Livestock Market Outlook
Cattle slaughter steadily increasing. The way it is looking, packers may get back to levels close to normal. If this is the case, they won’t have to cancel contracted in June and will start to slowly bring to kill backed up cattle and cattle taken from feedlots and put on forage diets or on pastures will be put into feedlots. With more cattle killed, beef prices will continue to drop especially with consumers wanting to buy least expensive proteins.
Over the past 3 to 4 years beef was in demand from October through December. Consumers had money to buy expensive cuts and there was the return to “office and company” holiday parties that were cancelled 2008/2010. It is highly doubtful there will be a late summer, fall or winter rally. October 2020 Live cattle settled at 102.85, December Live Cattle closed at $105.97, February 2021 settled at $109.50. Going into June and July, beef supplies will increase. Cattle producers should be seriously looking at hedging opportunities.
Volume on live cattle, feeder cattle and lean hogs is drying up. Spec spreading makes up the majority of trading. Cash cattle prices are posted but are taken with a grain of salt. Often when volume dries up, it isn’t long before there is a big move and often a reversal as algorithms take advantage of the small traders in the market. Fundamental traders are waiting to see how the cattle that have been backed up will eventually be priced. Just because they have been delayed going to slaughter doesn’t mean they don’t have a value. At some point, there will be an established cash price. With bigger slaughter, and overweight cattle the outlook for cash cattle prices is lower.
Pork carcass dropped 8.62 Wednesday with loins down 25.96, ribs off 23.89 and hams 4.60 lower. With bellies up just 2.34. Bigger kills and consumers backing off meat, unless exports are big, bigger daily slaughter will pressure pork and cash hogs. Like cattle, hogs are overweight hogs that need to go to slaughter. One thing is for certain, the extreme highs that make up the CME Index are nowhere near what the open market direct hogs will bring.
Looks like high priced pork has chased exporters away. It is possible China may have finished buying for storage. Record export buying from China last year from the EU and Brazil and this year adding in big exports the first quarter from the US along with increasing market hog inventories in China have push pork supplies high enough that the price of pork in China is going down.
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