Monday Morning Livestock Market Update - Strength Expected to Continue

GENERAL COMMENTS:

The attitude of traders might be mixed Monday. Cash cattle traded higher, as expected, and maybe even a little better than expected. But the market already had premium in futures. The April contract may want to remain close to cash and may not be too anxious to push much higher as it waits for cash to catch up. However, the strength of cash last week may provide the confidence needed by traders to buy back into the market after the slight dip Thursday. Boxed beef increased significantly, indicating seasonal demand is increasing. Packers are expected to be somewhat aggressive this week as they cannot afford not to purchase cattle to meet strong demand. Restaurant traffic is again increasing. The National Restaurant Association reported about 59% of the population was eating out once per week prior to COVID-19. After the pandemic hit that number dropped to 16%. Their latest survey done in March, indicated 37% of the population is eating out once per week. This is a factor in overall beef demand. Feedlots will be looking for higher prices this week and may hold for such, knowing packers will need to be aggressive.

Hogs continue to see amazing strength. The April contract now has four price gaps left in the chart from 1 to 1 1/2 weeks ago and a long-standing one from March 16. Chart gaps are generally filled, but this contract may run out of time to accomplish that task as it has 1 1/2 weeks remaining. May has two gaps from March 25 and 26. These have a better chance of being filled at some point. The bullish export sales report will continue to underpin the market, especially in light of the fact that China accounted for nearly half of those sales. It appears they will continue to be a strong buyer for the foreseeable future. Strong consumer demand will keep packers aggressive.

	BULL SIDE		BEAR SIDE
1)	Boxed beef has been on fire with prices increasing as demand increases. The grilling season is underway.	1)	Beef export sales were not very good, possibly indicating current prices have met with resistance from international buyers.
2)	New contract highs were made in some months, indicating traders remain willing to buy into the market. Increasing cash and strong demand supports higher prices.	2)	Feedlots may want to keep current with cattle and move them as quickly as possible due to higher feed prices. This could limit the increase in cash prices.
3)	New contract highs continue to develop in hog futures as strong fundamentals keep buyers aggressive.	3)	Hog futures have price gaps that need to be backfilled. This may be accomplished sooner rather than later.
4)	Consumers just cannot seem to get their fill of pork and prices have not yet reached resistance. Packers will continue to bid higher as they need to satisfy that demand.	4)	The market remains in a perpetual overbought condition and could retrace at any time. Any sign of weakness could trigger profit-taking.

Thursday Closing Livestock Market Update - Export Bullishness Boosts Hog Prices

GENERAL COMMENTS:

Lean hog futures led the gains in the livestock market Thursday, boosted by a massive weekly export-sales report and consistent willingness from pork customers to meet ever-higher price tags. This is true for beef customers, too, and although live cattle and feeder cattle futures ended the day mixed, these markets remain bullishly supported. Hog prices closed higher on the National Direct Afternoon Hog Report, up $1.05 with a weighted average of $96.70 on 5,500 head. The week's cash cattle trade hasn't been fully figured out yet Thursday afternoon, although some cattle traded in the South (Kansas) at $117, which was $2 higher than last week's weighted average. May corn closed down 4 1/2 cents per bushel at $5.59 3/4 and May soybean meal closed down $13 per ton at $410.20. The Dow Jones Industrial Average is up 171.66 points and NASDAQ is up 238.08 points.

From Friday (3/26) to Thursday (4/1), livestock futures scored the following changes: April live cattle off $0.075, June live cattle up $0.775, April feeder cattle off $1.25, May feeder cattle off $0.65, April lean hogs up $0.975, May lean hogs up $1.325.

LIVE CATTLE:

After being nudged to a fresh contract high on Thursday morning, the June live cattle contract closed down $0.35 at $122.55 per cwt. The nearby April live cattle contract closed down $0.95 at $120.025. Boxed beef prices were considerably higher again Thursday afternoon: choice up $2.85 ($249.97) and select up $6.57 ($244.70) with a movement of 125 loads (72.52 loads of choice, 13.46 loads of select, 19.64 loads of trim and 19.09 loads of ground beef). Awesome grocery store beef features have been noted, with ground beef advertised at $2 per pound, for instance, which suggests the beef market ought to expect a huge volume of business between now and Memorial Day, with money in peoples' pockets and a willingness to spend it on great grilling experiences, and perhaps even restaurant meals for the vaccinated. That means the packers are penciling huge profits over the next few weeks and will want to get their hands on ready fat cattle. A light trade developed Thursday in parts of the South at $117, which is $2 higher than last week's weighted average. The North continues to hold out for more money. Asking prices are around $190 to $192 in the North, and $118 to $120 in the South.

FRIDAY'S CASH CATTLE CALL: $2 to $3 higher. Thursday's $117 trade in Kansas may provide a pattern, and feedlots might decide to accept nothing less, in an environment where packers' volume and profitability is undeniable.

FEEDER CATTLE:

The livestock futures markets will be closed April 2 for Good Friday, so the nearby feeder cattle contract's Thursday close at $143.875 represents a $1.25 weekly loss. Still, with calves born today destined for a fall market near $160 per cwt (the October contract closed Thursday up $0.90 at $159.15), the trend has lately been favorable for cow-calf producers. That is true only if they will have the grass and feed to keep their critters alive through the spring and summer -- expanding drought conditions in the High Plains are a reminder of that threat, and feed prices continue to churn higher, with the DTN National Corn Index (an average of cash bids across the countryside) rising above $5.50 per bushel this week. The CME Feeder Cattle Index for March 31: up $0.44 at $140.35.

LEAN HOGS:

A rollicking weekly export-sales report Thursday showed why pork cutout prices have been able to explore such lofty prices in recent weeks. Almost half of the 61,000 metric tons (a marketing year high) of pork sales listed in the report are bound for China, so it's still the same story underpinning the upward trend in U.S. prices. After hitting a fresh contract high of $101.975, the April lean hog futures contract closed Thursday up $0.725 at $101.775. The May contract closed up $1.325 at $102.825, and the June contract closed up $1.025 at $106.325. Pork cutouts total 319.83 with 286.60 loads of pork cuts and 33.23 loads of trim. Pork cutout values: down $0.11, $108.86. Thursday's slaughter was seen at 491,000 head, which is 1,000 head more than a week ago and 3,000 head more than a year ago. The CME Lean Hog Index for March 30: up $0.46, $98.50, and the projected lean hog index for March 31: up $0.47, $98.97.

MONDAY'S CASH HOG CALL: Steady to $1 higher. While pork cutouts continue to explore seasonal values, and the international markets remain hungry, packers could continue to be aggressive in the cash hog market.

Thursday Midday Livestock Market Summary - Both Hogs, Cattle Play With Fresh Contract Highs

GENERAL COMMENTS:

On Thursday, feeder cattle are recovering from their Wednesday stumble, when they were pushed lower by a huge surge in feed prices. Higher prices across the board for most livestock contracts in the middle of Thursday's trading session mean lean hog futures are exploring fresh contract highs, again. Even some of the deferred live cattle contracts are testing fresh contract highs. May corn is down 4 1/2 cents per bushel and May soybean meal is down $7.60 per ton. The Dow Jones Industrial Average is up 161 points and NASDAQ is up 201 points.

LIVE CATTLE:

Futures trading volume for live cattle and other livestock contracts has been surprisingly light so far during the Thursday session, although perhaps everybody got it out of their system Wednesday when USDA released bullish (for feed prices) quarterly Grain Stocks numbers and annual Prospective Plantings numbers. The April live cattle contract is down $0.675 at $120.30; but the June contract is up $0.075 at $122.975 and other summer and fall contracts have similarly tiptoed higher Thursday morning, just into fresh contract highs. The export sales report showed relatively stable business this week, with net sales of beef reported at 18,700 metric tons (mt), mostly headed to Japan (6,000 mt), China (5,900 mt), and South Korea (2,600 mt).

Boxed beef prices are drastically higher: choice up $2.51 ($249.63) and select up $6.60 ($244.73) with a movement of 72 total loads (32.65 loads of choice, 9.63 loads of select, 17.86 loads of trim and 11.96 loads of ground beef).

FEEDER CATTLE:

Feeder cattle futures are clawing back some of Wednesday's steep losses, with the April contract up $0.025 at 143.90, the May contract up $0.15 at $149.55, and the August contract up $0.825 at $158.10. Elevated feed prices have been a known feature of the cattle feeding business in 2021 for several months already, so perhaps Wednesday's boost to corn prices wasn't such a surprise. Thursday's Drought Monitor update showed improvements in the Midwest, but cattle country in the High Plains continued to see an expansion of extreme drought, and the West continues to be covered by exceptional conditions.

LEAN HOGS:

Lean hog futures are experimenting with fresh contract highs Thursday and trading volume continues to pick up through the morning before the markets close for the long weekend (no trade on Good Friday, April 2). The April lean hog futures contract is up $0.675 at $101.725, the May contract is up $1.05 at $102.55, and the June contract is up $1.15 at $106.45. A pullback in the U.S. Dollar Index Thursday may be lifting the outlook for U.S. pork and hog price tags. The weekly export sales report showed a very impressive burst of business between March 19-25: net pork sales of 61,000 mt, with almost half of that headed to China (29,700 mt). The overall weekly figure is a marketing-year high, up 58% from the previous week and up 43% from the prior 4-week average.

The projected CME Lean Hog index for 3/31/2021 is up $0.47 at $98.97, and the actual index for 3/30/2021 was up $0.46 at $98.50. Pork cutouts Thursday morning total 188.79 loads with 161.98 loads of pork cuts and 26.81 loads of trim. Pork cutout values: up $2.27, $111.24.

Thursday Morning Livestock Market Update - Futures Show Strong Support

General Comments:

Cattle futures showed their strength Wednesday in light of the bullish Prospective Plantings report. Grain futures locked limit up after the report did not cause bullish traders to lose heart. Contracts closed higher across the board supported by strong boxed beef prices and the potential for significantly higher cash. No cash cattle were traded Wednesday with feedlots believing that they may be able to sell cattle for $3.00 to $4.00 higher. Higher grain prices as a result of lower planted acreage than expected were taken in stride as higher beef will offset the cost of feed. The demand outlook is positive with the seasonal price rally solidly under way. Cattle futures did not post new contract highs but came very close with a strong possibility of setting new highs Thursday.

Hog futures did not perform quite as well as cattle but held up well despite the strength of grains. May, June and July posted moderate losses while the rest of the complex closed higher. August was able to post a new contract high. Hogs did not feel the impact of higher feed prices as cash has been strong. Even though price closed a bit lower on the National Direct Hog report Wednesday, cutouts closed higher. This seems to indicate traders believe higher prices will continue to materialize with this bullish attitude and due to current fundamentals pointing higher. Weekly export sales will be released Thursday, which might have some impact on the market and is the last trading day before a holiday weekend. Projected Saturday slaughter was unable to be obtained Wednesday.

	BULL SIDE		BEAR SIDE
1)	Live cattle futures held up well in the face of rising feed costs as planted acreage was less than expected.	1)	Only the December live cattle contact was able to make a new high. Other contracts could not accomplish the task. Futures could stall for a bit.
2)	Packers will need to bid up more than they expected as feedlots will hold on for higher cash prices.	2)	Substantially higher feed prices may cause feedlots to be more aggressive, moving cattle to keep current with marketing.
3)	Most hog contracts closed higher despite the potential for higher feed prices. Increasing cutouts indicates demand remains strong.	3)	Hog futures may consolidate at current levels and packers may limit their aggressiveness for short period.
4)	August hogs made new contract highs with other contracts not far behind. Traders feel confident market strength will continue.	4)	If weekly exports are disappointing, traders may sell more aggressively in case the export market is finding some price resistance.