Livestock prices this week closed lower: LCQ0 -2.850 (-2.86%), LHN0 -2.725 (-4.78%).Â
Aug live cattle on Friday tumbled to a 1-month low and finished the week down -2.86%. A resumption of beef processing is boosting beef supplies and is negative for cattle prices. The CEO of JBS said that U.S. beef and pork processing plants are running at 85% to 90% capacity as they work to get back to normal from coronavirus closures. A decline in wholesale beef prices Thursday to 1-1/2 month low signals weak domestic beef demand and is bearish for cattle prices. Also, beef packer profit margins dropped to a 1-1/2 month low Friday, which may crimp cattle demand from beef packers. Slaughter rates have fallen, which signals lower beef supplies, after Friday’s USDA slaughter data showed 2.657 mln head of cattle processed through May 30, down -26.2% y/y. Foreign demand for U.S. beef has improved with U.S. Jan-Apr beef exports up +6.9% y/y to 1.004 billion lbs.
Jul lean hog prices on Friday closed higher but still finished the week down -4.78%. Jul hogs slumped to a 1-1/2 month low Thursday after Bloomberg reported that Chinese government officials told state-run agricultural companies to pause their purchases of U.S. farm products including U.S. pork. Also, domestic pork demand is a concern after wholesale pork prices dropped to a 1-1/2 month low Wednesday. In addition, pork packer profit margins dropped to a 1-1/2 month low Thursday, which may prompt pork packers to purchase fewer hogs. Pork supplies have fallen after the USDA reported May 21 that U.S. Apr commercial pork production fell -20.9% m/m and -10.5% y/y to 2.031 bln lbs. The Mar 27 USDA Q1 Hogs & Pigs report showed a record U.S. hog herd on Mar 1 at 77.6 million hogs. Foreign demand for U.S. pork is solid as Mexico, the top importer of U.S. pork, has resumed purchases, and China has ramped up its pork buying after its recent Phase-1 agreement. U.S. Jan-Apr pork exports jumped +35.2% to 2.664 bln lbs.Â