As the month of August comes to a close, the livestock markets appear to be changing their current upward price trends. Fundamental changes in supplies in all facets — for both cattle and hogs — halted the recent rallies experienced over the past 30 days.
The supplies beef — and particularly the supplies of pork — have cast a negative shadow over the futures and cash markets during the last part of the month of August. Also, the recent supply numbers of either cattle on feed or the hog inventory reports have indicated bigger numbers available for slaughter for both. Unless we see an increase in demand for either beef or pork, one might conclude that weaker prices for both cattle and hogs might be imminent.
The cattle market has seen a slowdown in the movement of beef the past several weeks and the futures market has reacted with a sell-off in the past couple of weeks. The sluggish action in the futures trade and the packers backing down their bids for live inventory seem to have cast a slightly negative attitude as we move into the month of September.
The export market has been a bit busier; which has helped prices of beef advance in recent weeks. However, with schools not opening because of the Covid virus, the school lunch demand for meat is likely to drop off to some degree. At this time it doesn't appear to be much more than a correction after a couple of months of increased prices in all areas of the trade.
The hog market appears to have a similar fate as the cattle market: lower prices in the weeks ahead. The pork cutout seems to be struggling at the present time as prices have gone sideways recently. The futures market suffered a weekly reversal during the last full week of August which normally signals an end to the trend — which had been up. Therefore, at minimum, there should be a short-term correction in both cash and futures over the next week or so.
If demand for pork remains strong during that period it should help keep the correction in prices to a minimum. The real negative to the market at the present time is the amount of pork in cold storage. There will have to be a decrease in that cold storage number to halt the negative outlook for hog prices and to end the current push toward lower levels.