Wednesday Closing Livestock Market Update - Cattle Crumble Lower, Hogs Positive

GENERAL COMMENTS:

Wednesday took out any question as to whether or not the cattle market had found a short-term low earlier in the week. Starting from the day's initial moments, the live cattle and feeder cattle contracts dipped $1.00 to $2.00 lower and closed the day with substantial losses. But despite the weakness in the cattle sector, the lean hog market once again closed higher with the cash market jumping higher as well. Hog prices were sharply higher on the National Direct Afternoon Hog Report, up $1.22 with a weighted average of $44.25 on 6,737 head. December corn is up 3/4 cent per bushel and December soybean meal is down $0.60. The Dow Jones Industrial Average is up 454.84 points and NASDAQ is up 116.77 points.

LIVE CATTLE:

The live cattle complex didn't endure losses as steep as the feeder cattle market, but cash cattle prices were lower again, which will surely pressure Thursday's market. October live cattle closed $1.00 lower at $104.47, December live cattle closed $0.70 lower at $108.45 and February live cattle closed $0.70 lower at $112.05. Overall, the day's losses weren't astronomical in any sector, but added up all together, the live cattle market had a brutal day with the board closing lower; both choice and select cuts rounding out the day lower and cash cattle prices being weaker as well. There was a light trade of cash cattle reported in the North for $163, $4.00 lower than last week's weighted average. And there was another round of trade in the South for mostly $103, $2.00 lower than last week's weighted average. Wednesday's slaughter is estimated at 117,000 head, 1,000 head less than a week ago and steady with a year ago.

Boxed beef prices closed lower: choice down $0.76 ($227.58) and select down $0.93 ($213.82) with a movement of 114 loads (53.10 loads of choice, 18.64 loads of select, 26.42 loads of trim and 15.71 loads of ground beef).

THURSDAY'S CASH CATTLE CALL: Steady with the week. It's been a rough week for feedlots as packers have whittled the market $2.00 to $4.00 lower depending on the region. With there being a good test on the market, the week's trade will most likely stay at these levels but could soft even more.

FEEDER CATTLE:

The feeder cattle complex struggled throughout the day. September feeder cattle closed $1.42 lower at $138.70, October feeder cattle closed $1.20 lower at $139.45 and November feeder cattle closed $1.17 lower at $140.35. The market's pressure largely stemmed from traders allowing the market to fall lower as they fear this downward cycle could be strung out for the next three to four weeks. And adding to the pressure, the live cattle market's lower cash cattle trade and fully lower boxed beef close didn't offer any positive encouragement whatsoever. The final report at OKC West in El Reno, Oklahoma, shared that compared to last week, feeder steers under 800 pounds sold $3.00 to $6.00 lower, and steers 800 pounds sold steady to $1.00 higher. Feeder heifers traded $3.00 to $6.00 lower with the exception of heifers weighing 800 to 900 pounds. which sold mostly $1.00 to $2.00 lower. Demand was moderate throughout the sale, but feeder steers sold better as demand was stronger. Both steer and heifer calves traded with a lower undertone as the demand for unweaned calves is weaker. The CME feeder cattle index 9/1/2020: down $0.17, $140.35.

LEAN HOGS:

Through Wednesday's morning hours, it wasn't unclear whether the lean hog complex was going to commit to trading about the $55.00 resistance level or if the complex was going to submissively drop to trading lower, once again. But as the day developed and trader support grew, the market closed substantially higher and blew the spot October contract well above the $55.00 threshold. October lean hog contracts closed $1.37 higher at $56.40, December lean hogs closed $0.72 higher at $56.50 and February lean hogs closed $0.30 higher at $62.37. With the market's robust close and hefty support through the cash hog market, Thursday may be able to make another run at higher trade. Pork cutouts totaled 357.21 loads with 313.21 loads of pork cuts and 44.00 loads of trim. Pork cutout values: down $1.03, $73.51. Wednesday's slaughter is estimated at 480,000 head, 2,000 head less than a week ago and 8,000 head less than a year ago. Tuesday's hog slaughter was revised to 475,000 head. The CME lean hog index 8/31/2020: up $0.20, $56.80.

THURSDAY'S CASH HOG CALL: Steady. Packers are obviously interested in the hog market as their aggressive buying this week has been vastly welcomed from producers. If the week can close with even steady prices, producers will be happy.

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Wednesday Morning Livestock Market Summary - Futures Finding Pre-Holiday Rhythm

General Comments:

Although more cash cattle trade is expected to develop over the next couple of days, the fact that trade was reported in the North and South on Tuesday continues to focus on the desire on both sides to get cash business done earlier than later this week. Light trade in the South at $104 per cwt live basis is $1 per cwt lower than last week's average, while Northern trade posted the most price pressure with limited trade reported but falling to $163 per cwt dressed basis. This is $4 per cwt lower than last week. Although later week trade may see some price support from these levels, the general consensus is that prices will remain lower than last week going into the Labor Day weekend. It is not unusual for cash cattle markets to trend lower around or after the Labor Day break as changes to overall demand continue in consumer patterns as the transition from summer to fall is represented by Labor Day. There is so much uncertainty right now as to what beef demand will look like over the next couple of months. With food service demand still struggling as COVID-19 concerns have limited dining out activities, limited capacity levels at those restaurants where dining rooms are open continues to have an impact on the amount of beef utilized. The upcoming football season will also impact overall demand, as attendance and tailgate routines have been adjusted and changed due to COVID-19. It will be months before the full impact on overall consumer demand will be evident to market prices. Much of this reduction is already factored into the market, but given the plethora of unknowns, market uncertainty may continue to develop. Futures trade is expected to trade mixed to mostly higher in light early trade with traders unlikely to focus on any major long-term market direction over the next few days as many traders are beginning to "check out" ahead of the holiday weekend.

Strong gains in nearby lean hog futures Tuesday was encouraging to see, given the recent market pressure, but technically these moves do little for market direction. What this market shift does do, is indicate that additional wide market price shifts could still develop as traders establish market ranges within a sideways trading pattern. Given the current condition of the hog market, this current pattern could hold through much of the fall months with nearby contracts hovering around the $55 per cwt trading range. The ability for pork values to continue to move higher during early September is encouraging, but given the current availability of pork in the system, even these levels are expected to become rangebound with little long-term changes expected to fall and winter demand that would bring about significant structural changes to the complex. Cash hog prices are expected $1 lower to $1 higher with most bids expected steady to 50 cents higher. Slaughter Wednesday is expected at 485,000 head. Saturday runs are expected at 108,000 head.

	BULL SIDE		BEAR SIDE
1)	Feeder cattle futures have bounced off last week's lows, creating some renewed buyer support through the complex. Corn prices have pulled back from the strong upward market shift, leaving the expectation that further production costs may be limited for the feeder cattle market. This could help add stability in feeder cattle prices during early September.	1)	Holiday buying is expected to be essentially wrapped up in beef markets with Labor Day traditionally signaling the last major "grilling weekend" of the summer. Concerns of a pullback in beef demand through the next few weeks could put price pressure on futures and cash market trade.
2)	Strong premiums continue in spring 2021 live cattle contracts with April futures trading $10 per cwt spot October futures. This indicates that renewed buyer support is expected early next year based on both likely demand support and tighter supply levels in the upcoming months.	2)	Cash cattle prices have started to see further market pressure during the week as trade developed on Tuesday. Limited trade volume is expected this week with plants closed this upcoming Monday for Labor Day, which will limit the amount of cattle needing to be purchased.
3)	Pork cutouts continue to show resilience as traders focus on potential demand stability over the coming weeks. Although the upside potential may still be limited, pork gains is creating limited optimism through the entire complex.	3)	Cash hog prices remained unchanged Tuesday, breaking the recent trend of higher cash values. This could signal that buying is quickly cooling through the complex, bringing about moderate softness in the entire complex surrounding the holiday weekend.
4)	Early week buyer support in October lean hog futures is helping build support through the entire lean hog complex. This may add stability even though volume is light through the rest of the week.	4)	Packer schedules will be significantly impacted due the Labor Day holiday next Monday. This will further limit the ability to clear market-ready hogs from the system despite attempts to add additional production to Saturday schedules. The burdensome supply issues will continue through most of the year, likely limiting aggressive price support until early 2021.

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Tuesday Closing Livestock Market Summary - Livestock Contracts Keep Support

GENERAL COMMENTS:

Early Tuesday morning it wasn't clear if the cattle contracts were going to be able to hold the market higher, as both live cattle and feeder cattle danced around both sides of steady. But as the day progressed, the market's support held true and allowed for a higher close again. Hog prices are unchanged on the National Direct Afternoon Hog Report, showing a weighted average of $43.03 on 5,546 head. December corn is up 1/4 cent per bushel and December soybean meal is down $1.70. The Dow Jones Industrial Average is up 215.61 points and NASDAQ is up 164.21 points.

LIVE CATTLE:

Live cattle contracts were able to secure a higher close for the day. October live cattle closed $0.17 higher at $105.47, December live cattle closed $0.17 higher at $109.15 and February live cattle closed $0.42 higher at $112.75. The bulk of the market's uncertainty remains in the two 2020 live cattle contracts left to trade. Once the market turns to the 2021 calendar year, there's more assurance in the market. Tuesday's slaughter is estimated at 120,000 head, 2,000 head more than a week ago and 6,000 head more than a year ago. Tuesday's cash cattle trade was mostly idle, but a light trade did develop in parts of the South for mostly $104, $1.00 lower than last week's average. The North had a modest trade of $163 to $164, which is $3.00 to $4.00 lower than last week's average.

Boxed beef prices closed mixed: choice up $0.39 ($228.34) and select down $0.57 ($214.75) with a movement of 124 loads (60.54 loads of choice, 19.58 loads of select, 26.39 loads of trim and 17.22 loads of ground beef).

WEDNESDAY'S CASH CATTLE CALL: Lower. As the market sits on rocky ground with the futures market and boxed beef prices are showing some weakness, packers are going to be less apt to pay higher prices this week than they are to move the week's trade lower.

FEEDER CATTLE:

Except for the spot September contract, the feeder cattle complex was able to carry the market's support into closing. September feeder cattle closed $0.17 lower at $140.12, October feeder cattle closed $0.02 higher at $140.65 and November feeder cattle closed $0.15 higher at $141.52. The market is seeming to trade comfortably around the $140 threshold, hanging just below the 40-day moving average of $141.72. At OKC West Livestock Auction in El Reno, Oklahoma, compared to a week ago, both steer and heifer calves traded lower as demand for unweaned calves continues to become less and less. With much of the area getting heavy rainfall and cooler temperatures, buying unweaned calves was a risk as sickness can easily set in. The CME feeder cattle index 8/31/2020: down $0.43, $140.52

LEAN HOGS:

The lean hog complex close fully higher with most of the market's support favoring the nearby contracts that continue to sell discounted to the 2021 contracts. October lean hogs closed $1.42 higher at $55.02, December lean hogs closed $0.65 higher at $55.77 and February lean hogs closed $0.50 higher at $62.07. The spot market's ability to close just $0.02 higher than the resistance at $55.00 isn't a full commitment to trade higher but does show some optimism. The October contract will be heavily pressured Wednesday to decide to trade back below resistance or to capitalize on the support and shoot higher. Pork cutouts total 413.21 loads with 386.55 loads of pork cuts and 26.66 loads of trim. Pork cutout values: up $1.92, $74.54. Tuesday's slaughter is estimated at 480,000 head, 4,000 head less than a week ago and 5,000 head more than a year ago. The CME lean hog index 8/28/2020: down $0.45, $56.60.

WEDNESDAY'S CASH HOG CALL: Steady. The market is seeming to need hogs and packers are willing to pay slightly higher prices for them. As the cutout continues to add value, packers could continue to pay more in the cash market.

#completeherdhealth

Tuesday Midday Livestock Market Update - Cattle Contracts Trade Indecisively

General Comments

The cattle complex has traded on both sides of steady Tuesday morning seeming anxiously uncertain where the market should in the near future. The market's uncertainty will likely continue as both technical and fundamental reasons continue to be stressed and leave many questions unanswered for the current time. Appearing to be the only steady livestock contract thus far in the week, the lean hog complex keeps trading steadily higher and cash hog prices are higher again Tuesday morning. December corn is down 1 cent per bushel and December soybean meal is down $0.30. The Dow Jones Industrial Average is up 70.97 points and NASDAQ is up 116.40 points.

LIVE CATTLE

Last week's rally in corn prices could have been some of the underlying weakness brewing in the cattle contracts, but as this week's corn trade remains mostly bearish cattle contracts are flirting with the notion of trading higher. The market sits in a pivotal timeframe as contracts could easily scale higher or tumble lower once enough traders agree on the same movement. With Taiwan opening the door for more U.S. beef and showlists of fat cattle now at manageable levels, the market could support an upward movement if desired. But as every coin has two sides, the market could easily fall lower as boxed beef prices teeter lower, carcass weights are still far heavier than usual and cash cattle prices are showing some resistance. The market will be subject to volatile swings over the next month until the feeder cattle rally begins. October live cattle are up $0.22 at $105.52, December live cattle are up $0.27 at $109.25 and February live cattle are up $0.42 at $112.75. The North is slow again to price their cattle, but Southern cattle are priced at $107 and bids are on the table in Kansas and Texas at $104.

Boxed beef prices are mixed: choice up $1.18 ($229.13) and select down $0.97 ($214.35) with a movement of 78 loads (33.53 loads of choice, 11.62 loads of select, 23.78 loads of trim and 8.62 loads of ground beef).

FEEDER CATTLE

Feeder cattle contracts have traded in the same back and forth manner as the live cattle contract have Tuesday morning. With minor support surfacing in the complex, traders are willing but not overly confident in moving the market higher given the uncertainty in the live cattle market. September feeder cattle are down $0.10 at $140.20, October feeder cattle are own $0.07 at $140.55 and November feeder cattle are up $0.05 at $141.42.

LEAN HOGS

The support in the lean hog complex has held steady through Tuesday's trade despite seeing the weakness in the cattle contracts. October lean hog are up $1.32 at $54.92, December lean hogs are up $0.70 at $55.82 and February lean hogs are up $0.57 at $62.15. Watching the spot October contract trade throughout the later part of the day and into Wednesday is critical as the market comes extremely close to either bowing down or rallying past the $55.00 resistance plane. With the support from a stronger cash market and gains once again in the cutout value the market could very likely rally above the plane.

The projected lean hog index for 8/31/2020 is up $0.20 at $56.80 and the actual index for 8/28/2020 is down $0.45 at $56.60. Hog prices are higher again on the National Direct Morning Hog Report, up $0.20 with a weighted average of $43.23, ranging from $39.00 to $43.50 on 3,583 head and a five-day rolling average of $42.79.Pork cutouts total 245.69 loads with 229.67 loads of pork cuts and 16.02 loads of trim. Pork cutout values: up $1.19, $73.81.

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