Market News

Fundamentals pressure lean hog futures

At the Chicago Mercantile Exchange, cattle futures ended the day mixed in tight trading ranges ahead of Friday’s Cold Storage and Cattle on Feed report.  The slow cash cattle trade didn’t help futures contracts find any direction.  Both the Cold Storage and Cattle on Feed reports were viewed as negative.  June live cattle closed $.37 lower at $108.27 and August contracts closed $.22 lower at $105.90.  August feeder cattle closed $.72 higher at $149.20 and September contracts closed $.57 higher at $149.82.

A light to moderate direct cash cattle trade developed in many areas Friday afternoon with live deals at $109 to $110 – $2 to $3 lower than last week’s weight average basis in the South.  Dressed deals were few and far between at $172 to $173 – $4 to $5 lower than last week’s weighted average basis in Nebraska.

At the Mitchell Livestock Auction in South Dakota, receipts are up on the week and the year.  Compared to last week feeder steers were $1 to $2 higher and heifers, where comparisons could be made, were unevenly steady.  The USDA says demand was good for the large offering of backgrounded yearling steers and heifers and demand was very good for yearlings that weren’t over conditioned.  Overall, the quality was attractive.  Feeder supply included 56 percent steers, and nearly 100 percent of the offering was over 600 pounds.  Medium and Large 1 feeder steers 864 to 895 pounds brought $136.30 to $145.80 and feeder steers 902 to 926 brought $130.75 to $140.  Medium and Large 1 feeder heifers 808 to 843 pounds brought $126.25 to $135 and feeder heifers 909 to 946 pounds brought $116 to $118.80.

At the Nebraska Hay Market, news crop large squares of alfalfa sold steady on a thin test and old crop grass hay sold steady.  Ground and delivered forages and dehy pellets sold steady.  The USDA says demand as moderate to good. Rain showers moved through much of the state this past week.  There are some producers still working on first cutting and others getting ready to start second cutting.  In Eastern/Central Nebraska, premium large square bales brought $180 and grass hay, new crop premium large square bales brought $150.  Old crop good large round bales brought $105.  Premium small square bales brought $150 and dehy alfalfa pellets, 17 percent protein brought $240.  In the Platte Valley area of Nebraska, Alfalfa good large rounds brought $105 to $110.  Grass hay, new crop premium large round bales brought $140; ground and delivered alfalfa brought $130 to $140.  Dehy alfalfa pellets 17 percent protein brought $215.  In Western Nebraska, alfalfa new crop good large round and large square bales brought $130.  Sun-cured alfalfa pellets 15 percent protein brought $210 to $240.

Boxed beef cutout closed mixed on light to moderate demand and light offerings.  Choice down $.25 at $217.16 and Select $.41 higher at $202.02.  The Choice/Select spread closed at $15.14.  Estimated cattle slaughter is 119,000 head – up 1,000 on the week and down 1,000 on the year.  Saturday’s estimated kill is 67,000 head – down 1,000 on the week and up 16,000 on the year.

Lean hog futures ended a negative week with another round of losses.  The uncertainties surrounding trade some of the largest US pork buyers has the market nervous.  The downside potential increases the longer the negative trade rhetoric goes.  The Cold Storage report was also viewed as negative to hog contracts.  July lean hogs closed $.65 lower at $79.82 and August contracts closed $.35 lower at $75.37.

Cash hogs ended the day sharply lower.  Processing margins have narrowed, and buyers have been successful in lowering costs to move numbers this week.  Chain speed has slowed with no Saturday slaughter planned.  And finally – the market is nervous – with the large hog supply and the ongoing negative trade rhetoric.  Any disruption to trade would be costly to producers.  The next set of Quarterly Hogs and Pigs report comes out next Thursday.   Barrows and gilts at the Iowa/Southern Minnesota closed $2.61 lower with a range of $74 to $81 with a weighted average of $79.02; the Western Corn Belt closed $2.15 lower with a range of $73 to $81.49 for a weighted average of $79.15; the Eastern Corn Belt was not reported due to confidentiality; and the National Daily Direct is $1.61 lower with a range of $73 to $81.49 for a weighted average of $79.97.

The USDA says early-weaned pigs were steady.  All feeder pigs were $2.00 per head lower. Demand was moderate for moderate offerings.  Receipts included 57 percent formulated prices.  Total composite formula rage was $26.77 to $44.00 with an average of $34.93.  Total composite cash range was $9.00 to $25 with a weighted average of $18.14.  The average for all early weaned pigs was $28.63 and the average for all feeder pigs was $39.89.

Butcher hogs at the Midwest cash markets are $1 higher at $59.  At the Interior Missouri Direct, barrows and gilts are steady at $68 to $69 with light to moderate supply and demand.  Sows are steady at $34 to $44.  For the week, barrows and gilts are $3 to $5 higher at sows are $2 to $7 higher.  At Illinois, slaughter sow prices were steady at $35 to $53 with moderate demand for moderate offerings.  Barrows and gilts were steady at $49 to $60 with moderate demand for moderate offerings.

Pork value closed $.60 higher at $85.64.  The primals are mixed with the largest gains in the loins, the ribs, and the bellies.  Estimated hog slaughter is 424,000 head – up 12,000 on the week and 5,000 on the year.  Saturday’s estimated kill is 0, a 21,000 head drop from last week and even on the year.