GENERAL COMMENTS:
Both the live cattle and lean hog contracts continued to trade higher throughout the day as demand keeps pushing the market higher. The feeder cattle contracts were set back by rallying corn prices but will most likely take a run at higher prices again if the corn market can trade steady to lower in the next little while as the momentum behind the cattle market is stellar. Hog prices closed higher again on the National Direct Afternoon Hog Report, up $0.22 with a weighted average of $99.41 on 10,630 head. May corn is up 19 1/4 cents per bushel and May soybean meal is down $2.30. The Dow Jones Industrial Average is up 57.31 points and NASDAQ is up 140.46 points.
LIVE CATTLE:
The live cattle contracts held their ground for the most part through Thursday's close, with only the June 2021 and August 2021 contracts closing lower. April live cattle closed $1.00 higher at $124.15, June live cattle closed $0.25 lower at $125.02 and August live cattle closed $0.10 lower at $124.02. It's unprecedented to see the June contract trading for more than the April contract and depending on how the next couple of days go, April may continue to narrow its discount to the June contract -- if the market's current momentum can sustain, which is very, very likely. This week's cash cattle trade has been an utter joy to watch! As packers must compete for cattle, the market is rejoicing in the sweet feeling of what price discovery can bring and looks to the weeks ahead with high hopes. There's no denying that corn prices are high and that feedlots want to move cattle, but I'd think long and hard before selling cattle too early in the weeks to come, and would really think twice about selling cattle with time, as all of the market's indicators signal that packers are going to be pushed to paying higher prices in the near future.
Thursday's slaughter is estimated at 119,000 head, 6,000 head more than a week ago and 21,000 head more than a year ago. Thursday's cash cattle trade was cleanup in nature and it's likely that the bulk of this week's business is done with.
Thursday's actual slaughter data shared that for the week ending March 27: carcass weights fell again for both steers and heifers. Steers averaged 899 pounds (down 2 pounds from the previous week) and heifers averaged 830 pounds (down 6 pounds from the last report).
Beef net sales of 18,200 mt reported for 2021 were down 3% from the previous week and 14% from the prior four-week average. The three largest buyers were for South Korea (9,100 mt), Japan (4,200 mt) and China (1,900 mt).
Boxed beef prices closed higher: choice up $4.19 ($270.50) and select up $8.64 ($263.83) with a movement of 110 loads (71.08 loads of choice, 11.79 loads of select, 11.45 loads of trim and 15.98 loads of ground beef).
FRIDAY'S CASH CATTLE CALL: Steady. Seeing that a large volume of cattle have traded, Friday's business will most likely be steady with the week's movement.
FEEDER CATTLE:
As the nearby corn contracts closed anywhere from $0.10 to $0.19 per bushel stronger, the feeder cattle contracts bowed down to the market's pressure as cost of gains are becoming problematic. Feedlots are having to change their rations and are looking at supplementing wheat and other resources instead of using corn. April feeders closed $0.50 lower at $147.12, May feeders closed $1.07 lower at $151.60 and August feeders closed $0.27 lower at $161.60. At Torrington Livestock Auction in Torrington, Wyoming, compared to last week, steer calves under 700 pounds traded steady with a few instances of $2.00 higher. Steer calves over 700 pounds traded $3.00 to $6.00 higher. Heifer calves weighing 700 pounds sold $1.00 higher compared to last week. With moisture in the region in the last 10 days, buyers are vigorously hitting the sale barn, looking for stock to go on grass. The CME Feeder Cattle Index for April 7: not available at this time.
LEAN HOGS:
I know that Thursday's export report could have been slightly disappointing to some of you as we naturally crave more, but following last week's marketing-year high, it was highly anticipated that this week's report would be lower. The good news is that packers are continuing to be met with phenomenal pork demand, which is consequently sending pork cutout prices higher and motivating packers to run quick chain speeds and keeping packers active in the cash market. Looking at the month ahead, I'm optimistic that this demand is going to remain strong given that spring temperatures are going to beckon more folks to their grills, which means protein will continue to be in high demand.
It was interesting to see Thursday's pork cutout volume be as small as it was (279.52 loads), which helps ultimately draw attention to cause and effect principles of tight supplies. When supplies are tight like they are now, small volumes can more times than not signal volatile price swings; don't be surprised if the pork cutout value moves around more than normal in the weeks and potentially months to come. Pork cutouts totaled 279.52 loads with 247.35 loads of pork cuts and 32.17 loads of trim. Pork cutout values: up $0.31, $111.00. Thursday's slaughter is estimated at 492,000 head, 1,000 head more than a week ago and 24,000 head more than a week ago. The CME Lean Hog Index for April 6: up $0.13, $100.47.
Thursday's actual slaughter data shared that hog weights are continuing to hold mostly steady. Live weights averaged 291 pounds (steady with a week ago) and dressed weights fell 1 pound to average 217 pounds.
Pork net sales of 33,400 mt reported for 2021 were down 45% from the previous week and 22% from the prior four-week average. The three largest buyers were Mexico (23,000 mt), Japan (3,400 mt) and Australia (1,600 mt).
FRIDAY'S CASH HOG CALL: Steady. With pork demand as strong as it is, packers are going to keep supporting the cash market until they are signaled to do otherwise.
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