Livestock prices this week closed lower: LCZ9 -0.425 (-0.36%), LHZ9 -1.975 (-3.13%). Dec live cattle on Friday closed lower and finished the week down by -0.36%. Dec cattle prices whipsawed over the past week as Dec cattle fell to a 1-week low Tuesday and then rose to a 1-week high Thursday. Domestic beef demand concerns pressured cattle prices after wholesale beef prices fell to a 3-week low Friday. Also, packer demand for cattle may wane after beef packer profit margins dropped to a 3-1/2 week low Friday. In addition, supplies are ample after the USDA reported Thursday that U.S. Oct commercial beef production rose +0.4% y/y to 2.44 billion lbs. Cattle prices plummeted to a 2-3/4 year nearest-futures low (V19) Sep 6 on concern about weak demand. Trade tensions between the U.S. and its trading partners are hurting U.S. exports as U.S. Jan-Sep beef exports are down -3.7% y/y to 2.274 bln lbs. Trade optimism had improved slightly last month after Japan removed tariffs on U.S. beef and pork as part of a larger trade pact with Japan. Japan accounts for 25% of all U.S. beef exports. The U.S. Meat Export Federation forecasts 2020 U.S. beef exports will climb 5% y/y. Supplies are projected to be robust as the USDA estimates U.S. 2018/19 beef production will climb +1.0% y/y to a record 27.195 bln lbs. The USDA projects U.S. 2018/19 beef exports will climb +0.3% y/y to 3.151 bln lbs. Friday’s USDA Cold Storage report was bullish for cattle price as U.S. beef in cold storage in Oct fell -0.6% m/m and -9.6% y/y to 466.210 mln lbs.
Friday’s USDA Cattle on Feed report was neutral for cattle prices as the total cattle feedlot herd on Nov 1 rose +1.2% y/y to 11.831 million head, above expectations of +1.1% y/y. Cattle placed on feed in Oct rose +10.2% y/y to 2.477 million head, below expectations of +10.8% y/y. Cattle marketed for slaughter in Oct fell -0.6% y/y to 1.875 million head, a bigger decline than expectations of -0.4% y/y.
Dec lean hog prices on Friday closed higher but still finished the week down by -3.13%. Dec hogs tumbled to a 2-1/4 month low Wednesday as weakness in the cash market undercut hog prices after cash hog prices plunged to a 14-1/2 month low Monday. Also, domestic pork demand has weakened as wholesale pork prices fell to a 2-week low Friday. Supplies are abundant as the USDA reported Thursday that U.S. Oct pork production rose +6.5% y/y to a record 2.61 billion lbs. Also, the Sep 27 Q3 USDA Hogs & Pigs Inventory report showed the total U.S. hog herd as of Sep 1 rose +3.4% y/y to 77.678 million, a record for a September since data began in 1988. Due to Chinese tariffs on U.S. pork, China has mainly imported pork from Europe with European 2019 Jan-Jul pork exports to China up +45% y/y to 1.14 MMT. The USDA FAS projected Sep 11 that European 2020 pork exports to China may climb 4% to a record 3.6 MMT. Escalation of the U.S./China trade conflict hammered hog prices down to an 8-1/2 month nearest-futures low Aug 23 after China announced plans to impose retaliatory tariffs on $75 billion of U.S. goods, including U.S. pork supplies. China’s hog herd has been decimated by African swine fever with about 20% of the herd having been culled. China’s total pig herd in Sep totaled 203.6 mln pigs, down -39.2% y/y. The UN’s Food and Agriculture Organization (FAO) forecasts global 2019 pork production will drop -8.5% to 110.5 MMT due to the spread of the swine flu. Foreign demand for U.S. pork has strengthened with U.S. Jan-Sep pork exports up +3.7% y/y to 4.496 bln lbs. The USDA projects that U.S. 2018/19 pork exports will climb +9.6% y/y to a record 6.441 bln lbs and that U.S. 2018/19 pork production will climb +5.1% y/y to a record 27.662 bln lbs. Friday’s USDA Cold Storage report was bearish for hog prices as U.S. pork in cold storage in Oct rose +2.6% m/m and +7.6% y/y to 614.508 mln lbs.