Monday Morning Livestock Market Update - No Definite Direction to Begin Week

GENERAL COMMENTS:

Limited cash trade took place by the end of Friday, providing limited direction for traders. Cash cattle traded $1.00 lower in the South at $185 and steady in the North at $301 dressed. This was about as expected earlier in the week and should not surprise the market. Boxed beef prices were higher with choice up $0.54 and select up $0.31. Boxed beef prices are holding well as consumer demand remains strong. Feeder cattle futures bounced to close the chart gaps made Thursday. The Commitment of Traders report showed funds selling 5,120 live cattle futures contracts, leaving them net long 56,642 contracts. Funds sold 3,360 feeder cattle contracts, reducing their net-long position to 3,336 contracts.

Nearby hogs bounced slightly during the second half of last week but did not indicate a bottom had been reached. Packers were not aggressive on Friday with the National Direct Afternoon Hog report down $0.25 with a weighted average of $85.98. This was offset slightly by a gain in cutouts of $0.22. This does set the stage for a bullish scenario for this week. The market is oversold, but without solid support it may remain that way for a time. The packers may not be aggressive Monday as they wait for indications of weekend pork movement. The Commitments of Traders report showed funds trimming their long futures position by 12,041 contracts with a current net-long position of 19,026 contracts.

	BULL SIDE		BEAR SIDE
1)	Steady cash trade in the North indicates packers needed cattle and were unable to hold out for lower cash. This may be the same again this week.	1)	Cattle futures bounced Friday but the buying interest seemed to lack conviction. It could not hold the initial strength of the day.
2)	June live cattle futures hold a discount to cash, which may be trimmed in the coming weeks if cash cattle holds at the current price.	2)	The packers may not be very aggressive this week as beef demand generally slows as temperatures increase.
3)	Hog futures cannot decline forever and with the market extremely oversold a retracement could unfold.	3)	Both cash and pork cutouts continue to struggle even at these lower prices. There are sufficient hogs available at heavier weights.
4)	Lower pork prices should stimulate demand when consumers compare the value to beef.	4)	Fund traders continue to liquidate their long futures positions, pushing futures to the lowest levels since the beginning of the year. The selling has been relentless since April.

Friday Closing Livestock Market Update - Feeder Cattle Prices Get a Bounce

GENERAL COMMENTS:

August feeders and July lean hogs both finished higher Friday but were lower on the week. August live cattle struggled with another week of bird flu in the news and finished down 30 cents Friday.

LIVE CATTLE:

August live cattle tried to trade higher early but ended down $0.30 at $177.17 Friday and lost $1.27 on the week. Specs in live cattle remain bullish, holding 54,133 contracts net long as of June 4, but that was down from 60,855 the previous week. Traders remain skittish, continuing to face news about bird flu every week.

The good news for producers is that consumers haven't been skittish about buying beef. Choice boxed beef prices were up 54 cents at $316.75 Friday and were up $3.55 on the week. Selects were up 31 cents at $301.14 Friday but were down 57 cents on the week. Despite reports of bird flu infections found in dairy cattle in Iowa and Minnesota this week, boxed beef prices continue to indicate active levels of retail demand with choice prices at their highest level since August. Last week's cattle slaughter was estimated by USDA at 614,000, also an indication of good demand. After Friday's close, USDA estimated daily slaughter at 118,000, down from 122,000 last week.

As of the time of this writing, light trade was reported in the South at roughly $185 or $1 lower, while a few northern trades were reported at $301, roughly steady with last week. More will likely come later Friday afternoon.

MONDAY'S CATTLE CALL: Steady with firm support from higher cash prices.

FEEDER CATTLE:

August feeder cattle closed up $2.07 at $254.92 Friday, an unexpected end-of-week bounce that limited the weekly loss to $1.47. Friday's higher close will not be good news to the noncommercials in feeder cattle that just switched to being net short 1,925 contracts as of June 4.

Despite seven consecutive lower closes before Friday, the cash side of feeder prices has been holding firm. On Friday afternoon, the CME Feeder Index was quoted at $250.54 as of Wednesday, up $1.26 from a week ago and a little below Thursday's August close at $252.85.

In the bigger picture, it is impressive that August feeder prices have held roughly steady the past two months, while the country has witnessed a slow spread of bird flu infections in dairy cattle. To date, there is still no reason to believe either the milk supply or beef supply is unsafe, a credit to industry practices. While the market continues to learn more about the virus, the number of calves in the U.S. remains historically low, and more are needed. This spring's greener pastures will help, but it remains to be seen if much expansion will take place in 2024. Technically speaking, August feeder cattle remain in a sideways trading range with important support near $249.

LEAN HOGS:

July lean hogs traded lower most of the day, but closed up $0.52 at $93.50, finding a second day of support after reaching its lowest close in five months on Wednesday. The roughly $16.50 drop in July futures prices since late April has coincided with specs and managed futures funds bailing out of sizeable net long positions. Friday afternoon's CFTC data showed noncommercials in lean hogs were reduced from 13,662 to 5,546 as of June 4, another week of liquidation.

Despite this weakness in futures prices, the cash side of the market has held firm the past two months with some deterioration seen in negotiated bids. Friday's report from USDA showed national formula prices at $90.15, while national negotiated prices ended lower at $85.98 -- a possible sign packers are finding it easier to fill their weekly supply needs. On Friday afternoon, the CME's Lean Hog Index was projected at $91.75 as of Thursday, up 26 cents on the week.

Retail customers have been more generous this year, bidding up cutout values enough to keep slaughter active. Friday's USDA report, however, showed cutouts ended the week down $2.34 at $100.91. Pork bellies had quite a week and ended at $128.73. Late Friday, USDA estimated year-to-date hog slaughter was up 0.8% from a year ago. USDA estimated Friday's hog slaughter at 466,000, down from 483,000 a week ago. Technically speaking, July lean hogs remain in an active downtrend with possible support near $90, the lowest prices of 2024.

MONDAY'S HOG CALL: Steady to lower in July hogs with prices nearing their lowest levels in 2024.

Friday Midday Livestock Market Summary - Feeder Cattle Prices Start Higher, Find Support

GENERAL COMMENTS:

Feeder cattle prices are starting higher Friday, while lean hog futures remain near their lowest prices in five months, more in line with their firm cash market.

LIVE CATTLE:

August live cattle futures are trading up $0.12 at $177.60, struggling to build bullish momentum after more reports of bird flu infections in dairy cattle this week, this time in Iowa and Minnesota. A report from Mexico of a person dying after being infected with Avian H5N2 also added to this week's cautious tone in cattle prices. There continues to be no evidence to claim U.S. beef is unsafe, but traders remain leery about owning cattle futures.

For the most part, we do not see the same caution at retail outlets as consumers continue to buy beef. USDA's report on Friday morning showed choice boxed beef up $1.04 at $317.25 and selects up $0.54 at $301.37 with 76 loads. The slaughter pace has also been active this week and will likely be back above 600,000 after the Memorial Day dip. Dow Jones estimates cattle slaughter at 117,000 for Friday, even with a week ago.

Friday morning's radar is mostly clear with moderate showers expected in parts of Nebraska and northern Missouri. Temperatures in the 90s are expected in the southwestern Plains as far north as Kansas, but should moderate by Monday.

In outside markets, U.S. employment fell 408,000 in May, down from its recent historical peak to 161.08 million. The unemployment rate increased from 3.9% in April to 4.0% in May. However, the yield on 10-year T-Notes jumped up 13 basis points, trading at 4.41% Friday morning after non-farm payrolls came in higher than expected, at 272,000. The Federal Reserve's next interest rate decision is on Wednesday, June 12.

FEEDER CATTLE:

August feeder cattle are trading up $2.25 at $255.10, proposing to break its string of seven lower closes, while holding support above $249.05. For the most part, August feeder prices have stayed in a sideways trading range the past two months, biding time while the market learns more about the risks of the bird flu that has been slowing spreading through dairy cattle. The country continues to function with a historically low number of calves and the strain on packers has been more obvious in 2024, even with the recent distractions. After a wetter spring in the western Plains, pressures to liquidate cattle prematurely have eased and time will tell when or if expansion can take place. For now, feeder prices are likely to keep benefiting from low supplies and good demand.

On the cash side, the CME Feeder Index was priced at $250.54 as of Wednesday, up $1.26 on the week, even though futures prices have been under pressure. Technically speaking, August feeder cattle prices are below the 100-day average near $261, but are holding above important support near $249.

LEAN HOGS:

July lean hogs are trading down $0.42 at $92.55, on track for a lower weekly close with prices near their lowest level in five months. The July futures contract has experienced a bearish dive of roughly $17 since late April, but formula cash hog prices have stayed remarkably steady near $90, meaning the futures price has almost returned to the cash level. Also reflecting firm cash prices, the CME Lean Hog Index was projected at $91.92 for Wednesday, up $0.92 from a week ago.

There is a small bearish crack in the cash market starting to develop, however. Early Friday, USDA showed national negotiated cash hogs at $86.63, below the national swine formula price of $90.11. The discount in negotiated prices is an early sign packers are finding it easier to obtain weekly supplies. So far in 2024, the hog slaughter has been up slightly from a year ago, at a fairly consistent pace. For Friday, Dow Jones' estimated hog slaughter at 469,000, down from 482,000 a week ago.

Friday morning's report of pork cutout values jumped up $3.21 to $103.90, above the late-May peak of $103.25 and was helped by an $10.27 gain in the price of bellies, now up to $143.20. Technically speaking, July hog prices are trending down with possible support near or above the 2024 low of $89.87.

Friday Morning Livestock Market Update - Traders Wait For Cash Direction

GENERAL COMMENTS:

Traders saw nothing to provide solid price direction Thursday as cash cattle did not trade. After the markets closed, some cash trades took place in Kansas at $190 delivered and $185 picked up, but not enough to determine a trend. Texas had a few traded at $185. The general estimate is for the bulk of cash trade to take place at steady money with last week. Boxed beef prices have been mixed during much of the week, giving the impression demand may be stabilizing. Packers need cattle but do not want to be too aggressive as overall beef demand may begin to slow seasonally. Choice boxed beef was $1.42 higher with select down $0.07. Feeder cattle futures gapped lower Thursday but closed well off their lows. Futures have eliminated most of what was gained since May 10. The market has lost about $12.00 in the past two weeks.

Hogs cannot get a break. New lows again were made Thursday before the market regained the losses. Traders are searching for fundamental support and are having difficulty finding it. The National Direct Afternoon Hog report showed cash down $2.49 with a weighted average price of $86.23. Cutouts showed a gain of $0.38, but that did not provide solid support. It seemed the support was due to the end of the liquidation phase and some technical buying near the contract lows. Even though the market is severely oversold, it may remain that way unless a catalyst triggers short-covering and new buying interest. Cash could end the week higher as has been the pattern and buyers will want to finish purchases for the week, but this may not provide much support. Saturday slaughter was revised higher with the current estimate at 41,000 head.

	BULL SIDE		BEAR SIDE
1)	Cattle futures rejected the lows Thursday, which could indicate selling may have run its course.	1)	Packers may need cattle but may not be aggressive as feedlots need to move cattle and weights are higher.
2)	The packers seem to be short-bought and will need to step up Friday. Cash cattle trade at steady or higher may increase the buying interest in futures.	2)	Feeder cattle futures have fallen substantially and may retest the lows from May 10. The weakness of live cattle may put further pressure on the market.
3)	The liquidation phase may have run its course. The severely oversold market could trigger short-covering into the weekend.	3)	Hog futures made new lows Thursday, which does not suggest the market has found support.
4)	July hogs have a chart gap above the current price that may be filled. A technical bounce may accomplish that task.	4)	Increasing hog weights may indicate hogs are backing up in the country. This leaves packers less aggressive as supplies are readily available.