in the near future.	2)	Cash cattle trade continues to erode as the week continues as packers still may be buying larger numbers of cattle, but with falling beef prices, bids are quickly eroding.
3)	With hog slaughter numbers steadily increasing, the overall focus on more stable pork supplies and the ability to limit the backlog of market-ready hogs has helped to bring buyer support to futures. This could continue to instill buying over the near future.	3)	Cash hog prices have eroded through the end of the week based on limited additional buying as packers gain access to more hogs through early June.
4)	The strong gains in outside markets over the recent days, especially in stock markets has helped to bring additional underlying support through most lean hog futures contracts, with deferred contracts showing the most support based on expected long-term buying.	4)	As pork packing plants return to a more normal routine, the concern of what to do with the additional pork supplies is likely to become a significant issue. With food service demand still limited due to limited menus and reduced seating capacity in many areas, the focus on sluggish pork value prices could limit upside potential in lean hog prices.

#completeherdhealth