Market News

Supply and demand concerns pressure hog futures

At the Chicago Mercantile Exchange, cattle futures ended the day mostly higher despite pressure from outside markets.  Fundamentals were mixed and there are expectations for a friendly Cattle on Feed report on Friday. June live cattle closed $.50 higher at $109.02 and August live cattle closed $.22 higher at $106.65.  August feeder cattle closed $.20 lower at $149.42 and September feeder cattle closed $.05 higher at $149.95.

Direct cash cattle trade was quiet.  Bids are at $108 live and $173 to $175 dressed – a long way from asking prices which are at $115 live and $183-plus dressed.  The widespread could delay any significant trade volume until Thursday or even Friday.

At the Kingsville Livestock Auction in Missouri, receipts are down on the week and up on the year.  Compared to last week, lighter weight feeder steers were steady to $5.00 higher, heavier steers were not well tested but did trade with a higher undertone.  Lightweight feeder heifers were $1 to $3 higher and heavier weight heifers were steady.  The USDA says demand was good and supply was moderate.  Feeder supply included 48 percent steers and 52 percent of the offering was over 600 pounds.  Medium and Large 1 feeder steers 500 to 550 pounds were $177.25 to $185.25 and feeder steers 800 to 850 pounds brought $142 to $143.10.  Medium and Large 1 feeder heifers 500 to 550 pounds brought $149.25 to $158.50 and feeder heifers 650 to 700 pounds brought $144.25 to $149.85.

Boxed beef cutout closed lower on light to moderate demand and heavy offerings.  Choice down $1.41 at $218.29 and Select down $1.25 at $201.05.  Estimated cattle slaughter is 119,000 head – up 5,000 on the week and 2,000 on the year.

Lean hog futures closed sharply lower for a second consecutive day.  With the market expecting record pork production, there are huge concerns about supply and demand.  July lean hogs closed $1.85 lower at $80.02 August contracts closed $2.57 lower at $75.15.

Cash hogs closed lower.  Processing margins have narrowed as the cost of live inventories has increased at a faster rate than pork values.  Buyers are trying to move more numbers at a lower cost all week.  Hog weights dropped slightly for the week – down to 278.5, a 0.2 decline from the previous week.  The market is nervous – there is a large hog supply.  Today’s lower cash trade also pressured contracts lower.  The negative trade talks continue and any disruption to trade would be costly to producers.  Barrows and gilts at the Iowa/Southern Minnesota closed $.84 lower with a range of $76 to $83.50 with a weighted average of $82.51; the Western Corn Belt closed $.93 lower with a range of $76 to $83.50 for a weighted average of $82.35; the Eastern Corn Belt was not reported due to confidentiality; and the National Daily Direct is $.66 lower with a range of $76 to $83.50 for a weighted average of $82.47.

Butcher hogs at the Midwest cash markets are steady to $3 higher at $56 to $58.  At the Interior Missouri Direct, receipts are down on the week and the year.  Barrows and gilts are steady to $3 higher at $68 to $69 with 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.  Prices are $2 higher at $36 to $53 on moderate demand for moderate to heavy offerings.  Barrows and gilts are steady at $51 to $59 with moderate demand for moderate offerings.

Pork cutout values closed firm – up $.17 at $84.88.  The primals were mixed with gains in the picnic, ribs, and bellies and losses in the loin, butts, and hams.

Estimated hog slaughter is 443,000 head – down 3,000 on the week and up 6,000 on the year.