April live cattle (LEJ26) futures on Friday fell $4.675 to $232.225 and hit a five-week low. For the week, April live cattle lost $9.875. March feeder cattle (GFH26) futures Friday lost $6.225 to $355.425 and hit a four-week low. For the week, March feeders were down $12.60.
It was a dreadful end to the trading week and month for the live and feeder cattle futures bulls. Friday’s technically bearish weekly and monthly low closes produced serious near-term technical damage to suggest that market tops are in place. A hot producer price index report issued Friday and a risk-off day in the general marketplace were also bearish elements for the cattle markets.
Lower cash cattle trading activity late last week was also negative for futures. More active cash cattle were reported by USDA at midday Friday, with the agency saying steers averaged $243.51 and heifers averaged $243.21. The USDA said the prior week’s average cash cattle trade was $246.91.
Beef packers’ cutting margins are presently in the red, which will likely limit their cash cattle bids in the near term. However, reduced slaughter levels have pushed Choice boxed beef to near non-pandemic seasonal records, easing some pressure on the deeply negative packer margins. The closure of a 50,000-head capacity yard in Texas is the most recent example of a bleak landscape for the industry.
Historically tight cattle supplies on feedlots, as confirmed by the late-February monthly USDA cattle-on-feed report, and still-strong consumer demand for beef at the meat counter will continue to be the main fundamental drivers in the coming months, likely limiting the price downside in futures, cash cattle, and beef markets.
Cattle futures traders will be more closely watching the U.S. stock indexes in the coming weeks. If the stock indexes continue to wobble, and if notions grow that the Federal Reserve may not be able to lower interest rates, consumer confidence could be dented, which in turn could reduce demand for beef at the meat counter.
April lean hog (HEJ26) futures on Friday closed steady at $95.725 and for the week were up $2.05. The lean hog futures market early Friday saw a modest rebound from Thursday’s losses but could not hold those gains into the close. Still, hog futures performed pretty well given the sharp losses suffered in the cattle futures markets in the past two trading sessions.
