Thursday Morning Livestock Market Update - Cattle Traders Begin Looking Ahead to Cattle on Feed Report

GENERAL COMMENTS:

Feeder cattle led the charge Wednesday with futures breaking through and closing above technical resistance. Live cattle futures are heading to the highs set in March. The limiting factor Thursday might be the upcoming Cattle on Feed report. Traders may either take some profits or protect their positions with other strategies ahead of the report and the extended weekend. Estimates for the report are for an on-feed number on May 1 of 99.1% of a year ago. Placements in April at 93.3% and marketings at 109.5%. The range of estimates for the on-feed number is 97.9% to 100.5%. Placements again have a wide range of 86.5% to $104.5% and will keep traders cautious going into the report. The range for marketing is from 108.6% to 110.7%. Boxed beef prices were lower with choice down $0.85 and select down $1.26.

Hogs remained unable to find support Wednesday. The cash and cutouts weakness on Wednesday does not provide support for Thursday. The National Direct Afternoon Hog report showed cash down $0.37. Cutout values declined by $0.62. There is continued talk about the concern over demand but hog slaughter continues to run above the previous week and year. More hogs are being processed for a reason. Weekly export sales may indicate an increase in international demand. The technical aspect of the market has been bearish with prices heading to test the lows from February. Saturday slaughter is estimated at 12,000 head.

	BULL SIDE		BEAR SIDE
1)	The trend is your friend and traders continue to follow the trend. Feeder cattle closed above resistance, which may increase buying interest.	1)	There is a chance for a bearish surprise on the Cattle on Feed report and traders may take steps to limit their exposure.
2)	Analysts expect some friendly numbers on the Cattle on Feed report, which may limit profit-taking ahead of the report.	2)	The weakness of boxed beef prices Wednesday may indicate the buying for Memorial Day has run its course and demand may slow as consumers grapple with high beef prices.
3)	Hog futures are significantly oversold and may bounce ahead of the extended weekend.	3)	Hog weights remain 3.9 pounds higher than a year ago, keeping packers active but not aggressive in the cash market.
4)	Hog weights remained unchanged from the previous week at 287.9 pounds. Higher slaughter is keeping market-ready hogs current.	4)	The trend is down with new lows nearly every day. Funds continue to exit their long positions with the market struggling to find fundamental support.

Wednesday Closing Livestock Market Update - Feeder Cattle Complex Momentum Drives the Cattle Sector Higher

GENERAL COMMENTS:

It was a mixed day for the livestock complex as the cattle contracts saw ample trader support, but the lean hog market continues to plunder lower as pork demand is lacking. No cash cattle trade has developed yet but packer interest could improve on Thursday. Hog prices closed lower on the Daily Direct Afternoon Hog Report, down $0.37 with a weighted average price of $87.82 on 3,665 head. July corn is up 3 1/4 cents per bushel and July soybean meal is up $5.90. The Dow Jones Industrial Average is down 231.53 points.

LIVE CATTLE:

It was another powerful day for the live cattle complex as the futures complex closed higher yet again thanks to the spillover support that came from the feeder cattle market's strong performance. The old saying of, "feeders are the leaders," was true today as the market saw boxed beef prices close slightly lower. June live cattle closed $1.20 higher at $184.17, August live cattle closed $1.25 higher at $181.67 and October live cattle closed $1.50 higher at $184.65. No cash cattle trade developed throughout the day as packers and feedlots will again go toe-to-toe this week. Early asking prices in the South are noted at $188 to $190, but remain unestablished in the North. Most of this week's trade will likely be delayed again until Friday. 

Wednesday's slaughter is estimated at 122,000 head -- 2,000 head less than a week ago and 1,000 head more than a year ago.

Boxed beef prices closed lower: choice down $0.85 ($312.17) and select closed $1.26 lower ($299.61) with a movement of 133 loads (85.92 loads of choice, 21.97 loads of select, 7.19 loads of trim and 17.73 loads of ground beef).

THURSDAY'S CATTLE CALL: Steady to somewhat higher. Feedlots continue to hold the market's leverage, and with that being the case, prices will likely trade steady if not a little higher again this week.

FEEDER CATTLE:

The feeder cattle complex held back nothing through Wednesday's trade as the market closed anywhere from $1.00 to $3.00 higher as countryside support and strong live cattle fundamentals continue to propel the complex higher. Nearby corn prices closed $0.01 to $0.03 higher, but the feeder cattle complex didn't seem to care as traders were interested in advancing the market -- so much so that the spot August contract closed above its 100-day moving average ($260.25). August feeders closed $3.07 higher at $262.90, September feeders closed $2.62 higher at $263.75 and October feeders closed $2.50 higher at $264.20. At Ozarks Regional Stockyards in West Plains, Missouri, compared to last week feeder steers sold $4.00 to $9.00 higher and feeder heifers traded $5.00 to $10.00 higher with instances up to $15.00 higher. The market reporter remarked that "October in May is the best way to describe today's offering. The sounds of bawling calves could be heard across the parking lot as producers have elected to market to take their calves to town with these high prices." The CME feeder cattle index 5/21/2024: up $0.69, $248.44.

LEAN HOGS:

Another day, another lower close and continuing to lack substantial consumer demand seems to summarize the lean hog complex well. The lean hog complex endured yet another dreary day as the market saw little support from traders as consumer demand continues to be an issue for the market. June lean hogs closed $1.00 lower at $95.40, July lean hogs closed $1.20 lower at $98.12 and August lean hogs closed $1.02 lower at $97.55. There's a chance that Thursday's export report could be beneficial to the complex, but in recent weeks demand hasn't been strong from international buyers either. Pork cutouts totaled 258.10 loads with 224.78 loads of pork cuts and 33.32 loads of trim. Pork cutout values: down $0.62, $100.07. Wednesday's slaughter is estimated at 484,000 head -- 4,000 head more than a week ago and 15,000 head more than a year ago. The CME lean hog index 5/20/2024: down $0.21, $92.01.

THURSDAY'S HOG CALL: Lower. With pork demand remaining an issue, it's likely that packers only lightly buy in this week's cash market. 

Wednesday Midday Livestock Market Summary - Feeders Drive Cattle Complex Higher Again

GENERAL COMMENTS:

The feeder cattle complex is powering its way through Wednesday's trade and thankfully the live cattle complex is able to follow in its wake as its market is receiving some of the spillover support. Meanwhile, the lean hog complex continues to trade lower as demand remains unfruitful. August live cattle are up $1.03 at $181.45, August feeder cattle are up $2.73 at $262.55, June lean hogs are down $1.15 at $95.25, July corn is up 3 1/2 cents per bushel and July soybean meal is up $0.30. The Dow Jones Industrial Average is down 48.03 points.

LIVE CATTLE:

Even though midday boxed beef prices are lower, the live cattle complex doesn't seem to be too concerned as the market continues to charge higher. June live cattle are up $0.85 at $183.82, August live cattle are up $0.90 at $181.32 and October live cattle are up $1.07 at $184.22. If afternoon boxed beef prices close lower, there's a chance traders could pull back from the market Thursday. But at this point, the complex still feels as though support is strong enough to justify higher trade. Still no cash cattle trade has developed and it's likely the market will wait to trade cattle Thursday, or even more likely on Friday. Asking prices in the South are noted at $188 to $190 but remain unestablished still in the North.

Boxed beef prices are lower: choice down $0.93 ($312.09) and select down $0.78 ($300.09) with a movement of 84 loads (58.43 loads of choice, 10.08 loads of select, 4.91 loads of trim and 10.38 loads of ground beef).

FEEDER CATTLE:

The feeder cattle complex is seeing the most support thus far Wednesday as the contracts are trading anywhere from $1.00 to $2.00 higher. It's significant to see the spot August contract trading above its 100-day moving average, which is also likely adding fuel to the live cattle complex as the feeder cattle market's power is strong this morning. August feeders are up $2.55 at $262.37, September feeders are up $2.27 at $263.40 and October feeders are up $2.10 at $263.10. The May 2024 feeder cattle contract will expire Thursday, and currently there's a $12.00 spread between the May 2024 and August 2024 feeder cattle contracts.

LEAN HOGS:

With demand continuing to lag in the pork sector, the lean hog complex is continuing to trade lower as the market desperately yearns for demand but continues to be disappointed by consumer interest. June lean hogs are down $1.15 at $95.25, July lean hogs are down $1.45 at $97.87 and August lean hogs are down $1.20 at $97.37. The loin continues to pull the carcass price lower as its down $2.70 Wednesday morning, and the butt is an issue this morning as its down $6.37.

The projected CME Lean Hog Index for 5/21/2024 is down $0.19 at $91.82 and the actual index for 5/20/2024 is down $0.21 at $92.01. Hog prices are lower on the Daily Direct Morning Hog Report, down $1.47 with a weighted average price of $87.02, ranging from $85.00 to $88.00 on 1,721 head and a five-day rolling average of $88.26. Pork cutouts total 153.30 loads with 125.75 loads of pork cuts and 27.56 loads of trim. Pork cutout values: down $0.59, $100.10.

Wednesday Morning Livestock Market Update - Further Strength in Cattle Futures

GENERAL COMMENTS:

Cattle futures opened higher Tuesday and closed higher with August live cattle above $180, the highest close since March 22. The February contract closed above $190. Demand continues to support the market with boxed beef showing further strength with a gain of $0.32 for choice and $1.52 for select. This will give feedlots confidence to hold out for more this week. The Cattle on Feed report will be released Friday after the close with traders likely beginning to turn their attention to it Wednesday. Traders are facing two aspects of the market that will impact trading activity -- the Cattle on Feed report and the three-day weekend. The Friday of Memorial Day weekend generally has significantly lighter trade as the attention is focused on the kick-off weekend of the summer. Then there is the report that will not be traded until next week on Tuesday. Traders may reduce their risk ahead of the weekend. The estimates for the report are for on-feed number May 1 of 99.1% of a year ago. Placements in April at 93.3% and marketings at 109.5%.

Hog futures were unable to find strong buying interest Tuesday. Cutouts continued to struggle with a loss of $1.08. The positive aspect was the strength of cash with the National Direct Afternoon Hog report showing an increase of $1.77. The slaughter pace continues to remain strong but hog numbers are not tightening. Some of the influence on this may be the imports of hogs from Canada being processed in the U.S. Futures remain entrenched in a downtrend with lower lows Tuesday. Cash is expected higher Wednesday as the packers will remain aggressive ahead of the weekend.

	BULL SIDE		BEAR SIDE
1)	Demand is strong and reflected in higher boxed beef prices. The packers will need to remain aggressive to meet that demand.	1)	The strong demand for the Memorial Day weekend may run its course resulting in the weakness of boxed beef prices.
2)	Cattle futures closed near the highs which should keep buying interest strong as traders trade with the trend.	2)	Cattle futures may retrace before the holiday weekend and the Cattle on Feed report.
3)	Hog futures are oversold and, with the extended holiday weekend, they may cover some short positions ahead of the weekend.	3)	Pork demand ahead of the weekend is not as great as expected, keeping a bearish tone in the market.
4)	The packers may be aggressive Wednesday as they may want to purchase hogs sooner rather than later before the holiday weekend.	4)	Support remains elusive as funds continue to liquidate and lower lows indicate further weakness. Futures have not found solid support.