Tuesday Morning Livestock Market Summary - Traders Look for Stability in Post-Weekend Activity

General Comments:

Activity levels in the cash cattle market are expected to remain sluggish Tuesday following the holiday weekend. Initial showlist distribution and inventory taking is likely Tuesday morning, but at this point, bids and asking prices are likely to be pushed off until midweek or later. The focus on cash trade last week will now move to the morning mandatory report in order to determine final numbers sold last week and overall average prices. Last week's cash trade developed through most of the week with wide price ranges seen once again. This makes it very hard to estimate the overall average price paid for cattle until final numbers are released. Traders will have the first chance to trade the May Cattle on Feed report Tuesday morning, which could leave markets generally unsettled. Although significantly lower levels were seen from year-ago results in all three categories, the report deviated little from pre-report estimates. This lack of change from market expectations could minimize the overall impact on price levels during morning trade as these reductions have likely already been factored into the market. Traders are also looking for more concrete meat demand news over the weekend. Given that some food service businesses are opening up, and retail demand remains strong for beef products, the focus on regaining consumer movement of beef, even at higher prices will be closely followed in the coming days and weeks. Tuesday slaughter is expected at 103,000 head.

Mixed trade is expected early Tuesday morning on uncertainty about how traders will respond to the long holiday weekend and late week pressure in the complex before the long weekend. Packing plants continue to slowly but steadily increase overall numbers of hogs moving through the system, which is expected to help minimize the backup of market-ready hogs, but the higher meat values at retail locations could still limit overall widespread gains in consumer demand through the upcoming weeks. There is more focus on recovery efforts in the food service industry, but given continued restrictions in many areas, and the economic pains brought about by the surging unemployment levels, it may be a very slow and gradual road to recovery for many restaurants. Technically, lean hog futures continue to hold within the sideways trading pattern with spot June futures over $15 per cwt above support levels, but nearly $7 below recent resistance levels. It will likely take a significant and abrupt change in overall market direction to break prices out of this current pattern. Cash hog bids are expected $1 lower to $1 per cwt higher with most bids steady to 50 cents higher. Slaughter Tuesday is expected at 403,000 head.

	BULL SIDE		BEAR SIDE
1)	A total of 1.43 million feeder cattle were placed in feedlots during April. This is 78% of year-ago levels, indicating significantly reduced placements which were expected, but will significantly tighten the long-term supply outlook for cattle through the end of the year.	1)	Significant reductions in cattle marketed from feedlots was no surprise in Friday's report. But with only 76% of year-ago levels sold, the focus once again shifts to the increased age and condition of cattle in feedlots around the nation and how this will impact quality and production levels in the coming weeks and months.
2)	Cash cattle trade last week traded as high as $190 per cwt dressed and $120 per cwt live basis. Although given the wide trading range through the week, it is uncertain the overall weekly average price at this point, but the focus of renewed buyer support is building increased momentum in cash market support despite the backlog of market-ready cattle needing to be shipped to processors.	2)	Limited trade volume surrounding the holiday weekend could leave traders generally sluggish through the early part of the week. This may limit the impact on overall inventory or beef demand in the near future as traders focus on outside market positioning.
3)	Growing expectations of demand support for pork products through the early summer months continue to focus on the ability to bring additional, but limited buying support back into the complex.	3)	Late week pressure in cash hog prices and wholesale pork values could limit price support during early week trade. This focus may continue to spark uncertainty in lean hog futures due to expected sluggish trade volumes Tuesday.
4)	Slow but steady growth in hog processing speeds is expected to continue through the end of the month. Although it may be a long time until pork plants see daily hog runs near pre-covid levels, the ability to show steady improvement is creating underlying market support.	4)	Continued back and forth bickering between the U.S and China on multiple issues continues to add concern about the ability to instill and increase overall pork exports to China over the coming weeks. Although overall pork imports by China have seen significant increases, the ability for the U.S to get a significantly larger market share of these imports has been limited at best.

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Friday Closing Livestock Market Summary - Livestock Contracts Trade Mixed Into the Three-Day Weekend

GENERAL COMMENTS:

A three-day weekend might be exactly what livestock contracts need. Seeming to be weighed down by the mess of COVID-19, livestock contracts aren't able to do much of anything until the backlog of cattle and hogs is thoroughly processed and the market is current again. Hog prices closed lower on the National Direct Afternoon Hog Report, down $0.68 with a weighted average of $38.68 on 4,694 head. July corn is up 1/4 cent per bushel and July soybean meal is up $1.60. The Dow Jones Industrial Average is down 8.96 points and NASDAQ is up 39.70 points.

From Friday to Friday, livestock futures scored the following changes: June live cattle up $0.70, August live cattle down $0.50; August feeder cattle down $2.27, September feeder cattle down $2.60; June lean hogs up $0.90, July lean hogs down $1.85.

LIVE CATTLE:

Live cattle contracts closed the week mixed with some deferred contracts trying to meekly rally while nearby contracts felt the pressure of the resistance at $100 all throughout the week. June live cattle closed $1.10 lower at $97.70, August live cattle closed $0.90 lower at $97.32 and October live cattle closed $0.50 lower at $102.75. Cash cattle trade was quiet all throughout Friday, with the day serving as mostly a clean up day. The market was strong again this week as the prices were able to jump $10 to $11 in both the Northern and Southern Plains. Friday's slaughter is estimated at 102,000 head, 11,000 head more than a week ago and 18,000 head less than a year ago. Saturday's slaughter is projected to be around 56,000 head.

Friday's Cattle on Feed Report came as no surprise, as both placement and marektings were lower. Cattle and calves on feed were down 5% with 11.2 million head on feed. Placements totaled 1.43 million head, which was down 22% from 2019 and the second lowest the report has ever been for April placements since the series began in 1996. Marketings totaled 1.46 million head, down 24% from 2019, the smallest ever recorded since the series began. It's evident that COVID-19 has crippled the beef industry from every angle and unfortunately these problems are going to take longer to fix than many realize.

Boxed beef prices close lower: choice down $5.07 ($396.74) and select down $8.35 ($374.18) with a movement of 101 loads (46.14 loads of choice, 13.65 loads of select, 9.00 loads of trim and 32.06 loads of ground beef).

TUESDAY'S CASH CATTLE CALL: It all depends on slaughter. Last week packers bought right at 103,000 head and this week they were fairly aggressive again. The industry needs the market to push as hard as possible to get to normal levels so that carry-over from the last month -- going on two months now -- can be worked through and the market can trade in some fashion of normal.

FEEDER CATTLE:

Feeder cattle contracts trended lower throughout the week but were able to close slightly higher come Friday afternoon. August feeders closed $0.07 lower at $128.80, September feeders closed $0.02 higher at $130.15 and October feeders closed $0.07 higher at $131.25. Some sale barns have seen some rain in the later part of the week, which didn't help their prices, but for the most part, feeder cattle traded strong this week as buyers realize grass season is upon us and it's time to kick cattle out. Given the sheer turmoil feedlots are enduring, with too many fat cattle sitting in pens, having the availability to go to grass is almost like a free ticket to heaven at this point. The CME feeder cattle index 5/21/2020: down $0.36, $126.24.

LEAN HOGS:

Coming off Thursday's rally, the lean hog market closed in a disappointing manner, as the market closed $0.57 to $1.37 lower. June lean hogs closed $0.57 lower at $58.77, July lean hogs closed $1.27 lower at $55.90 and August lean hogs closed $1.00 lower at $4.27. Packers opted to sit Friday mostly out of the market as they head into the three-day weekend. Cash hog prices were softer and only 4,694 head, which isn't much considering it's a three-day weekend. Pork cutouts total 483.44 loads with 458.14 loads of pork cuts and 25.29 loads of trim. Pork cutout values: down $1.10, $96.75. Friday's slaughter is estimated at 380,000 head, 15,000 head more than a week ago and 24,000 head less than a year ago. Saturday's slaughter is projected to be around 170,000 head. The CME lean hog index 5/20/2020: down $1.39, $64.59.

TUESDAY'S CASH HOG CALL: Steady. Cash prices will most likely continue to teeter back and forth as packers manage needing more supplies and needing to work through the hogs they have spoken for.

#completecalfcare

Friday Morning Livestock Market Summary - Mixed Trade Expected

General Comments:

Cash cattle activity continues to trickle into the market with another round of light activity on Thursday, but in the same price range as earlier in the week. Live deals are at $115 to $120 per cwt, while dressed sales are reported at $180 to $190 per cwt. This underlying support in the market follows the focus on packers slowly increasing daily and weekly slaughter levels as the industry tries to move back to a more normal status. There is still a backlog of market-ready cattle due to the previous production losses during the month of April, but traders are closely focusing on Friday afternoon's Cattle on Feed report, and weight breakdown summaries in order to get a better idea of the overall feedlot situation through the early summer months. The monthly Livestock Slaughter report posted total beef production falling 25% from March levels and 20% from year-ago production. Total numbers of cattle slaughtered in April fell 21% from year-ago levels, as overall weights increased 2%. The focus through most of the futures trade will be to confirm the production losses in April, while looking forward to the upcoming Cattle on Feed report. Because of the holiday Monday, traders will not be able to trade Cattle on Feed report data until Tuesday morning, potentially creating more than usual anticipated adjustments through the Friday session. Friday slaughter is expected at 101,000 head.

Movement in the lean hog complex has been a mixed bag through the week with prices moving in a choppy and generally inconsistent pattern due to traders trying to adjust to current supplies while anticipating future demand. Strong triple-digit gains in nearby lean hog futures continues to focus on the underlying need for packers to gain access to daily supplies that are slowly growing. But this could limit additional direction during the next few days. Pork slaughter production in April was significantly reduced, which anyone with any knowledge of the pork industry already knows due to plant closures because of COVID-19. But April production levels were interesting as they fell 21% from March levels and were down 10% from April 2019 totals. It is still very interesting that even with the April production losses, overall year-to-date production is 104% year-ago levels. Futures are expected to remain mixed with a combination of follow-through, late week buying and end-of-the-week position covering as markets will remain closed Monday due to the holiday. Cash hog bids are expected $1 lower to $1 per cwt higher with most bids steady to 50 cents higher. Slaughter Friday is expected at 402,000 head. Saturday runs are expected near 158,000 head.

	BULL SIDE		BEAR SIDE
1)	Continued strong cash cattle trade is pointing to increased packer buyer support. This may continue to add increased underlying support next week.	1)	Despite the pullback in slaughter numbers and overall beef production in April due to coronavirus issues, beef supplies in cold storage is just 2% lower than March levels, but 14% above year-ago levels. Total year-to-date beef production remains 1% above 2019 levels, despite the 25% reduction from March.
2)	Cattle placements and overall on feed numbers are expected to see significant reductions in the afternoon report. This should help to add additional underlying support to the market going into the report. But report levels will likely need to be in the lower end of the estimated range in order to get a strong market reaction to the report due to much of this reduction already being factored into the market.	2)	The lack of consistency in trade estimated going into the Cattle on Feed report, may create some additional uncertainty as the wide range could leave little confidence of just how much lower numbers will be once the report is released.
3)	Cash hog values posted strong gains Thursday focusing on the need for packers to quickly and aggressively regain access to hogs as they continue to push for higher production levels over the upcoming days and weeks.	3)	Even with strong production losses in the pork processing segment in April, overall year-to-date pork output is 4% above 2019 levels. This creates a somber picture of just how much pork is available to the market, knowing that growing numbers of market-ready hogs are being backed up through the system, which could keep overall pork supplies burdensome through most of the year.
4)	Pork slaughter in April fell sharply from March levels and year-ago totals. Total pork production of 2 billion pounds is a 21% reduction from March levels. This will continue to tighten the supply levels through most of the summer.	4)	Total pork in cold storage remained stable with March levels. This is after overall pork production from packing plants fell 21% in the same time period, pointing to the significant reduction in overall pork demand through the month of April.

#completecalfcare

Thursday Midday Livestock Market Summary - Livestock Contracts Trade Lukewarm

General Comments

As the complex moves gingerly, the indecisive nature of this week has each complex toying with the idea of trading higher in various ranges throughout each contract, but not enough substantial support has developed to allow the market to take off and trade fully higher. July corn is down 1 3/4 cents per bushel and July soybean meal is down $3.30. The Dow Jones Industrial Average is down 55.65 points and NASDAQ is down 51.13 points.

LIVE CATTLE

As the day progresses the live cattle complex continues to trade higher and warm up as more time goes on, and if more cash cattle trade can develop Thursday afternoon -- the support needed for the nearby contracts to push closer to $100 may be there. June live cattle are up $0.10 at $98.50, August live cattle are up $0.20 at $97.82 and October live cattle are down $0.10 at $99.52. Some cash cattle trade has developed in Colorado at $117, but the rest of the country is pretty quiet. Asking prices are around $120 to $125 in the South, and $190 to $195 in the North.

Boxed beef prices are lower: choice down $2.16 ($401.88) and select down $6.37 ($384.81) with a movement of 64 loads (37.55 loads of choice, 8.47 loads of select, zero loads of trim and 18.43 loads of ground beef).

FEEDER CATTLE

The feeder cattle complex is unenthused with the day and trades mostly lower. August feeder cattle are down $0.10 at $128.90, September feeder cattle are down $0.45 at $130.05 and October feeders are down $0.45 at $131.02. As the live cattle contracts continue to build, the feeder cattle contracts may follow in their shadow once the complex sees that the opportunity is there and able to be capitalized on throughout the afternoon.

LEAN HOGS

The lean hog index is seeing some support develop in nearby contracts while the deferred contracts trade moderately lower still. June lean hogs are up $2.07 at $58.95, July lean hogs are up $1.20 at $56.95 and August lean hogs are up $0.57 at $55.12. The hog industry has its eye on the retail sector and sees that with beef prices jumping to astronomical levels that there are customers to be gained as many don't want to pay the exponentially higher prices for beef.

The projected lean hog index for 5/20/2020 is down $1.39 at $64.59 and the actual index for 5/19/2020 is down $1.06 at $65.98. Hog prices are lower on the National Direct Morning Hog Report -- down $0.68 with a weighted average of $32.27, ranging from $33.00 to $39.00 on 4,245 head and a five-day rolling average of $36.79. Pork cutouts total 173.14 loads with 139.66 loads of pork cuts and 33.48 loads of trim. Pork cutout values: down $0.09, $99.83.

#completeherdhealth