Monday Morning Livestock Market Summary - Will Last Week's Market Optimism Continue

General Comments:

Limited cash market direction is expected Monday morning as both sides return from the long holiday weekend. The typical showlist distribution and inventory-taking routine early in the week is expected to keep all participants busy through much of the morning, although some limited business may develop before the end of the day as been the pattern over the last few weeks. Cash markets last week posted additional price pressure, but the narrowing of the extremely wide price ranges may be indicating that cash market trade could be getting back to a normal rhythm. There will be growing uncertainty about the ability to maintain beef demand through the remainder of the summer given the traditional sluggish demand cycle following the Fourth of July and continued changes in overall demand for beef in the food service industry. The strong rally in futures trade last Thursday created some underlying technical support with triple-digit gains developing in all nearby contracts. August futures moved to the highest levels in more than a month, as prices quickly approach $100 per cwt levels once again. The ability to sustain these gains early Monday is likely to spark renewed commercial buyer interest as traders look for the potential to build on recent support in both live cattle and feeder cattle futures. Monday's slaughter is expected at 117,000 head.

Lean hog futures continue to aggressively search for a bottom to this weaker market structure, but so far, it has been a struggle to find enough bullish market news to give buyers incentive to change direction through the summer months. It is uncertain just how traders will react following the long holiday weekend. In general, it has been a relatively quiet holiday weekend when it comes to global political and economic direction, and news. But this has led to increased speculation surrounding the ability to sustain and grow domestic and export pork demand through the upcoming summer months, while nearby lean hog futures hover at or near contract lows. There is concern that the current amount of hogs and recent gains in feed costs will create additional market struggles through the rest of the summer, and most of remaining 2020. The ability to bring additional price support back into wholesale and retail pork values through the upcoming days and weeks should make significant strides in refocusing traders on market stability and further gains through the upcoming days and weeks. Cash hog prices are expected $1 lower to 50 cents higher with most bids expected steady. Slaughter Monday is expected at 454,000 head.

	BULL SIDE		BEAR SIDE
1)	August live cattle futures closed at $99.40 per cwt last week. This is a $3.13 per cwt rally from lows set earlier in the week. The technical support developing during early July broke through initial resistance levels and set month-long highs across nearby live cattle trade.	1)	Continued weakness in cash cattle prices last week will create uncertainty as traders return to the market following the long holiday weekend. This could create uncertainty as packers still have access to growing numbers of market-ready cattle through the rest of the summer.
2)	Boxed beef values ended higher at the end of last week. Although these gains were narrow, the ability to bring stability to wholesale beef values during early July will go a long way in rebuilding market confidence and hopefully regain price support following the market free fall in the last few weeks.	2)	Traditionally beef demand struggles following the Fourth of July, for the rest of the summer. Combined with limited summer travel plans and sluggish demand in food service markets, the concern that active beef movement becomes very real over the next couple of months.
3)	Strong gains in pork cutout values Thursday pointed to renewed buyer interest. This is expected to be more than pre-holiday purchasing, it could indicate a change in market direction through the rest of July.	3)	August lean hog futures remain near contract lows, with limited support expected to develop as traders return from the holiday weekend. This could continue to hold nearby price levels under $50 per cwt as traders remain focused on weakness in cash values and uncertain pork demand growth in domestic and export markets.
4)	Lean hog traders appear to be moving away from short-term hog supply concerns and more focused on rebuilding the long-term structure across the industry. With prices at or near contract lows, this may continue to bring firm buyer support back into the market, especially for traders focused on long-term growth potential.	4)	As traders quickly return to the market following the long weekend and sluggish activity last week, the concern that increased COVID-19 cases around the country will further hamper efforts of reopening the country and business structure with several states taking measures to curb the spread of virus infections and rolling back previous phases of reopening. This could significant impact restaurant activity and overall pork demand.

#completecalfcare

Thursday Closing Livestock Market Update - Is That a Rally in the Making or Just the Fourth of July Spirit?

GENERAL COMMENTS:

Cattle contracts really tested the market Thursday afternoon and flirted with nearby resistance. It seems odd that, with the backlog of cattle, prices would rally, but nevertheless, they did. Hog prices closed lower on the National Direct Afternoon Hog Report, down $0.07 with a weighted average of $28.61 on 5,558 head. September corn is down 7 cents per bushel and December soybean meal is down $0.40. The Dow Jones Industrial Average is up 92.39 points and NASDAQ is up 53.00 points.

From Thursday to Friday, livestock futures scored the following changes: August live cattle up $3.38, October live cattle up $3.21; August feeder cattle up $2.28, September feeder cattle up $2.07; July lean hogs down $0.55, August lean hogs up $1.08.

LIVE CATTLE:

Live cattle contracts are feeling like the daring type these days. Rallying the market upwards of $2.00 in nearby contracts and upwards of $1.00 in deferred, all while knowing there's a mountain of cattle to be processed and a looming wonder of how third quarter boxed beef demand will remain. August live cattle closed $2.10 higher at $99.40, October live cattle closed $2.00 higher at $102.67 and December live cattle closed $1.42 stronger at $105.92. Time is the best answer for unknown questions in the marketplace, and as time works through July we will better understand where these prices really need to lay. There was another light round of trade in Thursday afternoon that was mostly steady with the trade earlier in the week. Southern live cattle traded for $91 to $96 this week, and Northern cattle traded for $148 to $155. Thursday's slaughter is estimated at 121,000 head, 1,000 head more than a week ago and year ago figures are incomparable given that it was the Fourth of July.

Thursday's USDA Actual Slaughter Under Feder Inspection shared a mixed bag -- lower slaughter than initially expected, but lighter weights. For the week ending June 20, cattle slaughter totaled 645,661 head, whereas the USDA Estimated Weekly Meat Production Under Federal Inspection estimated the week at 656,000; equating to 10,339 fewer head. But it was encouraging to see that cattle weights had dropped. Live cattle weights totaled 1,364 pounds (eight pounds lighter than the previous week) and dressed weights totaled 828 pounds (four pounds lighter than the previous week).

Boxed beef prices closed higher: choice up $0.06 ($205.44) and select up $0.33 ($198.76) with a movement of 156 loads (87.50 loads of choice cuts, 16.28 loads of select, 21.29 loads of trim and 31.15 loads of ground beef).

MONDAY'S CASH CATTLE CALL: Lower. The current volume of supply is a burden that will keep live cattle prices depressed.

FEEDER CATTLE:

Feeder cattle contracts stuck their neck out on the line and really test the market heading into the Fourth of July holiday. The board saw significant gains and rallied upwards of $1.47 to $2.55 throughout the market. On one hand, this could have been a weird holiday disruption as the week is shortened and the feeder cattle contracts simply rallied side-by-side the live cattle market -- or seeing that the market tested resistance planes, this could be a grab for higher ground heading into July. 

August feeders closed $1.80 higher at $134.87, September feeders closed $1.82 higher at $135.85 and October feeders closed $1.80 higher at $136.70. The CME feeder cattle index 7/1/2020: down $0.08, $129.05.

LEAN HOGS:

The lean hog complex leaned into the last trading minutes of the day and closed mostly higher throughout the complex. The rally came as a last-ditch effort to close higher after the market had traded mostly lower earlier in the day. July lean hogs closed $0.07 lower at $44.72, August lean hogs closed $0.12 stronger at $49.20 and October lean hogs closed $0.07 higher at $48.35. Pork cutouts totaled 444.53 loads with 398.09 loads of pork cuts and 46.44 loads of trim. Pork cutout values: up $2.84, $66.46. Thursday's slaughter totals 461,000 head, 11,000 head more than a week ago and year ago figures are incomparable given that it was the Fourth of July. The CME lean hog index 6/30/2020: up $0.04, $45.24.

Thursday's USDA Actual Slaughter Under Feder Inspection treated the hog industry better than cattle producers -- a higher slaughter than anticipated and lower weights. Actual slaughter totaled 2,593,128 head where it was projected to be 2,587,000 head; equating to 6,128 head more than anticipated. Hog weights were also down as live weights totaled 287 pounds (two pounds lighter than the previous week) and dressed weights totaled 214 pounds (two pounds lighter than the previous week).

MONDAY'S CASH HOG CALL: Lower. The complex closed slightly higher in nearby contracts and moderately higher in deferred, but the facts are still bearish for the cash hog market -- too much supply makes it incredibly hard for prices to rally.

#completeherdhealth

Thursday Midday Livestock Market Summary - Cattle Contracts Aren't Weakening

General Comments

Heading into the noon hour of the last trading day for this week, cattle contracts remain optimistic and the lean hog complex is split. Shortened holiday weeks are tough because one minute the market can be as painfully boring as attending a third-grader's recorder concert, and the next minute you're sitting back in your chair wondering what the hell these bullish cattle contracts are thinking! September corn is down 3 3/4 cents per bushel and December soybean meal is down $0.50. The Dow Jones Industrial Average is up 229.12 points and NASDAQ is up 108.13 points.

LIVE CATTLE

Live cattle prices are rallying upwards of $2.17 in nearby contracts while live trade in Texas is developing for $93. I desperately long for the day when our marketplace can go back to trading on sound fundamentals because this off-the-cuff irrational denial of what the market is faced with simply cannot be sustained. August live cattle are up $2.02 at $99.35, October live cattle are up $2.05 at $102.72 and December live cattle are up $1.45 at $105.95. Cash cattle trade has been relatively quiet throughout the day with just a little bit of trade developing in Nebraska live for $95 to $96, and in Texas for $93 live. Seeing that the market is closing early for the 4th of July weekend, it's safe to assume that the bulk of this week's trade is done and that only clean-up trade will wrap up the day. This week Southern live cattle have had a full range of $91 to $96, mostly $94 to $95, while Northern dressed deals have had a full range of $148 to $155, mostly $153 to $155.

Thursday's export report shared that beef net sales of 12,300 mt were reported for 2020 which was down 49% from the previous week and down 36% from the prior four-week average. The three primary increases were from Japan (3,800 mt including decreases of 500 mt), South Korea (2,900 mt, including decreases of 600 mt) and Taiwan (1,700 mt, including decreases of 100 mt).

Boxed beef prices are mixed: choice up $0.16 ($205.54) and select down $0.13 ($198.30) with a movement of 79 loads (42.29 loads of choice, 10.13 loads of select, 10.20 loads of trim and 16.06 loads of ground beef).

FEEDER CATTLE

Feeder cattle contracts have had a volatile week -- enduring significant swings in prices and not feeling secure in either direction. Heading into the afternoon, the entire feeder cattle complex is trading higher, ranging from $1.47 to $2.60 stronger. August feeders are up $1.80 at $134.87, September feeders are up $2.00 at $136.02 and October feeders are up $1.87 at $136.77. Largely the market's gumption is stemming from the rally seen in the live cattle contracts.

LEAN HOGS

The lean hog complex has some contracts that would rally if support and interest would build but traders seem to me mostly checked out for the week and with an early close, the complex's chance of building a rally in the time the day has left is slim. July lean hogs are down $0.02 at $44.77, August lean hogs are up $0.22 at $49.30 and October lean hogs are down $0.32 at $47.95. The midday cutout value is up notably, just $0.14 shy of a $4.00 jump.

Pork net sales of 39,200 mt were reported for 2020 which was up 63% from the previous week and up 61% from the prior four-week average. The three primary increases were from China (21,600 mt, including decreases of 900 mt), Mexico (8,400 mt including decreases of 4,300 mt) and Japan (2,200 mt including decreases of 300 mt).

The projected lean hog index for 6/30/2020 is up $0.04 at $45.28, and the actual index for 6/29/2020 is up $0.01 at $45.24. Hog prices are lower on the National Direct Morning Hog Report, down $0.05 with a weighted average of $28.63, ranging from $24.00 to $30.13 on 4,988 head and a five-day rolling average of $28.61. Pork cutouts total 227.42 loads with 210.44 loads of pork cuts and 16.97 loads of trim. Pork cutout values: up $3.86, $67.48.

#completeherdhealth

Thursday Morning Livestock Market Summary - Trade Coasts Into Long Holiday Weekend

General Comments:

Following another round of light-to-moderate trade Wednesday, the overall lack of support in cash markets seems to be focusing on the generally weak undertone as packers continue to have easy access to needed cattle even though overall plant speed has returned to a pre-coronavirus level. The backlog of cattle in the system still leaves feeders with limited options in the cash trade as a "take it or leave it" packer mentality continues. Cash cattle trade is expected to hold in the current market range through the end of the week, with live deals hovering from $92 to $95 per cwt, mostly $94 to $95 per cwt, while dressed trade is at $152 to $155 per cwt. This is about $1 per cwt live basis below last week's average, and steady to weak from trade early in the week. At this point, both sides are gearing up to wrap trade up by the end of the day with the desire to head into the weekend covered for needs next week. Futures markets will remain closed Friday and will close early Thursday, ahead of the holiday. This will likely limit additional market participation through the Thursday session, although the firm gains on the first trading session of July is helping to rekindle expectations of further support, limited as it may be. Thursday's slaughter is expected at 121,000 head.

Underlying market pressure is likely to continue in lean hog futures trade Thursday as traders temporarily break away from long-term market moves and likely focus on end-of-the-week positioning. With markets closed Friday due to the Fourth of July holiday, the continued concern about price, recent long-term lows and abundant hogs available to the complex, continues to weigh on price levels. Currently, all nearby contracts are trading below $50 per cwt, creating a generally weak market structure as limited demand support is likely over the near future. The hope that strong pork demand surrounding holiday movement will bring a sense of price stability still exists, but the sheer mass of hogs available is likely to limit any extended upward market swings. Cash hog prices are expected $1 lower to 50 cents higher with most bids expected steady. Slaughter Thursday is expected at 468,000 head. Friday slaughter is expected at 200,000 head. No Saturday runs are expected due to the Fourth of July holiday.

	BULL SIDE		BEAR SIDE
1)	Strong underlying support in all live cattle futures late Wednesday is helping to bring renewed buyer support back to the complex during early July. With August futures still trading well below $97 per cwt, there is potential that further long-term gains may start to trickle back into the complex based on expected growth in beef demand.	1)	With August live cattle futures still holding well below $100 per cwt, the concern that prices could hover within this lower price range through much of the summer is causing concern about further buyer support redeveloping in the near future.
2)	The upcoming holiday weekend is creating optimism for growth in beef demand and the ability to clear additional product through retail and food service channels. The focus on feature activity of beef products surrounding the long holiday weekend could aggressively move large amounts of beef into consumer hands over the next few days.	2)	Sharp gains in grain markets has quickly sparked increased production costs to all cattle breakeven levels. This may continue to cause pressure to live cattle and feeder cattle trade over the near future based on the expectation that new-crop corn supplies are likely to be lower than previously expected due to acreage reductions.
3)	Pork cutout values appear to have stabilized with increased gains seen midweek. The ability to ratchet cash hog and pork values higher during early July will go a long way in bringing additional buyer support to the complex.	3)	July through October lean hog futures continue to struggle with prices below $50 per cwt. These price levels are limiting new trade volume with some traders expecting prices to hover within this trade range over the near future.
4)	Active slaughter has so far been unphased by the uptick in COVID-19 cases across the country. This has allowed packing plants to maintain active and aggressive schedules to further reduce the backlog of hogs in the production system.	4)	Little market activity is expected Thursday ahead of the holiday weekend. This can allow for wide but volatile price shifts due primarily to lack of volume and can shift from fundamental or technical market direction.

#completeherdhealth