GENERAL COMMENTS:
The live cattle contracts are leery of trading too positively when they sense a top in the boxed beef market close and the feeder cattle contracts closed lower amid a strong corn rally. The lean hog contracts closed higher as the market's support continues to surprise everyone. Hog prices closed higher on the National Direct Afternoon Hog Report, up $2.30 with a weighted average of $107.21 on 8,718 head. July corn is up 40 cents per bushel and July soybean meal is up $6.50. The Dow Jones Industrial Average is up 141.59 points and NASDAQ is down 1.72 points.
LIVE CATTLE:
The live cattle contracts played Thursday's trade timidly but were able to close mildly higher. June live cattle closed $0.10 lower at $116.35, August live cattle closed $0.10 higher at $119.42 and October live cattle closed $0.10 higher at $124.17. With very little trade developing throughout the cash cattle market and the futures contracts tip-toeing gingerly throughout the day, the market mimicked the excitement of watching paint dry. It's looking like the bulk of this week's cash cattle trade is done with, though a few pens could trade Friday as clean up. Southern live deals this past week have been marked at $116 to $120, mostly $119 to $120 which is steady to $1.00 higher and Northern cattle have traded from $187 to $192, mostly $191, which is fully steady. Thursday's slaughter is estimated at 121,000 head, 2,000 head more than a week ago.
Beef net sales of 27,900 mt reported for 2021 were up 19% from the previous week and 45% from the prior four-week average. The three largest buyers were China (9,000 mt), Japan (8,800 mt) and South Korea (6,000 mt). Last week's export report needed to be adjusted as the shipment to the Netherlands were adjusted down 33,589 mt for the week ending May 13.
Thursday's actual slaughter data shared that, for the week ending May 15, steers carcasses lost 2 pounds from the previous week to average 894 pounds, and heifers saw a big drop in weights, down 7 pounds from the previous week to average 819 pounds.
Boxed beef prices closed higher: choice up $0.49 ($329.98) and select up $0.05 ($304.10) with a movement of 102 loads (59.67 loads of choice, 21.87 loads of select, 13.48 loads of trim and 6.69 loads of ground beef).
FRIDAY'S CASH CATTLE CALL: Steady. It's unlikely that very many cattle will trade come Friday; if some do, they will be for steady prices with the week's trend.
FEEDER CATTLE:
The $0.34 to $0.40 rally in the nearby corn contracts took the wind out of the feeder cattle contracts rally and left the market closing fully lower. August feeders closed $2.35 lower at $152.85, September feeders closed $2.27 lower at $154.82 and October feeders closed $2.22 lower at $156.25. With the May contract expiring Thursday afternoon at $136.30 and the spot market now being the highly sought-after August contract, $152.85 looks a lot better to producers than a $136.30 does. The feeder cattle contracts are cash settled, so producers pray that the cash market does more rallying, opposed to the future market regressing -- but with corn prices as volatile as they are, a $20 rally isn't going to come without challenges. At Southern Oklahoma Livestock Auction in Ada, Oklahoma, compared to last week, steers over 600 pounds sold steady to $2.00 higher and steers under 600 pounds sold $8.00 to $10.00 higher. Heifers over 600 pounds sold steady to $3.00 higher and heifers under 600 pounds sold $4.00 to $10.00 higher. The CME Feeder Cattle Index for May 26: up $0.22, $136.57.
LEAN HOGS:
Even though the morning challenged the lean hog contracts, the day's supportive nature of higher pork cutout values, a rigorous slaughter pace and strong cash demand all helped push the contracts higher. June lean hogs closed $0.45 higher at $115.72, July lean hogs closed $0.30 higher at $116.70 and August lean hogs closed $0.22 higher at $113.82. Pork cutouts totaled 310.52 loads with 280.04 loads of pork cuts and 30.48 loads of trim. Pork cutout values: up $2.39, $126.37. Thursday's slaughter is estimated at 481,000 head, 4,000 head more than a week ago. The CME Lean Hog Index for May 25: up $0.30, $112.50.
Pork net sales of 45,900 mt reported for 2021 were up noticeably from the previous week and up 56% from the prior four-week average. The three primary buyers were Mexico (21,800 mt), China (9,600 mt) and Japan (7,700 mt).
Thursday's actual slaughter data shared that, for the week ending May 15, hog weights remained steady from the previous week. Live carcasses averaged 288 pounds and dressed carcasses averaged 215 pounds.
FRIDAY'S CASH HOG CALL: Steady to somewhat lower. Pinpointing the cash hog market is a tricky game these days. It's likely that packers dove into Thursday's market aggressively because they plan to skip out of Friday's trade and enjoy the Memorial Day weekend. Then again, with pork cutouts chopping higher yet again, packers could be running their numbers twice and marking sure they have enough hogs to continue running these snappy slaughter speeds. Come Friday, we will see how the cards fall.
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