Changes in livestock futures spreads from month to month paint the picture of how market fundamentals are moving.

  • Live Cattle
    • The five major futures spreads were all near or below previous 5-year low weekly closes last week, meaning fundamentals remain bearish out through spring 2023.
      • The June-August spread weakened by $1.675 during April
        • Telling us to expect a large cattle on feed number as of May 1 in the next report
        • It also suggests April marketings were likely on the low side
      • The August-October spread weakened by $0.85 during April
        • Indicating April placements were likely solid again
      • The October-December spread weakened by $1.10 during April
        • Also suggesting April placements were large, possibly with some lighter cattle moved to yards due to terrible pasture conditions across the US Central and Southern Plains
  • Lean Hogs
    • The five major futures spreads were mixed at the end of last week.
      • The big news was the collapse in the June-August, indicating a quick move to bearish short-term fundamentals.
      • While both the August-October and October-December spreads finished the week/month at bullish levels, we need to keep an eye out for a Down Escalator Simulator to develop.
      • The farther out December-February and February-April spreads closed in neutral territory as commercial traders take a wait-and-see approach.