Tuesday Morning Livestock Market Summary - Price Support Likely Surrounding End-of-Month Position Adjustments

General Comments:

Following the pattern of the past few weeks, cash cattle trade started to develop Monday once again. Although overall volume was light in all areas and may not be enough to give a good market test, but Monday prices were steady to lower than last week's average. The few dressed deals in the North ranged from $152 to $155 per cwt, with live deals at $92 per cwt. If the market continues to hold at or near these price levels, this would indicate the first week since the COVID-19 pandemic has started where cash prices are below front-month futures prices. The erosion of basis levels over the past couple of months has been one of the most disappointing factors in the recent cattle market shifts. Weak basis levels could continue through most of the summer based on the backlogged cattle supplies and concern that beef demand may still struggle to show significant increases through the end of the year. Futures trade is expected steady-to-moderately higher with limited trade volume trickling into the complex as traders focus on end-of-quarter adjustments. The Fourth of July holiday demand could create a much needed spark in beef demand to start the third quarter. Price ranges in live cattle and feeder cattle appear to remain stuck in a narrow sideways pattern with little new market direction expected in the coming days, which would break out of the current pattern. Tuesday's slaughter is expected at 120,000 head.

Traders entered the week looking for needed market stability, which helped to post narrow gains in all contracts through the end of trade Monday. This same focus is expected most of the Tuesday session with traders appearing to be more focused on adjusting positions in front of month and quarter end, rather than searching for any significant or new market direction at this point. With markets closed Friday in observance of the Fourth of July holiday, trade volume is expected to remain sluggish through most of the week with traders already adjusting to lighter schedules as this is the first major holiday after restrictions have been lifted. Although activity levels are still nothing compared to normal Independence Day celebrations, there is hope of returning to a more normal holiday routine with strong meat demand over the weekend. With the fourth of July landing on the weekend this year, there could be additional consumer buying extended through the whole weekend. This has the potential to spark renewed pork buying as retail price levels have moderated over the past couple weeks from previous levels. Mixed trade is likely in the lean hog futures complex as the morning progresses, although the underlying tone of the market still remains bearish, the potential to add limited support to nearby and deferred contract prices could help sustain gains at the end of the month. Cash hog prices are expected $1 lower to 50 cents higher with most bids expected steady to weak. Slaughter Tuesday is expected at 471,000 head. No Saturday runs are expected due to the Fourth of July holiday.

	BULL SIDE		BEAR SIDE
1)	Light-to-moderate gains in boxed beef values Monday is helping to create some market stability following consistent price pressure over the last few weeks. The ability to establish support levels in cutout values will likely spark renewed buying in wholesale and retail levels during early July.	1)	Cash cattle trade started to develop Monday, posting even lower cash prices. This creates additional concern that further market erosion is likely in the coming weeks as basis levels continue to erode.
2)	Traders are focusing on the potential for moderate-to-strong beef demand over the Fourth of July Holiday weekend. A strong shift in consumer buying as beef prices have moved back from previously escalated levels could help to offset traditional demand pressure typically seen through the rest of the summer.	2)	Fourth of July is traditionally the last big push for beef demand for the summer. This is creating concerns that beef and cattle prices may continue to erode lower given the burdensome amount of cattle needing to be processed over the coming weeks and months.
3)	Lean hog futures continue to search for long-term support levels. The firm gains in nearby lean hog contracts Monday is creating the hope that renewed buying will develop through early July.	3)	Pork cutout values eroded lower Monday as concerns of sluggish post-holiday demand could put additional pressure on hog prices as well as overall pork cutout values. The limited demand in the food service industry will likely continue to keep pork values subdued.
4)	Continued strong slaughter rates are seen through the end of the month. This will continue to add consistency to the hog market as further slaughter disruptions continue to be a major concern and more COVID-19 cases develop in many areas.	4)	Limited packer activity expected over the holiday weekend with no Saturday slaughter expected, and Friday and Monday schedules expected to be reduced. This will greatly reduce the overall number of hogs slaughtered this week.

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Monday Closing Livestock Market Summary - Livestock Contracts Close Surprisingly Higher

GENERAL COMMENTS:

Monday was better than initially assumed as all three livestock futures markets were able to close the day stronger. Holiday weeks are typically problematic as trade is off-balanced and traders are usually checked out for a long weekend with little interest in really moving the market. Hog prices closed lower on the National Direct Afternoon Hog Report, down $0.18 with a weighted average of $28.48 on 6,201 head. July corn is up 9 1/4 cents per bushel and July soybean meal is down $1.60. The Dow Jones Industrial Average is up 580.25 points and NASDAQ is up 116.93 points.

LIVE CATTLE:

Live cattle contracts came out of the gate strong Monday and showed significant interest in trading higher, although they fought some resistance throughout the morning. The entire complex closed higher, ranging from $0.30 to $0.85 higher. August live cattle closed $0.45 higher at $96.47, October live cattle closed $0.57 higher at $100.05 and December live cattle closed $0.70 higher at $103.77. Some light cash trade developed in Iowa at $153 and some cattle also sold in Texas at $91 to $92. There wasn't enough trade to develop trends for the week and cash cattle interest will most likely pick up more come Tuesday. Monday's slaughter is estimated at 121,000 head -- 2,000 head more than last week and 2,000 head more than a year ago.

Boxed beef prices closed higher: choice up $1.19 ($208.36) and select up $1.86 ($200.71) with a movement of 150 loads (65.67 loads of choice, 24.77 loads of select, 24.45 loads of trim and 35.18 loads of ground beef).

TUESDAY'S CASH CATTLE CALL: Lower. Holiday weeks always throw a kink into the cash cattle market because packers either have to run and jump to get cattle bought or they sit back idly and let the week pass. Knowing there are ample amounts of cattle around, packers will probably pick up some cattle here and there with the most obvious trend for the week continued pressure on the cash cattle market.

FEEDER CATTLE:

Feeder cattle contracts turned around after the noon hour and closed $0.20 to $0.90 stronger. August feeders closed $0.90 higher at $133.50, September feeders closed $0.50 higher at $134.27 and October feeders closed $0.40 higher at $135.12. At Oklahoma National Stockyards in Oklahoma City, Oklahoma, feeder steers sold steady to $4.00 higher compared to last week, and feeder heifers sold $2.00 to $6.00 higher. Demand for feeder cattle was notably strong and steer and heifer calves were called steady to $3.00 higher. There is concern about drought in that that area as strong winds and hot temperatures continue. The CME Feeder Cattle Index 6/26/2020: up $0.22, $130.04.

LEAN HOGS:

Even with last week's bearish USDA Hogs and Pigs report, the market closed fully higher Monday afternoon. July lean hogs closed $0.10 higher at $45.37, August lean hogs closed $0.32 higher at $48.45 and October lean hogs closed $0.42 higher at $47.42. Even with a slightly weaker cash hog trade, it's positive to see hog weights decreasing in efforts to help additional pressure from building. For the week ended June 13, hog live weights were down three pounds at 289 pounds and dressed weights were down two pounds at 216 pounds. Monday's slaughter is estimated at 468,000 head -- 18,000 head more than a week ago and 12,000 head more than a year ago. Pork cutouts totaled 431.68 loads with 389.81 loads of pork cuts and 41.87 loads of trim. Pork cutout values: down $0.74, $65.21. The CME lean hog index 6/25/2020: up $0.36, $45.23.

TUESDAY'S CASH HOG CALL: Steady to slightly lower. A modest regression is expected to continue as the sheer number of hogs available is plentiful.

#completeherdhealth

Monday Midday Livestock Market Summary - Some Positivity for Live Cattle & Lean Hogs

General Comments

Livestock contracts are trading here and there, without a major consensus of where the market should align its protectory for the week at. Throughout the day the live cattle and lean hog contracts have toyed with the idea of trading higher, but the feeder cattle contracts are adamant about bowing lower and continue to scale back. July corn is up 6 1/2 cents per bushel and July soybean meal is down $0.40. The Dow Jones Industrial Average is up 446.29 points and NASDAQ is up 90.88 points.

LIVE CATTLE

Despite the ginormous backlog of cattle continuing to be an issue for the industry, the live cattle complex is trading higher into the noon hour. August live cattle are up $0.32 at $96.35, October live cattle are up $0.40 at $99.87 and December live cattle are up $0.52 at $103.60. The week is anticipated to be mostly quiet as slaughter will mostly likely be smaller than last week's kill with the holiday weekend. New showlists appear to be higher in Kansas, somewhat lower in Nebraska/Colorado, and lower in Texas. Bids and asking prices have not yet been established throughout the countryside.

USDA National Weekly Direct Slaughter Cattle - Negotiated Purchases shared that packers bought 92,334 head last week. Of that 89,875 head are committed for delivery in the next two weeks while the remaining 2,459 head will be delivered in the next 15 to 30 days.

Boxed beef prices are up: choice up $2.03 ($209.20) and select up $1.49 ($200.34) with a movement of 79 loads (32.56 loads of choice, 12.67 loads of select, 8.04 loads of tri and 25.68 loads of ground beef).

FEEDER CATTLE

Feeder cattle contracts are far from interested in trading higher as the complex has traded lower throughout the entire morning. After last week's push to see stronger prices throughout the countryside, the complex will most likely coast through this week without too much excitement. Seeing that some cow/calf country is getting rain is a positive win for producers as many worry that hay prices are going to be up from last year's prices. August live cattle are down $0.60 at $132.00, September live cattle are down $0.72 at $133.05 and October live cattle are down $0.72 at $134.00.

LEAN HOGS

Surprisingly enough the lean hogs complex is supporting some nearby excitement Monday morning. July lean hog are up $0.15 at $45.42, August lean hogs are up $0.82 at $48.95 and October lean hogs are up $0.65 at $47.65. Even though slaughter is anticipated to be slightly lower this week with the 4th of July weekend, packers were aggressive Monday morning and upped cash prices nearly $0.50 -- but with pork prices showing strength throughout different times of last week and up $3.58 at midday Monday, packers have incentive to keep working.

The projected lean hog index is unavailable due to packer submission problems. Hog prices are higher on the National Direct Morning Hog Report, up $0.41 with a weighted average of $28.94, ranging from $24.00 to $30.13 on 4,907 head and a five-day rolling average of $28.67. Pork cutouts total 222.02 loads with 192.19 loads of pork cuts and 29.83 loads of trim. Pork cutout values: up $3.58, $69.53.

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Monday Morning Livestock Market Summary - Sluggish Trade Volume Expected During Holiday Week

General Comments:

Both sides of the cash market are expected to remain slow to show early-week developments following the continued market tumble in cash prices last week. Even though trade has continued to develop nearly every day of the week, last week's trade showed the narrowest trade ranges in over a month, creating potential consistency even though prices have continued to tumble lower. Trade last week ranged from $93 to $97 per cwt live and $152 to $156 dressed. As slaughter capacity levels move back to a more normal range with the inventory of market-ready cattle still burdensome on the market, the previous cash basis premium has quickly evaporated. August live cattle futures have held within a narrow sideways trading pattern over the last month, remaining well confined within a $1.50 per cwt trading range from $95 to $96.50 per cwt. The ability to hold current support levels above $95 per cwt even with the recent cash market pressure could help to bring some much needed buyer support to the market over the coming days and weeks. Cattle slaughter is expected to continue to remain strong, although overall weekly numbers are expected to dip through the week with limited Friday and Saturday kills due to vacation schedules. Monday slaughter is expected at 120,000 head.

Follow-through pressure Monday is likely in several contracts following sharp near-limit losses in most remaining 2020 contracts on Friday. With last week's bearish Hogs and Pigs report focusing on larger-than-expected market hog supplies available to industry, combined with struggling pork values and sluggish demand growth during the summer has created significant market pressure through the entire complex. Last week's market shift lower, quickly moved August and October futures well below the $50 per cwt threshold. This has created technical pressure in all nearby contracts that is likely to spark follow-through liquidation through the near future. Early-week hog slaughter is expected to remain strong, but the upcoming holiday will quickly limit production levels through the last couple days of the week and evaporate most Saturday runs. This will likely create even more concerns surrounding the ability keep the hog complex current, although the falling average hog weights over the last few weeks continues to limit the amount of pork being backed up in the system. Cash hog prices are expected $1 lower to 50 cents higher with most bids expected steady to weak. Slaughter Monday is expected at 471,000 head.

	BULL SIDE		BEAR SIDE
1)	Firm market premiums continue to hold in spring 2021 contract months with April futures trading at a $12 per cwt premium to current August futures. This focuses the attention on tighter long-term cattle supplies.	1)	Cash cattle prices continue to show moderate-to-strong pressure with prices falling $5 to $7 per cwt last week. This has quickly eroded the previously strong basis opportunities in the market.
2)	Active feeder cattle buying is being reported at steady-to-higher money with feeders looking for opportunities for market-ready cattle in early 2021. The continued pressure in grain markets, reducing feed costs is adding to the recent buyer support.	2)	Burdensome levels of market-ready cattle will continue to plague the cattle market through the rest of the summer and well into fall months. This could add even more price pressure cash and futures prices in the near future.
3)	Continued focus on reduced long-term herd size due to reduced farrowing intentions and less hogs kept back for breeding purposes is helping to spark renewed premiums in summer 2021 contract months.	3)	Sharp losses last week in hog futures continues to create technical weakness in all nearby lean hog trade. This is reestablishing long-term support levels below $40 per cwt based on recent market pressure in the complex.
4)	Active packers continue to chip away at the large amount of market hogs available to the market. This is expected to continue to erode overall hog weights going into the month of July.	4)	The upcoming Fourth of July holiday is expected to significantly cut weekly slaughter rates, which have been dependent on a strong Saturday slaughter over the past several weeks. Significant pressure in harvest numbers on Friday and Saturday will impact the ability to keep market-ready hogs moving through the system in an efficient manner.

#completecalfcare