Tuesday Midday Livestock Market Summary - Livestock Contracts Lower After Monday's Rally

GENERAL COMMENTS:

The optimism that circulated through livestock futures late last week and Monday disappeared Tuesday as all the contracts are lower as we move into Tuesday afternoon. As strange as it may be, going against all fundamentals, the market seems to have some underlying support. Determining whether the market's regression on Tuesday is a simply a chance to catch a break or is a pivotal turning point back to lower trading ranges is yet to be solidified. December corn is down 4 1/2 cents per bushel and December soybean meal is down $1.80. The Dow Jones Industrial Average is down 210.80 points and Nasdaq is up 23.44 points.

LIVE CATTLE:

Live cattle futures are taking a minute to slightly regress and consider the recent change in direction. August live cattle are down $0.27 at $99.82, October live cattle are up $0.02 at $103.95 and December live cattle are down $0.17 at $106.87. Seeing where Tuesday's boxed beef movement ends up will be interesting as the midday report only showed a small 55 load count. At midday, cash cattle trade is mostly quiet but one regional came into Nebraska and bought cattle for $157, $3.00 higher than last week's weighted average. Trade has been mostly quiet for the week without a trend.

Boxed beef prices are higher: choice up $0.58 ($206.04) and select up $0.89 ($197.86) with a movement of 55 loads (27.74 loads of choice, 13.58 loads of select, 5.75 lads of trim and 7.98 loads of ground beef).

FEEDER CATTLE:

Feeder cattle sales were sparse Monday afternoon as several sale barns took the day off. The feeder cattle complex contemplated for a long time whether contracts should follow the live cattle momentum; after enough time and pressure to do so, the feeder complex did follow suit. But just as the live cattle contracts started to weaken, the feeder cattle contracts were quick to rethink. Nearby contracts are taking the biggest step backwards while deferred contracts are only trading slightly lower. August feeder cattle are down $1.05 at $135.07, September feeders are down $0.80 at $136.42 and October feeders are down $0.47 at $137.37.

LEAN HOGS:

The hog complex isn't supporting Monday rallying except for in the August and October contracts, which is largely traders moving their positions before the July contract expires. July lean hogs are down $0.20 at $44.75, August lean hogs are steady at $49.27 and October lean hogs are up $0.12 at $49.17. The glut of hogs that still needs to be processed is burdensome on nearby contracts but looking past 2020 (let's hope this year's madness ends there) prices are far more optimistic, trading anywhere from $60.50 to $76.77 in 2021.

The projected lean hog index for 7/2/2020 is up $0.64 at $45.66 and the actual index for 7/1/2020 is down $0.26 at $45.02. Hog prices are higher on the National Direct Morning Hog Report, up $0.59 with a weighted average of $29.11, ranging from $24.00 to $30.19 on 5,310 head and a 5-day rolling average of $28.86. Pork cutouts total 210.23 loads with 189.88 loads of pork cuts and 20.35 loads of trim. Pork cutout values: up $1.14, $65.48.

#completecalfcare

Tuesday Morning Livestock Market Summary - Traders Attempt to Defend Recent Gains

General Comments:

Cash cattle trade is expected to remain quiet early Tuesday morning with the focus moving back to a more typical trading pattern seen before the packer reductions caused by COVID-19. There is still an opportunity for trade this week. Given the recent discount in cash markets to the futures trade, it appears that packers are much less aggressive to secure cattle early in the week with the expectation that there are plenty of cattle available as the backlog of market-ready cattle remains a significant factor through the next couple of months. With last week's average cash cattle price falling to $94.87 per cwt, $1.24 per cwt lower than the previous week, the continued weakness in cash cattle prices remains evident despite the rally in futures trade. Although fundamentally speaking, it is hard to argue that cash cattle prices have reached the bottom, the strong support developing in futures trade is pointing to some expectations that cash cattle markets may be supported by the end of the week. With cash basis levels moving to significant negative levels to spot live cattle futures after holding near historic highs through the spring months, the abrupt shift in the futures and cash cattle market prices is creating even more instability. Live cattle futures held above $100 per cwt in all contract months Monday, but the inability to hold early gains is adding a hint of insecurity in the complex that recent gains will be able to be sustained over the near future. Tuesday's slaughter is expected at 121,000 head.

Nearby lean hog futures are expected to trade in a narrowly mixed range early Tuesday morning with widespread follow-through support during the first day of the week, leading to spillover buying in several contracts, while limited but noticeable selling pressure could develop across the complex in July and August futures trade. Nearby lean hog futures continue to struggle with the large backlog of market-ready hogs available to packers, and the inability to consistently push wholesale pork prices higher during the month of July. This could add further uncertainty as nearby contracts focus on defending long-term support levels over the coming days. Cash hog prices are expected $1 lower to 50 cents higher with most bids expected steady. Slaughter Tuesday is expected at 471,000 head.

	BULL SIDE		BEAR SIDE
1)	Live cattle futures are trading at multiweek highs as underlying technical support is steadily moving into the complex. Given the focus on significantly tighter cattle and beef supplies through the end of the year, the downside pressure in futures trade is likely to be limited in the near future.	1)	Boxed beef values continue to struggle to find stable footing during early July. Coming off the Fourth of July holiday weekend, additional concerns of further beef price weakness due to demand uncertainty continues to keep wholesale prices weak.
2)	Average cattle weights are starting to ease from recent highs. This is indicating that the market is becoming more current. Although weights are still well above year-ago levels, the trend for lower weights heading into the dead of summer is indicating that the market is moving in the right direction.	2)	Cash cattle prices continue to struggle, as basis levels have continued to erode the past few weeks. The abundant supply of cattle available to packers has put most pressure on cash values even though packer production has moved back to more normal levels.
3)	Lean hog traders continue to focus on the ability to price premium levels into long-term production schedules. Summer 2021 contracts have increased premium levels to $32 per cwt over front-month July futures contracts. This focus does little to ease the current pain of immediate market status but creates hope that there is a light at the end of the tunnel.	3)	Despite the price support in futures trade over the last couple of days, the lean hog futures complex remains vulnerable from a technical standpoint. This could quickly test long-term support levels in nearby contracts, reversing recent market support, which has moved into the complex.
4)	August lean hog futures continue to defend long-term support levels during early July. The ability to hold prices above $48.12 per cwt through the next couple of weeks is expected to be a significant technical victory and likely will spark additional buyer support over the near future.	4)	Cash hog values remain generally stable during early July, limiting underlying support as packers have little incentive to bid significantly higher prices as they are gaining access to adequate numbers of market-ready hogs despite aggressive slaughter schedules for the week.

#completeherdhealth

Monday Closing Livestock Market Summary - Livestock Support Remains

GENERAL COMMENTS:

As perplexing as it may be, all three livestock markets rallied through Monday's closing. Cattle contracts closed with the biggest rally, but the deferred lean hog contracts weren't all that far behind. Hog prices are unavailable on the National Direct Afternoon Hog Report due to packer submission problems. September corn is up 3 cents per bushel and December soybean meal is up $1.80. The Dow Jones Industrial Average is up 459.67 points and NASDAQ is up 226.02 points.

LIVE CATTLE:

Live cattle contracts closed above $100 throughout the complex, which was a strong close that begs the question -- is this going to last or will the market's pressure of plentiful supply, heavier weights and weakening boxed beef prices erode the contracts to lower prices?

August live cattle closed $0.70 stronger at $100.10, October live cattle closed $1.25 higher at $103.92 and December live cattle closed $1.12 higher at $107.05. So far, the countryside has just seen a mild sampling of trade as most packers as still just inquiring about cattle. There were some cattle that traded in Kansas for $95 for immediate delivery to be killed this week. Bids and asking prices have yet to be established, but seeing that the board has traded higher now for a handful of days ... feeders are anticipated to prices cattle higher this week. Last week's slaughter totaled 593,000 head, with 109,000 head processed Friday and no cattle slaughtered Saturday. Monday's slaughter is estimated at 119,000 head, 2,000 head less than a week ago and steady with a year ago.

Boxed beef prices closed mixed: choice up $0.02 ($205.46) and select down $1.79 ($196.97) with a movement of 169 loads (91.91 loads of choice, 24.67 loads of select, 21.04 loads of trim and 31.79 loads of ground beef).

TUESDAY'S CASH CATTLE CALL: Steady. The market will either dance with steady prices or teeter lower again this week. Packers have been diligent about buying cattle consistently and for the most part, they've been mostly scheduled for early delivery. July will pressure the fat cattle market as there's an enormous amount of cattle to be processed.

FEEDER CATTLE:

Feeder cattle contracts were not shy about trading higher all throughout the day and closed anywhere from $0.55 to $1.37 stronger. August feeders closed $1.27 higher at $136.15, September feeders closed $1.37 higher at $137.22 and October feeders closed $1.15 higher at $137.85. Sales that took place early in the week last week fared quite well, but interest dwindles as the week progressed and got closer to the holiday weekend. Last week's auction summaries shared that, for the state of Nebraska, compared to the previous week, yearling steers sold mostly steady and yearling heifers over 650 pounds sold steady to $5.00 stronger. Demand was good with several buyers wanting cattle immediately. Some of the cattle came off grass while others were pulled from the grow yards. There's been more and more slaughter cows and bulls hitting the market as some areas of the state are showing great signs of dryness. The CME feeder cattle index 7/2/2020: down $0.17, $128.88.

LEAN HOGS:

The lean hog complex was able to close the day higher with nearby contracts closing just slightly higher; deferred contracts closed near $1.00 higher. July lean hogs closed $0.22 higher at $44.95, August lean hogs closed $0.7 higher at $49.27 and October lean hogs closed $0.70 higher at $49.05. 2020 contracts seem to be bearish through the end of the year as plentiful supply continues to be an issue, but as the calendar turns to 2021, prices look more optimistic. Pork cutouts totaled 467.53 loads with 414.56 loads of pork cuts and 52.97 loads of trim. Pork cutout values: down $2.12, $64.34. Last week's slaughter totaled 2,043,000 head, with 176,000 head on Friday and no hogs processed Saturday. Monday's slaughter is estimated at 452,000 head, 16,000 head less than a week ago and 31,000 head less than a year ago. The CME lean hog index 7/1/2020: down $0.26, $45.02.

TUESDAY'S CASH HOG CALL: Steady. Without knowing exactly what the cash market is trading for (packer submission problems), the long-term trend leans toward steady trade. There's obvious pressure on the market as ample supply continues to be an issue, but if packers have lofty kills planned, sometimes they have to up their bids to get the hog they need immediately.

#completeherdhealth

Monday Midday Livestock Market Summary - Livestock Contracts Trending Higher

General Comments

Continuing to rally and thrive into Monday's noon hour -- the livestock complex is continuing to rally off last week's positive movement and has all three livestock contracts trending higher. The fundamental support for the market rally is slim to none but as the market keeps inching higher and higher, time will hold the answers as to how true and substantial this move is. September corn is up 4 cents per bushel and December soybean meal is up $2.20. The Dow Jones Industrial Average is up 327.23 points and NASDAQ is up 220.59 points.

LIVE CATTLE

Live cattle contracts jump into the new week full of energy and optimism. August live cattle are up $0.72 at $100.12, October live cattle are up $1.22 at $103.90 and December live cattle are up $1.02 at $106.95. Showlists this week are higher in Kansas, somewhat higher in Texas and somewhat lower in Nebraska and Colorado. Now with the July Fourth holiday behind us, the market will start to test the summer fat cattle market immensely. Hot days, a surplus of cattle and questions regarding third quarter beef demand are going to greatly affect the cash cattle market in the near future.

Even though last week was shortened for the holiday, cash cattle trade was huge. The National Weekly Direct Slaughter -- Negotiated Purchases shared that last week's sales totaled 127,258 head. Of that 118,448 head are committed for delivery in the next two weeks, and the remaining 8,810 head are for delivery in the following 15 to 30 days.

Boxed beef prices are lower: choice down $0.38 ($205.06) and select down $2.27 ($196.49) with a movement of 117 loads (64.44 loads of choice, 17.15 loads of select, 18.86 loads of trim and 16.68 loads of ground beef).

FEEDER CATTLE

Feeder cattle contracts haven't forgot about the big price move made last week before Thursday's close and have picked up that support and are carrying optimism into this week's marketplace. August feeders are up $0.92 at $135.80, September feeders are up $0.90 at $136.72 and October feeders are up $0.75 at $137.40. Feeder cattle prices have been truly commendable throughout the early summer sales which came as a surprise to most but as prices keep creeping higher and higher, the feeder cattle contracts could be subject to downward pressure when cash cattle prices continue to develop for lower money.

LEAN HOGS

The lean hog complex; though not as aggressive as the cattle contracts, is trending higher into the new week throughout the entire complex. July lean hogs are up $0.42 at $45.15, August lean hogs are up $0.45 at $49.65 and October lean hogs are up $0.82 at $49.17. Watching how aggressively packers slaughter hogs through the next couple of months will greatly determine how much longer we have to chat about the backlog of hogs. But with the next big holiday being Labor Day, the marketplace is going to need household consumer demand to be extraordinary, and hopefully restaurants can continue to stay open with concerns about more COVID-19 cases popping up.

The projected lean hog index for 7/1/2020 is down $0.26 at $45.02 and the actual index for 6/30/2020 is up $0.04 at $45.28. Hog prices are unavailable on the National Direct Morning Hog Report due to packer submission problems. Pork cutouts totaled 217.42 loads with 189.92 loads of pork cuts and 27.49 loads of trim. Pork cutout values: up $1.59, $68.05.

#completeherdhealth