Thursday Closing Livestock Market Update - Overall, Feedlots Continue to Hold Out for More Money

GENERAL COMMENTS:

It was another mixed day for the livestock complex as technically speaking the lean hog market found some support, but without much cash cattle trade having developed -- both the live cattle and feeder cattle markets closed lower. Packer interest will improve on Friday for the cattle sector, but it's anyone's call at this point who will win this week's battle in the cash cattle arena -- packers or feedlot managers. Hog prices closed lower on the Daily Direct Afternoon Hog Report, down $2.49 with a weighted average price of $86.23 on 946 head. July corn is up 12 3/4 cents per bushel and July soybean meal is up $3.30. The Dow Jones Industrial Average is up 78.84 points.

LIVE CATTLE:

As the market continues to wait for the cash cattle complex to trade, traders again elected to let the market drift lower through the day's end as they're still lacking sufficient support to comfortably trade the contracts higher. June live cattle closed $0.05 higher at $181.82, August live cattle closed $0.40 lower at $177.47 and October live cattle closed $0.65 lower at $179.65. Bids of $184 to $185 were offered throughout most of the day in the Southern Plains, and bids of $188 live were offered in Nebraska, but no Northern cattle sold throughout the day. There was a small handful of cattle traded in Kansas at $185, and even fewer cattle traded in Texas for $185 – which is $1.00 lower than last week's weighted average, but not enough cattle have traded at that price to say that the week's trend has been set. Asking prices remain firm for cattle left on showlists in the South at $187 to $188, and in the North at $305 to $306. Packers and feedlot managers will again go toe-to-toe this week as packers desperately want to pump the brakes on the cash market, but feedlots are current so they continue to hold substantial leverage. 

Thursday's slaughter is estimated at 122,000 head -- 3,000 head less than a week ago and 2,000 head less than a year ago.

Boxed beef prices closed mixed: choice up $1.42 ($316.21) and select down $0.07 ($300.83) with a movement of 121 loads (84.90 loads of choice, 22.64 loads of select, 3.57 loads of trim and 9.93 loads of ground beef).

FRIDAY'S CATTLE CALL: Steady. With the board trending lower and boxed beef prices being mixed, packers may be able to get more cattle bought at steady money this week.

FEEDER CATTLE:

The feeder cattle complex sank further and further throughout the day as the market reacted poorly to the corn market's slight rally, and from the lack of support from the live cattle and fed cattle markets. Unfortunately, the spot August contract gapped lower at the day's start and continued to trend lower from that point onward, leaving the market well below its 40-day moving average. But before you grow concerned about the market's overall well-being -- I'd encourage you to look at the CME feeder cattle index. Wednesday afternoon the CME feeder cattle index closed at $250.86 which is an extremely high price point given that the market's all-time high for the index was made just last September at $254. Overall demand from buyers remains incredibly strong as there simply aren't as many feeders to be had this year. The futures market may be under pressure, but the entire feeder cattle market is not, as evidenced by the strong feeder cattle demand in the countryside, and it's likely that this type of technical turmoil will follow the complex until August when the contract expires and prices much converge. August feeders closed $1.97 lower at $252.85, September feeders closed $2.10 lower at $254.10 and October feeders closed $2.20 lower at $254.95. The CME feeder cattle index for 6/5/2024: not available at this time.

LEAN HOGS:

Finally, the lean hog complex has again seemed to find some technical support as the market had little fundamental help in its mostly higher close Thursday afternoon. June lean hogs closed $0.05 higher at $92.15, July lean hogs closed $0.77 higher at $92.97 and August lean hogs closed $0.05 higher at $91.67. Yes, pork cutout values did close slightly higher, but the overall carcass prices were slightly skewed by the $5.00 jump in the belly. It was also disappointing, but expected given Wednesday's lower cutout close, that cash prices ended the day $2.49 lower and that only a scant 946 head traded. Pork cutouts totaled 315.05 loads with 276.81 loads of pork cuts and 38.24 loads of trim. Pork cutout values: up $0.38, $100.69. Thursday's slaughter is estimated at 470,000 head -- 7,000 head less than a week ago and 12,000 head more than a year ago. The CME lean hog index 6/4/2024: up $0.13, $92.06.

FRIDAY'S HOG CALL: Lower. It would appear that packers have already bought the hogs that they needed for the week and it's not likely that Friday's cash market sees much interest or support.

Thursday Midday Livestock Market Summary - Cash Cattle Bids Are Beginning to Surface

GENERAL COMMENTS:

It's another mixed day for the livestock complex with the cattle contracts trading mostly lower while the hog contracts are trading modestly higher thanks to some technical support. There are bids offered in the countryside for cash cattle, but still no business has developed.

July corn is up 9 3/4 cents per bushel and July soybean meal is up $3.80.

The Dow Jones Industrial Average is up 23.69 points.

Thursday's export report shared that beef net sales of 14,500 metric tons (mt) for 2024 were down 8% from the previous week and 11% from the prior four-week average. The three largest buyers were South Korea (6,000 mt), Japan (3,400 mt) and Mexico (1,400 mt). Pork net sales of 29,900 mt for 2024 were down 33% from the previous week but up 3% from the prior 4-week average. The three largest buyers were China (8,900 mt), Mexico (8,300 mt) and Japan (3,400 mt).

LIVE CATTLE:

The live cattle complex is continuing to trade lower as the market patiently waits to see what develops in the cash sector. There are bids of $184 offered in the South and live bids of $188 offered in the North, but still no cattle have traded. Asking prices for cattle in the South are firm at $187 to $188 and in the North at $305 to $306. The futures market may be trading slightly lower, but it's not likely feedlots will cave in early and let cattle trade lower without at least waiting for Friday to come around when packer interest could improve. Packers will attempt to get cattle bought cheaper, but feedlots are current, so they still hold most of the market leverage. June live cattle are up $0.22 at $182.00, August live cattle are down $0.60 at $177.27 and October live cattle are down $0.92 at $179.37.

Boxed beef prices are mixed: choice up $0.95 ($315.74) and select down $0.77 ($300.13) with a movement of 61 loads (43.19 loads of choice, 10.25 loads of select, zero loads of trim and 7.42 loads of ground beef).

FEEDER CATTLE:

Between the live cattle contracts trading lower and corn prices trading modestly higher, it comes as no surprise the feeder cattle contracts are also trading lower. But before you throw in the towel and begin to believe that the overall market is weakening, I'd encourage you to look at the CME Feeder Cattle Index as best represents buyer demand in the countryside. It's rather impressive that just last September the CME Feeder Cattle Index topped around $254, and that as of Wednesday afternoon the index closed at $250.86. Buyer demand is still incredibly strong and even though the futures complex is enduring some weakness, the market's fundamentals are still prevailing. August feeders are down $2.20 at $252.62, September feeders are down $2.40 at $253.80 and October feeders are down $2.57 at $254.57.

LEAN HOGS:

After closing sharply lower Wednesday afternoon, the lean hog complex is back to trading mostly higher Thursday. June lean hogs are steady at $91.12, July lean hogs are up $0.90 at $93.10 and August lean hogs are up $0.20 at $91.82. Export sales were modest for the market, but more than anything the market seems to be trading higher as trades have again found some technical support. Following Wednesday's lower close in pork cutout values, Thursday's cash market has seen packer interest sharply regress.

The projected CME Lean Hog Index for 6/5/2024 is down $0.14 at $91.92, and the actual index for 6/4/2024 is up $0.13 at $92.06. Hog prices are unavailable on the Daily Direct Morning Hog Report due to confidentiality; however, we can see that only 761 head have traded and the market's five-day rolling average now sits at $87.09. Pork cutouts total 169.39 loads with 148.24 loads of pork cuts and 21.15 loads of trim. Pork cutout values: up $0.66, $100.97.

Thursday Morning Livestock Market Update - Demand Uncertainty Grips the Market

GENERAL COMMENTS:

Cattle could not find buying interest to keep prices in positive territory Wednesday. Feeder cattle suffered triple-digit losses with a close at the lowest level since May 14. There was no cash trading activity in the country to provide any direction. Early hopes for higher cash have waned with cash possibly trading no better than steady. Boxed beef was lower with Choice down $2.09 and Select down $3.57. However, the lower boxed beef prices may not set the tone for cash, but the perception of slowing demand moving into summer may be the larger factor.

Hogs continued to fall as traders holding long positions threw in the towel. Both cash and cutouts are unable to provide support. Fund traders have been holding a net-long futures position, but have likely been nearly eliminated. Contracts are now within striking distance of the contract lows and could be tested before a price rebound. Short-covering could provide some support to the market but that may be limited. The National Direct Afternoon hog report showed cash down $0.06 with cutouts down $0.45. Saturday slaughter is estimated at 29,000 head.

	BULL SIDE		BEAR SIDE
1)	Even if cash cattle trade is steady this week, futures should bounce as they hold a discount to cash.	1)	Traders are looking ahead to the dog days of summer and the potential for slowing demand. Cattle weights are higher and will require fewer cattle to meet demand.
2)	Feedlots may hold tight to their cattle, knowing packers will need to step up to purchase to maintain slaughter and meet demand.	2)	Cattle futures closing lower Wednesday may increase the selling pressure as futures closed below some key moving average levels.
3)	Hog futures are extremely oversold which could trigger a possible bounce ahead of the weekend. This may be the final washout of traders that had been bullish.	3)	Hog weights jumped 2.4 pounds last week to an average of 290.4 pounds. This is 6.6 pounds above a year ago.
4)	Strong weekly export sales could provide the catalyst for short-covering as lower prices may be stimulating international demand.	4)	Hog futures may challenge the contract lows before the selling pressure subsides.

Wednesday Closing Livestock Market Update - Technical Pressure Continues to Drive Contracts Lower

GENERAL COMMENTS:

It was another day of lower closes for the livestock complex as all three of the markets rounded out Wednesday with a lower end. Still no cash cattle trade has developed, but packer interest is expected to increase by Thursday. Hog prices closed lower on the Daily Direct Afternoon Hog Report, down $0.06 with a weighted average price of $88.72 on 5,875 head. July corn is down 3 1/4 cents per bushel and July soybean meal is up $4.40. The Dow Jones Industrial Average is up 96.04 points.

LIVE CATTLE:

It was another dismal day for the live cattle complex as traders scanned the market looking for support, but without any cash cattle trade developing and boxed beef prices closing lower, the market was left with little other option but to close lower. June live cattle closed $0.40 lower at $181.77, August live cattle closed $0.57 lower at $177.87 and October live cattle closed $0.50 lower at $180.30. It is positive to see that the market continues to trade above its 100-day moving average, but if support doesn't substantiate by Thursday, traders could be pressured into breaking through the market's moving average. No cash cattle trade developed throughout the day but asking prices in the North have been noted at $305 to $306 but remain unestablished still in the South. Packer interest should improve on Thursday. 

Wednesday's slaughter is estimated at 124,000 head -- 1,000 head less than a week ago and steady with a year ago.

Boxed beef prices closed lower: choice down $2.09 ($314.79) and select down $3.57 ($300.90) with a movement of 115 loads (66.10 loads of choice, 23.97 loads of select, 7.27 loads of trim and 17.55 loads of ground beef).

THURSDAY'S CATTLE CALL: Steady. The market may be pressured with some doggish tones this week, but the fact remains that if packers want to have enough meat to market to retailers, they're going to need to stay engaged in the cash market.

FEEDER CATTLE:

The feeder cattle market continued to sink lower through Wednesday's end as even though feeder cattle demand in the countryside remains strong – the rest of the market's factors were lacking. No cash cattle trade has developed yet, and with the live cattle contracts closing lower, feeders opted to jump on the market's lower trending bandwagon and closed fully lower too. August feeders closed $1.20 lower at $254.82, September feeders closed $1.40 lower at $256.20 and October feeders closed $1.40 lower at $257.15. The CME feeder cattle index 6/4/2024: down $0.03, $250.86.

LEAN HOGS:

The lean hog complex continued to drift lower and lower until Wednesday's market came to an end. Yes, the cash market saw a little more interest as 5,875 head traded, but with pork cutout values lower, traders didn't find nearly enough support in the day's market to change the market's direction. June lean hogs closed $0.60 lower at $92.10, July lean hogs closed $1.72 lower at $92.20 and August lean hogs closed $1.92 lower at $91.62. The market could be better supported on Thursday if export sales are fruitful but given that last week's sale report was substantially stronger than the market's current norm, it's tough telling what demand will be on tomorrow's exports. Pork cutouts totaled 273.76 loads with 225.32 loads of pork cuts and 48.44 loads of trim. Pork cutout values: down $0.45, $100.31. Wednesday's slaughter is estimated at 482,000 head -- 1,000 head less than a week ago and 23,000 head more than a year ago. The CME lean hog index 6/3/2024: up $0.20, $91.93.

THURSDAY'S HOG CALL: Lower. Given that packers bought over 5,000 head in today's cash market, it's likely means that they've fulfilled most of their needs for the week and that Thursday's market will see less interest.