Market News

Demand uncertainties pressure deferred hog futures

At the Chicago Mercantile Exchange, cattle futures closed mostly lower in a narrow range on light trade activity.  There has been some position squaring ahead of the Cattle on Feed report.  Feeder cattle were also pressured by higher corn prices.  October live cattle closed $.65 lower at $112.45 and December live cattle closed $.07 lower at $117.90.  September feeder cattle closed $.15 higher at $155.67 and October contracts closed $.60 lower at $157.27.

A light direct cash cattle trade has developed in parts of the North with dressed deals marked at $175.  Business so far is generally steady with last week’s weighted average basis in Nebraska.  There have been a few bids at $108 to $109 live, but other than that cattle country has been relatively quiet.  Asking prices are still holding firm at $113 to $114 live and $180 dressed.  Significant trade volume isn’t expected to develop until after the Cattle on Feed report.

At the Mitchell Livestock Auction in South Dakota, receipts are down on the week and the year.  Compared to last week, feeder steers were too lightly test to compare and heifers were mostly steady with instances of a higher undertone.  The USDA says demand was moderate to good.  Feeder supply included 36 percent steers and 98 percent of the offering was over 600 pounds.  Medium and Large 1 feeder steers 705 to 746 pounds brought $156.25 to $163.25 and feeder steers 951 to 954 pounds brought $150.50 to $156.50.  Medium and Large 1 feeder heifers 801 to 844 pounds brought $141.25 to $147.50 and feeder heifers 851 to 893 pounds brought $138.50 to $140.75.

Boxed beef cutout values closed firm to higher on moderate to fairly good demand and moderate to heavy offerings.  Choice up $.27 at $204.52 and Select up $.73 at $194.91.  The Choice/Select spread is $9.61.  Estimated cattle slaughter is 120,000 head – up 1,000 on the week and 2,000 on the year.

Outside of the nearby contracts, lean hog futures closed mostly lower.  There is support from cash trade along with global market concerns as China continues to battle African Swine Fever.  Processing plants in North Carolina are still backed up and have yet to reopen at full capacity.  That might be supportive in the near-term, but is cause for concern as hog weights will likely increase adding more meat to a market that has struggled with demand uncertainties.  October lean hogs closed $1.25 at $61.25 and December lean hogs closed $.37 higher at $58.27.

Cash hogs were closed higher with solid negotiated purchase numbers.  Processing numbers continue to ramp up as facilities regain access following Hurricane Florence.  Once production resumes at full capacity, look for some supply concerns to reenter the market as hog weights will likely be heavier adding more meat to a market that is saturated and has faced demand uncertainties.  The industry is also watching the African Swine Fever situation in China and how it has impacted the global meat market.  Barrows and gilts at the Iowa/Southern Minnesota closed $1.85 higher with a range of $50 to $61 for a weighted average of $59.21; the Western Corn Belt closed $1.89 higher with a range of $50 to $61 for a weighted average of $59.16; the Eastern Corn Belt was not reported due to confidentiality; and the National Daily Direct closed $2.17 higher with a range of $50 to $61 for a weighted average of $58.40.

At Illinois, slaughter sow receipts are down on the week and the year. Prices are steady at $16 to $29 with light to moderate demand and offerings.  Barrow and gilt prices are $2 higher at $29 to $40.

Pork cutout values closed firm – up $.56 at $78.95.  The primals were mostly lower, but bellies closed more than $4 higher and loins closed more than $2 higher.  The rest of the primals were weak to lower.

Estimated hog slaughter is 437,000 head – up 26,000 on the week and down 21,000 on the year.