Market News

Export concerns pressure cattle futures

At the Chicago Mercantile Exchange, live cattle futures closed lower as the sell-off continued.  Worries about a drop-off in pork exports is carrying over into the cattle complex as more pork domestically would create more competition for US beef products with consumers.   Feeder cattle contracts bounced off of Monday’s large losses.  June live cattle closed $.05 lower at $105.92 and August contracts closed $.47 at $102.42.  August feeder cattle closed $.32 higher at $146.10 and September contracts closed $.17 higher at $146.67.

Direct cash cattle trade has been fairly quiet with a few scattered bids reported in parts of cattle country.  Both bids and asking prices are not well defined – but some bids have been reported at $105 live and $172 dressed.  More definition could shape up sometime on Wednesday -but significant trade volume won’t likely happen until Thursday or Friday.

At the close, at the Oklahoma National Stockyards, receipts were up on the week and the year.  Feeder steers and heifers traded unevenly steady and 500 to 600-pound calves were $1 to $4 lower on a light test with lightweight calves not well tested.  The USDA says demand was moderate to good with quality mostly plain to average.  Drought conditions have taken a bigger toll on cattle in parts of the country and a large number of producers have been forced to sell their inventories earlier than normal.  Feeder supply included 71 percent steers and 69 percent of the offering was over 600 pounds.  Medium and Large 1 feeder steers 600 to 700 pounds brought $151 to $157.50 and feeder steers 900 to 1000 pounds brought $124 to $135.85.  Medium and Large 1 feeder heifers 600 to 700 pounds brought $131 to $141 and feeder heifers 800 to 900 pounds brought $118 to $131.25.

Boxed beef cutout values closed lower on light to moderate demand and moderate offerings.  Choice closed $.86 lower at $216.83 and Select closed $.32 lower at $201.57.  The Choice/Select spread closed at $15.26.  Estimated cattle slaughter is 115,000 head – down 5,000 on the week and 2,000 on the year.

Lean hog futures closed sharply higher on short covering with increased buying interest as the end of the quarter nears.  The export picture is still shaky as trade disputes with China, Mexico, and Canada are ongoing.  The market is also preparing for the latest Hogs and Pigs report which comes out on Thursday.  July lean hogs closed $1.05 higher at $79.12 August contracts are up $1.15 at $74.75.

Cash hogs ended the day lower. It has been much of the same this week.  Narrowing processing margins have buyers working hard to move more numbers at lower costs.  Chain speed has slowed – partially because of the reduction of market-ready numbers and partially because of those weaker packer margins.  And the market remains nervous with the large hog supply and continued negative trade rhetoric.  Any disruption to demand would be costly to US pork producers.  Barrows and gilts at Iowa/Southern Minnesota closed $.44 lower with a range of $75 to $79 with a weighted average of $77.61; the Western Corn Belt closed $.34 lower with a range of $71 to $79 for an average for $77.45; the Eastern Corn Belt was not reported due to confidentiality; and the National Daily closed $1.32 lower with a range of $71 to $79.04 for a weighted average of $78.08.

Butcher hogs at the Zumbrota, Minnesota market are $1 lower at $53 and the markets in Wisconsin and Iowa are steady at $60.  At the Interior Missouri Direct, receipts are up on the week and down on the year.  Barrows and gilts are steady at $69 to $70 on light to moderate supply and demand.  Sows are steady at $34 to $44.  At Illinois, slaughter sow receipts are up on the week and the year.  Sow prices are $1 lower at $34 to $48 with moderate demand for moderate to heavy offerings.  Barrows and gilts are $2 lower at $47 to $56 with moderate demand for moderate offerings.

Pork cutout values closed higher – up $.87 at $87.41.  The primals were mostly higher, led by the ribs, the loins, and the bellies.  Estimated hog slaughter is 447,000, down 1,000 on the week and up 7,000 on the year.