Friday Closing Livestock Market Update - Traders Run From Market

GENERAL COMMENTS:

Friday's market lent the livestock complex no favors as the contracts dived lower upon the onset of higher interest rates which created uncertainly throughout the entire marketplace. The cattle complex had even more anxiety heading into the afternoon as it awaited Friday's Cattle on Feed Report. Hog prices closed lower on the Daily Direct Afternoon Hog Report, down $7.69 with a weighted average of $86.34 on 3,395 head. December corn is down 11 1/2 cents per bushel and December soybean meal is down $5.60. The Dow Jones Industrial Average is down 486.27 points.

LIVE CATTLE:

With the futures complex plunging lower no matter where you looked, the live cattle complex jumped on the market's lower bandwagon as it was not only concerned about the Fed's interest rate hike but also about what Friday's Cattle on Feed Report would amount to. Thankfully, Friday's Cattle on Feed report came out mostly neutral as placements were slightly higher than a year ago but fed cattle marketings were 6% higher.

October live cattle closed $0.60 lower at $144.25, December live cattle closed $0.80 lower at $148.55, and February live cattle closed $1.07 lower at $152.70. Throughout the week Southern live cattle traded for $143, which is $1.00 stronger than last week's weighted average, and Northern dressed cattle traded for mostly $228, which is also $1.00 stronger than last week's weighted average. 

Friday's slaughter is estimated at 125,000 head -- 7,000 head more than a week ago and 14,000 head more than a year ago. Saturday's slaughter is projected to be 33,000 head. This week's slaughter is estimated at 667,000 head -- steady with a week ago and 24,000 head more than a year ago.

Friday's Imported Meat report shared that for the week fresh beef imports totaled 23,568 metric tons with Canada, Mexico and Australia being the biggest importers. Year-to-date fresh beef imports total 867,310 metric tons, which is 8% greater than when compared to a year ago. Processed beef imports for the week total 2,528 metric tons with Brazil contributing 67% of that shipment. Year-to-date processed beef imports total 69,966 metric tons which is 21% greater than when compared to a year ago.

Boxed beef prices closed mixed: choice up $0.23 ($248.63) and select down $2.80 ($219.31) with a movement of 100 loads (50.65 loads of choice, 28.17 loads of select, 8.46 loads of trim and 12.27 loads of ground beef). Throughout the week choice cuts averaged $250.05 (down $4.71 from the week before) and select cuts averaged $224.14 (down $7.08 from the previous week) and the week's movement of cuts, grinds, and trim totaled 765 loads.

MONDAY'S CASH CATTLE CALL: Higher. Given that feedlots were again able to trade cattle higher this week, they'll like set out to price cattle higher next week as they know packers will continue to need the cattle given the chain speeds they're running.

FEEDER CATTLE:

The feeder cattle complex tried to focus on the corn market's 11- to 12-cent plumet through the day's end, but with the added complexity of the raised interest rates, mass selling throughout the futures complex and the unknown nature of the Cattle on Feed report -- the market closed mostly lower. October feeders closed $0.37 higher at $178.35, November feeders closed $0.20 higher at $178.25, and January feeders closed $0.47 lower at $179.47. With corn prices and interest rates being on the forefront of buyers' minds, next week's market will look for support and hopefully the cash cattle market will again trade cattle higher and give traders some comfort. Oklahoma's Weekly Cattle Auction Summary shared that throughout the week feeder steers traded steady to $1.00 lower, except those weighing over 800 pounds which traded $2.00 to $5.00 higher. Feeder heifers traded mostly steady. Steer calves sold steady to $3.00 lower and heifer calves traded steady to $4.00 lower. Slaughter cows sold $2.00 to $5.00 lower and slaughter bulls traded steady. Feeder cattle supply over 600 pounds was 39%. The CME Feeder Cattle Index 9/22/2022: up $0.40, $180.15.

LEAN HOGS:

It was a wild day for the lean hog complex as the market absorbed two news blasts. The first came from China as they released their third batch of pork reserves this month to try to curve rising prices. China was a buyer listed on Thursday's export report, but the market took the news bearishly as exporting product remains crucial to our market's wellbeing. Secondly, news came Friday afternoon that South Korea has confirmed that two large farms have dealt with an outbreak of African swine fever, reported Pigs333. Nevertheless, the market had plenty to absorb this afternoon and given the vast selling that took place in the commodity markets, the lean hog complex followed suit. October lean hogs closed $1.50 lower at $92.62, December lean hogs closed $2.87 lower at $82.80, and February lean hogs closed $2.70 lower at $87.05. Pork cutouts totaled 279.43 loads with 256.56 loads of pork cuts and 22.87 loads of trim. Pork cutout values: down $2.95, $100.93. Friday's slaughter is estimated at 474,000 head - 2,000 head more than a week ago and 3,000 head more than a year ago. Saturday's slaughter is projected to be around 134,000 head. The CME Lean Hog Index 9/21/2022: up $0.05, $98.01.

MONDAY'S CASH HOG CALL: Lower. Packers won't likely show interest in the cash market until Tuesday or later.

Friday Midday Livestock Market Summary - Lower Tones Settle into the Complex

GENERAL COMMENTS:

With a depressed tone settling into all of the livestock contracts as the market heads into the day's afternoon, a lower close could be expected for the contracts.

LIVE CATTLE:

Friday's market continues to trade with a doggish and skeptical tone as the market anxiously awaits Friday's Cattle on Feed Report. Traders and cattlemen alike would love to believe analysts' estimates for the report but given that they've gotten their hopes up in months past believing that placements will be lower only to see on Friday afternoon that they're reported higher has everyone leery. Regardless of how the on-feed and placement data fairs, the market is at least going to be able to appreciate the marketing portion of the report as analysts believe marketings could be as much as 6.5% higher than a year ago. October live cattle are down $0.55 at $144.30, December live cattle are down $0.70 at $148.67 and February live cattle are down $0.87 at $152.90. The cash cattle market hasn't seen any bids renewed at this time and it's looking like the vast majority of the week's business is done. Throughout the week Southern live cattle traded for $143 which is $1.00 stronger than last week's weighted average, and Northern dressed cattle traded for mostly $228 which is also $1.00 stronger than last week's weighted average.

Friday's Imported Meat report shares that for the week fresh beef imports totaled 23,568 metric tons with Canada, Mexico and Australia being the biggest importers. Year-to-date fresh beef imports total 867,310 metric tons, which is 8% greater than when compared to a year ago. Processed beef imports for the week total 2,528 metric tons with Brazil contributing 67% of that shipment. Year-to-date processed beef imports total 69,966 metric tons which is 21% greater than when compared to a year ago.

Boxed beef prices are lower: choice down $0.11 ($248.29) and select down $1.52 ($220.59) with a movement of 64 loads (41.73 loads of choice, 9.51 loads of select, 5.37 loads of trim and 7.47 loads of ground beef).

FEEDER CATTLE:

The feeder cattle market continues to sell out despite the corn complex trading as much as $0.12 to $0.13 lower in its nearby contracts. September feeders are down $0.17 at $178.02, October feeders are down $0.02 at $177.95 and November feeders are down $0.20 at $177.90. The market would like to rest its hat on the wins the fat cattle market saw earlier this week, but until the market can see exactly how Friday's Cattle on Feed report pans out, all are hesitant. However, if the report can indeed display what analyst's projected, then the market sits in a fine position to rally as early as next week.

LEAN HOGS:

With the rest of the livestock complex taking a hesitant stance in Friday's market, the lean hog market has opted to follow suit even though it saw strong export sales on Thursday and pork cutout values closed $3.53 higher Thursday afternoon. October lean hogs are down $1.22 at $92.90, December lean hogs are down $2.45 at $83.22 and February lean hogs are down $2.30 at $87.45. It's likely that the market keeps with this lower trend through closing, but it won't likely pressure the market support plane of $82.25.

The projected lean hog index for 9/22/2022 is down $0.42 at $97.59, and the actual index for 9/21/2022 is up $0.05 at $98.01. Hog prices are lower on the Daily Direct Morning Hog Report, down $7.71 with a weighted average of $86.21, ranging from $84.00 to $105.00 on 3,241 head and a five-day rolling average of $93.03. Pork cutouts total 210.13 loads with 197.19 loads of pork cuts and 12.94 loads of trim. Pork cutout values: down $2.30, $101.58.

Friday Morning Livestock Market Update - Choppy Trade Expected Ahead of Report

Even though cash traded mostly $1.00 higher in both the North and South, cattle futures were unable to find support, posting triple-digit losses in nearby contracts for the day. Weekly export sales were not as good as hoped with 15,200 metric tons (mt), which may have added to the negative trade. Likely the focus on the trade turned to the upcoming Cattle on Feed report Friday. On feed numbers as of Sept. 1 are estimated at 100% of a year ago. Placements are expected at 98.5% with marketings at 106%. Placements being lower should be supportive, but the track record of the past number of reports keeps traders nervous over the actual placement number. USDA has been consistently higher than trade estimates. This prompted some profit-taking despite stronger cash. Boxed beef did not help with choice down $0.73 and select down $4.03. Packer margins continue to tighten.

October hogs recorded a fourth consecutive day of losses, as traders just are not excited about the market. Cash was significantly lower with the National Direct Afternoon report showing a loss of $4.12. However, the bright spot was the $3.53 increase in cutouts. This was not enough to generate buying interest from traders. Weekly export sales were good with 29,000 mt sold. China has not been a top buyer, but they have been a consistent buyer recently. Futures may rebound a bit Friday as traders might cover some short positions into the weekend. Saturday slaughter is estimated at 136,000 head.

	BULL SIDE		BEAR SIDE
1)	If cattle placements come in as expected on the report Friday, it would provide support to the market as it would solidify the trend of tightening numbers.	1)	Cattle were unable to penetrate and hold new contract highs. This may result in further long liquidation.
2)	Higher cash was expected and received. Packers needed to bid up to obtain the desired supply. Feedlots will set their sights higher next week.	2)	Feeder cattle have fallen significantly with the confirmation of the head-and-shoulders top. Further weakness is expected.
3)	Hogs have shown weakness much of the week with short-covering likely into the weekend.	3)	Hogs just cannot find consistent support from cash or cutouts. This leaves limited upside potential.
4)	Strong cutouts will improve packer margins in turn, allowing them to be more aggressive with their hog purchases to maintain an active slaughter pace.	4)	Hog futures remain overbought, which could result in another day of selling as traders may not have finished liquidating long positions.

Thursday Closing Livestock Market Update - Sell-Off Continues

GENERAL COMMENTS:

Perhaps motivated by profit-taking after the livestock markets gave up on making new highs during the latter half of the week, futures traders sold off enough contracts Thursday afternoon to send cattle and hog prices plunging. Outside markets were no help, with the U.S. Dollar Index still headed higher after Wednesday's interest rate hike. Hog prices moved lower on the Daily Direct Afternoon Hog Report, down $4.12 with a weighted average of $94.03 on 6,811 head. Cash cattle saw light to moderate trade Thursday morning, with Southern live deals at $143 ($1 higher than last week) and Northern dressed deals at mostly $228 (also $1 higher than last week). December corn closed up 2 3/4 cents at $6.88 1/4 per bushel, and December soybean meal closed down $9.90 at $428.90 per ton. The Dow Jones Industrial Average is down 107.69 points.

LIVE CATTLE:

Losses in the live cattle futures market accelerated through the latter half of Thursday's trading session. October live cattle closed $1.025 lower at $144.85, December live cattle closed $1.40 lower at $149.35, and February live cattle closed $1.125 lower at $153.775. The timing of this sell-off, coming after Tuesday's fresh contract highs and ahead of Friday's Cattle on Feed report, definitely smacks of speculators' profit-taking or closing out positions to manage risk. In contrast, the reality of the cash market for fed cattle has remained hot again this week. Packers have paid up for needed supply. A light to moderate trade developed Thursday morning in all three major feeding areas, with Southern live deals marked at $143, which is $1 higher than last week's weighted averages. Northern dressed business is being marked at mostly $228, also $1 higher than last week's weighted average basis Nebraska. Some asking prices remain firm around $145 on a live basis and $230-plus dressed. Analysts on average are expecting the Friday Cattle on Feed report to show roughly the same Sept. 1 number of cattle on feed as a year ago, after a diminished beef herd contributed a lower quantity of August placements (estimated down 1.5% from last year).

Boxed beef prices closed lower again: choice down $0.73 ($248.40) and select down $4.03 ($222.11) with a movement of 186 loads (82.83 loads of choice, 57.88 loads of select, 7.41 loads of trim and 38.11 loads of ground beef).

FRIDAY'S CASH CATTLE CALL: $1 higher. Packers have needed to buy cattle to fulfill their slaughter goals, and this week have been meeting the feedlots' asking prices at levels mostly $1 to $3 higher than last week.

FEEDER CATTLE:

Triple-digit losses in the feeder cattle contracts Thursday have emphasized the downward trend that has taken this market down more than $10 per cwt since mid-August. At the close, October feeders were $1.25 lower at $177.975, November feeders were $2.275 lower at $178.05, and January feeders were $2.025 lower at $179.95. Despite the unrelentingly expensive feed markets, the cash market for calves and feeder cattle is showing robust demand. Superior Livestock Auction's online sale on Thursday attracted active bidding, and many representative lots of 600- or 700-lb steers easily fetched around $200 per cwt. Salebarns across the countryside are also noticing active markets with lots of buyers and good demand, although prices have either stayed steady or slipped as much as $3 week over week. The CME Feeder Cattle Index 9/20/2022: down $0.10, $178.10.

LEAN HOGS:

As the pork market navigates a seasonal shift in which cuts will be most demanded by consumers, day-to-day prices may continue to be volatile. October lean hog futures closed $0.30 lower at $94.125, December lean hogs closed $0.775 lower at $85.675, and February lean hogs closed $0.90 lower at $89.75. From a chart perspective, the front-month October contract now has a wide range to flail around inside without testing either support or resistance between $89 and $98 per cwt. Pork packers have been able to find a fairly steady mix of domestic and export markets to buy their products, even without China leading the way anymore. Day-to-day weakness in the rib primal reminds the market that summer grilling season is over, and as of Thursday, it's now officially fall. Pork cutouts totaled 280.62 loads with 245.07 loads of pork cuts and 35.55 loads of trim. Pork cutout values: up $3.53, $103.88. The CME Lean Hog Index for 9/20 was down $0.40 at $97.96 and the projected index for 9/21 is up $0.05 at $98.01.

FRIDAY'S CASH HOG CALL: Steady. After the latest jump in the cash hog prices, the market may now be finding a plateau.