Monday Midday Livestock Market Summary - Mixed Bag for the Livestock Complex

GENERAL COMMENTS:

The livestock complex is a mixed bag to start the week, as the feeder cattle and lean hog contracts are seeing pushback, feeders wrestle with Friday's lousy Cattle on Feed report and hogs look for continued demand. Meanwhile, the live cattle market is trending higher as boxed beef prices are stronger to start the day off and Friday's Cattle Inventory Report was supportive. December corn is up 11 1/4 cents per bushel and December soybean meal is up $15.80. The Dow Jones Industrial Average is up 26.01 points.

LIVE CATTLE:

The live cattle contracts head-faked Monday's market to start. First, lower red print was seen throughout the market, but as time has progressed and the market nears the noon hour, the market is trending mildly higher. August live cattle are up $0.22 at $137.60, October live cattle are up $0.30 at $143.30 and December live cattle are up $0.27 at $148.45. The live cattle market was pleased to see Friday's Cattle Inventory report as well as the aggressive marketings throughout June. While the placement data was troublesome for the market, if packers continue to move cattle as vigorously as they have through recent months through the plants, then the placements will soon be worked through, and thinner supplies are still unavoidable for late 2022 and through 2023. Last week's negotiated cash cattle market was disappointing with only 69,000 head trading. As packers continue to master the markets with their ability to manage their needs of cattle through alternative marketing arrangements, forward contracts and formula deals, the cash cattle market is paying the cost.

Throughout last week, Southern live deals were marked at mostly $136, roughly $0.50 lower than last week's weighted averages. While Northern dressed business came in at mostly $227, $2 lower than last week's weighted average basis Nebraska.

Last week's negotiated cash cattle trade totaled 69,032 head. Of that 65% (45,034 head) were committed for the nearby delivery, while the remaining 35% (23,998 head) were committed for the deferred delivery.

Boxed beef prices are higher: choice up $1.38 ($268.50) and select up $1.02 ($243.52) with a movement of 28 loads (18.94 loads of choice, 7.20 loads of select, zero loads of trim and 2.10 loads of ground beef).

FEEDER CATTLE:

With the ongoing, unsettled war in Ukraine, the grain market hasn't gotten any easier to pinpoint amid back-and-forth news stories and ongoing land blasts. On Friday, the world was hopeful that Ukraine was going to be able to export some of their grain, but those dreams were short-lived as Russia attacked the port of Odesa on Saturday. Nevertheless, our corn market has found modest support in Monday's market which has pressured the feeder cattle contract to move lower in combination of Friday's bearish Cattle on Feed report. We assumed that Friday's bearish COF report would steal the early part of the week's trade, but long-term speaking, one still can't deny the supportive nature of the market's July Cattle Inventory report. August feeders are down $1.72 at $179.82, September feeders are down $1.25 at $183.22 and October feeders are down $1.15 at $185.85.

LEAN HOGS:

The lean hog market has taken a turn for lower prices in its nearby contracts as most of the livestock complex battles pressure. The deferred contracts haven't been pressured with the same doggish energy that's seemed to have taken ahold of the livestock complex, but if pork demand can stay supported through closing, then the market may stand a chance at trading higher come Tuesday especially if packers start to fan interest toward the cash market. August lean hogs are down $2.00 at $116.70, October lean hogs are down $1.50 at $94.80 and December lean hogs are down $0.50 at $86.02.

The projected lean hog index for July 22 is up $0.92 at $119.08 and the actual index for July 21 is up $1.12 at $118.16. Hog prices are lower on the Daily Direct Morning Hog Report, down $3.67 with a weighted average of $114.32, ranging from $113.50 to $126.00 on 3,304 head and a five-day rolling average of $120.03. Pork cutouts total 147.09 loads with 117.89 loads of pork cuts and 29.20 loads of trim. Pork cutout values: up $1.99, $127.96.

Monday Morning Livestock Market Update - Higher Placements May Have a Negative Influence

GENERAL COMMENTS:

Live cattle were higher due to positioning ahead of the reports Friday. There was anticipation at least one of the reports would be friendly and short-covering pushed futures higher. Traders did see friendly numbers on the Bi-annual Cattle Inventory report with total inventory down 2%. Beef heifers over 500 pounds were down 3% with beef calves under 500 pounds down 3%. This was about as expected, so no real surprises there. The surprise was on the Cattle on Feed report. Placements during the month of June were at 98% of a year ago compared to the trade estimate of 94.7%. Even though on feed numbers and marketings were in line with estimates, higher placements are likely to push futures lower Monday as traders react to the actual versus expectations. Feeder cattle may go along for the ride as they follow the lead of live cattle as well as some negative influence from higher corn futures.

August hogs were the focus of the day as the index continues to increase and cutouts showed strong gains. Cutouts were up $1.84 with the lean hog index up $0.67 at $117.40. Traders may not be quite as exuberant Monday as they wait to see how pork movement was over the weekend. Packers are not expected to be aggressive for the same reason. Cash on the National Direct Afternoon Hog report showed a decline of $6.23 Friday. There are sufficient hogs around to keep packers satisfied. However, weights continue to decrease with a decline of 1 1/2 pounds compared to the previous week. The average weight for the week ended 7/16 was 277.5 pounds compared to 278.1 pounds the previous week. August hogs are riddled with chart gaps; it may be tough to close them in the current market environment.

	BULL SIDE		BEAR SIDE
1)	The Cattle Inventory report was friendly to the market and may provide some support.	1)	Higher placements than expected on the Cattle on Feed report may pressure cattle futures Monday, possibly eliminating the gains of Friday.
2)	Beef inventory for June showed a decline of 9.9 million pounds from May, indicating demand has remained strong.	2)	Total beef inventory is 29% higher than a year ago. This leaves plentiful supplies available to the market.
3)	Once hog futures penetrated overhead resistance, there was little to hold them back.	3)	Total pork in inventory is 22% above a year ago with belly stocks 46% higher.
4)	October hogs carry a huge discount to cash and may begin to make up some of the difference over the next few weeks.	4)	The sharp drop in cash hogs Friday may have a negative influence on futures trading Monday.

Friday Closing Livestock Market Update - Contracts Rally Ahead of USDA Reports

GENERAL COMMENTS:

Heading into Monday's market, the big question will be: which USDA report are the cattle contracts going to focus on? The Cattle on Feed report was somewhat bearish with its larger-than-expected placements, but the Cattle Inventory report was bullish with the market possessing the fewest beef cows it's had since 2014. Hog prices closed lower on the Daily Direct Afternoon Hog Report, down $6.23 with a weighted average of $118.48 on 4,266 head. December corn is down 9 1/4 cents per bushel and December soybean meal is down $3.20. The Dow Jones Industrial Average is down 137.61 points.

From Friday to Friday livestock futures scored the following changes: August live cattle up $2.45, October live cattle up $3.45; August feeder cattle up $5.20, September feeders up $4.80; August lean hogs up $8.88, October lean hogs up $3.73; September corn down $0.40, December corn down $0.40.

LIVE CATTLE:

The live cattle contracts rallied ahead of the day's close as the market anxiously awaited the two big USDA reports. The Cattle on Feed report was a disappointment as showed greater numbers than expected, but the Cattle Inventory report came in supportive of a stronger cattle market as the nation's beef cow herd numbers are the lowest they've been since 2014. The markets could be finicky come Monday as it's a coin toss on which report traders will focus on. However, long term, the market remains bullish. August live cattle closed $1.65 higher at $137.37, October live cattle closed $2.02 higher at $143.00 and December live cattle closed $1.85 higher at $148.17. The cash cattle market didn't see much support through Friday's market and, unfortunately, this week serves as the third consecutive week when packers have been able to push prices lower and only buy thin volumes throughout the cash market. With packers having the ability to buy and commit cattle months in advance through alternative marketing arrangements and formula deals, their need to support the cash market when cattle are abundant is thin to none. Nevertheless, throughout the week Southern live deals were marked at mostly $136, roughly $0.50 lower than last week's weighted averages. While Northern dressed business came in at mostly $227, $2 lower than last week's weighted average basis Nebraska.

Friday's slaughter is estimated at 119,000 head, 1,000 head less than a week ago and 7,000 head more than a year ago. Saturday's slaughter is projected at 49,000 head. This week's slaughter is estimated at 665,000 head, 9,000 head less than a week ago and 10,000 head more than a year ago.

Friday's Cold Storage report shared that total red meat supplies in freezer were down 1% from the previous month but up 24% from last year. Total pounds of beef in freezers were down 2% from last month but up 29% from a year ago.

Boxed beef prices closed mixed: choice down $0.64 ($267.12) and select up $1.97 ($242.50) with a movement of 95 loads (56.07 loads of choice, 14.39 loads of select, 12.54 loads of trim and 11.91 loads of ground beef). Throughout the week choice cuts averaged $269.70 (up $1.43 from last week) and select cuts averaged $242.33 (up $0.31 from last week) with the week's total movement of cuts, grinds and trim totaling 517 loads.

MONDAY'S CASH CATTLE CALL: Lower. Given that packers have ample supplies of cattle committed to them through other arrangements, their need to support the cash market right now is thin with supplies of cattle abundant.

FEEDER CATTLE:

The feeder cattle complex rounded out Friday's market on a substantially higher note as the market anticipated a supportive Cattle on Feed and Cattle Inventory report. The Cattle Inventory report was supportive as it showed fewer beef cows in the market, fewer replacement heifers in the market and a smaller calf crop for the year, but Friday's goodness stopped there as the Cattle on Feed Report stung like a bee. When analyzing these USDA reports it's important to remember that the market will react hastily if the USDA actual figures vary much from analysts' average estimate, which is where the problem with Friday's COF report stems from. Analysts projected that placements would be down around 94.3% of a year ago, but Friday's data depicted that placements were actually 98% of a year ago. Unfortunately, this unexpected hike in placements will likely suck some of the wind out of the feeder cattle market's sail, but it won't erode all the market's bullish energy as it's stemming from multiple sources. Thankfully, feeder cattle demand throughout the countryside remains incredible as buyers continue to realize that the market is going to be thin on supplies in the months to come. Additionally, it helps that trader are helping push this bullish move as Friday's market closed above the market's recent high and is equivalent to prices not last seen since late March. Nevertheless, there's a chance that the market fixates its attention on the unexpected jump in placements, but, long term, the market's outlook is still bullish. August feeders closed $3.27 higher at $181.55, September feeders closed $3.17 higher at $184.47 and October feeders closed $2.77 higher at $187.00. The CME Feeder Cattle Index for July 21: up $0.34, $171.01.

LEAN HOGS:

The lean hog market rounded out Friday's close with a stronger tone as the market accelerated technically and even captured higher pork cutout prices ahead of the weekend. August lean hogs closed $2.40 higher at $118.70, October lean hogs closed $0.55 higher at $96.32 and December lean hogs closed $0.30 higher at $86.52. Heading into next week's trade, the market will again rely on and look for follow-through support from consumers to sustain the complex. If interest holds and demand continues to keep pork prices at least steady, the market could continue to trend at these levels. However, if packers sense that demand is waning, the market likely won't see aggressive interest and the futures market could show hesitancy. Pork cutouts total 239.50 loads with 212.01 loads of pork cuts and 27.50 loads of trim. Pork cutout values: up $1.84, $125.74. Friday's slaughter is estimated at 435,000 head, 1,000 head less than a week ago and 5,000 head more than a year ago. Saturday's slaughter is projected to be around 41,000 head. Thursday's slaughter was revised to 441,000 head, 13,000 head more than what was originally stated. August lean hogs closed $2.40 higher at $118.70, October lean hogs closed $0.55 higher at $96.32 and December lean hogs closed $0.30 higher at $86.52. The CME Lean Hog Index for July 20: up $0.67, $117.04.

Friday's Cold Storage Report shared that frozen pork supplies were down 1% from last month, but up 22% from last year. Stocks of pork bellies were down 6% from last month but up 46% from last year.

­­­­­MONDAY'S CASH HOG CALL: Steady. Packers won't likely be aggressive buyers in Monday's market as they'll feel the market out to see how demand interest seems before jumping into the cash market, which will likely demand strong prices again next week.

Friday Midday Livestock Market Update - Complex Turns Higher

GENERAL COMMENTS:

The livestock complex is running into Friday's afternoon fully higher as the market absorbs ample support from traders and the likelihood of bullish USDA reports coming Friday afternoon. From the latest Cold Storage report to the midyear Cattle Inventory and monthly Cattle on Feed reports -- Friday afternoon will have everyone staring at their computer screens. December corn is down 2 3/4 cents per bushel and December soybean meal is down $0.70. The Dow Jones Industrial Average is down 62.66 points.

LIVE CATTLE:

The live cattle market is higher and is rallying up to the market's average one-month high for many of the contracts. August live cattle are up $1.27 at $137.00, October live cattle are up $1.72 at $142.70, and December live cattle are up $1.50 at $147.85. The market's excitement likely stems from the anticipated bullish USDA reports that are going to be unveiled Friday afternoon -- the monthly Cattle on Feed report and the midyear Cattle Inventory report. The cash cattle market hasn't seen any renewed interest thus far and it's most likely that the week's business is done with. Thus far throughout the week, Southern live trade has been marked at $136, roughly $0.50 to $1 lower than last week's weighted average. Dressed deals in the North have been marked at mostly $227, $2 lower than last week's weighted averages.

Boxed beef prices are higher: choice up $0.45 ($268.21) and select up $1.91 ($242.44) with a movement of 53 loads (28.08 loads of choice, 5.69 loads of select, 11.97 loads of trim and 7.05 loads of ground beef).

FEEDER CATTLE:

The feeder cattle contracts are higher Friday afternoon as the market is poised for Friday afternoon's reports. Both the Cattle on Feed and Cattle Inventory reports are expected to bode well for the cattle complex, and as traders push the feeder cattle contracts close to the market's recent high, everyone is watching the minutes pass until the reports become available. Friday afternoon's trade will likely keep with its strong tone through closing unless the corn market has a change of heart and for some reason shoots higher. It's not Friday's market that will likely see the benefits of these reports, but mostly Monday's market if they are indeed as supportive as assumed. August feeders are up $1.90 at $180.17, September feeders are up $2.27 at $183.57 and October feeders are up $2.17 at $186.40.

LEAN HOGS:

The lean hog complex isn't going to sit idle ahead of the week's close and miss an opportunity to capture a modest rally ahead of the Friday's last bell. August lean hogs are up $1.80 at $118.10, October lean hogs are up $0.32 at $96.10 and December lean hogs are up $0.22 at $86.45. Aside from the livestock complex's strong underlying tones, it's helping that pork cutout values are trending higher into the afternoon. It's key that packers see continued strong pork demand amid such limited supplies of market-ready hogs as that will be key to keeping packers interested in the cash market.

The projected lean hog index for July 21 is up $1.12 at $118.16, and the actual index for July 20 is up $0.67 at $117.04. Hog prices are lower on the Daily Direct Afternoon Hog Report, down $3.05 with a weighted average of $117.99, ranging from $113.50 to $134.00 on 3,809 head and a five-day rolling average of $119.82. Pork cutouts total 153.02 loads with 138.59 loads of pork cuts and 14.43 loads of trim. Pork cutout values: up $3.02, $126.92.