GENERAL COMMENTS:
To say that this past week was anything less than exhausting and painfully brutal for the cattle contracts would simply be untrue. The sharp spike in corn prices sent the feeder cattle complex crashing lower, and the live cattle market ended up absorbing the market's negative morale as well. Meanwhile, the lean hog contracts continued to rally most of the week as demand continues to support prices. Hog prices closed higher on the National Direct Afternoon Hog Report, up $0.89 with a weighted average of $108.19 on 3,120 head. May corn is up 5 cents per bushel and July soybean meal is up $0.50. The Dow Jones Industrial Average is up 227.59 points and NASDAQ is up 198.40 points.
From Friday to Friday, livestock futures scored the following changes: April live cattle down $3.00, June live cattle down $3.45; April feeder cattle down $5.78, May feeder cattle down $6.05; June lean hogs up $4.03, July lean hogs up $4.83.
LIVE CATTLE:
Friday's live cattle contracts may have been able to close mostly higher, but it's hard to get overly excited about Friday's higher close when the week was sold out by nearly every sector -- traders left the market to drift lower right alongside the cash cattle market even though boxed beef prices are higher and slaughter speeds ran vigorously. April live cattle closed $0.47 lower at $117.85, June live cattle closed $0.12 lower at $115.72 and August live cattle closed $0.12 higher at $116.85.
This past week's sorry cash cattle trade comes as a raw thorn pushed into feedlots' sides. Beef demand is exceptional, and historically the market would be looking to make a spring-time high, but yet cash cattle prices are trailing lower. This week's lower cash cattle trade boils down to the fact that feedlots hold insufficient leverage in the market to demand the prices they need. And with corn prices rallying, feedlots continue to see profitability sucked out of their bottom line nearly as quick as this week's corn market shot higher. This week, Northern dressed cattle sold for $190 to $195, which is $4.00 less than a week ago. Southern live cattle sold for $118 to $120, mostly at $119 to $120, which is roughly steady to $1.50 lower than last week's average. Friday's slaughter is estimated at 113,000 head, steady with a week ago and incomparable to 2020 with COVID-19 difficulties. Saturday's slaughter is projected to be around 74,000 head, 4,000 head more than a week ago.
Boxed beef prices continued to track higher throughout the week despite the hurdles that the cattle market had to absorb. Choice cuts averaged $280.19 (up $6.77 from last week) and select cuts averaged $271.46 (up $3.95 from last week) and the week's movement of cuts, grinds and trim totaled 513 loads.
Friday's Cattle on Feed report was expected to be a wildcard for the market, as when compared to 2020 data the 2021 estimates were alarmingly higher. But comparing 2021 data to that of 2020 isn't sensible as 2020 was land-blasted from the onset of COVID-19.
Boxed beef prices closed mixed: choice up $1.46 ($283.77) and select down $1.56 ($272.13) with a movement of 124 loads (79.42 loads of choice, 10.95 loads of select, 14.25 loads of trim and 19.65 loads of ground beef).
MONDAY'S CASH CATTLE CALL: Lower. As much as I'd like to say it wasn't so, next week's cash cattle trade is likely to be lower as packers sit on ample supplies of cattle that they've procured for the weeks ahead.
FEEDER CATTLE:
The feeder cattle contracts may have closed fully higher Friday afternoon, but the week was far from perfect. With corn prices skyrocketing and cost of gains becoming outlandish, cattle buyers had to step gingerly into sales this week and monitor their expenses meticulously. The feeder cattle contracts were able to close higher Friday afternoon as the corn market closed mostly lower, but it remains a force to be reckoned with. April feeders closed $1.60 lower at $133.85, May feeders closed $0.65 lower at $137.67 and August feeders closed $1.52 lower at $149.90.
Oklahoma's Weekly Cattle Auction Summary shared that, compared to last week, the state sold feeder steers and heifers mostly $2.00 to $6.00 lower, and there were some instances of even $8.00 lower. Steer and heifer calves traded $3.00 to $6.00 lower. Demand was only moderate compared to the weeks past as cost of gains are a limiting factor to buyer's aggression in the market. The CME Feeder Cattle Index for April 22: down $1.17, $136.36.
LEAN HOGS:
The lean hog market had some pressure to fight this week, but thankfully tight supplies and exceptional demand is a tough market to push against. June lean hogs closed $2.17 higher at $105.72, July lean hogs closed $2.27 higher at $104.52 and August lean hogs closed $2.22 higher at $101.15. You'll notice that Saturday's kill is projected to be smaller than last weeks and that simply comes down to the fact that supplies are incredibly thin right now for market-ready hogs. Pork cutouts totaled 222.28 loads with 197.81 loads of pork cuts and 24.47 loads of trim. Pork cutout values: down $2.76, $111.94. Friday's slaughter is estimated at 474,000 head, 6,000 head more than a week ago and incomparable to 2020 with COVID-19 difficulties. Saturday's slaughter is projected to be around 63,000 head, 12,000 head less than a week ago. The CME Lean Hog Index for April 21: up $0.87, $105.99.
MONDAY'S CASH HOG CALL: Steady to somewhat higher. With supplies being as tight as they are, packers are going to have to continue to scout the cash market in order to successfully fill all their needs.
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