GENERAL COMMENTS:
You would think with such excellent demand the live cattle market would be rocking and rolling and wanting to send the day fully higher. But traders know all too well the boxed beef market is soon going to be making a top and they don't want to get caught in an over-extended position when boxed prices start to fall. July corn is up 9 1/4 cents per bushel and July soybean meal is down $0.50. The Dow Jones Industrial Average is up 215.30 points and NASDAQ is up 202.34 points.
LIVE CATTLE:
As Thursday draws closer and closer to the noon hour, the live cattle contracts are flirting, ever so timidly, with the idea of trading higher. With boxed midday choice and select cut prices above $3.00/pound, the market has plenty of demand fueling its flame. June live cattle are up $0.07 at $116.97, August live cattle are up $0.07 at $120.20 and October live cattle are down $0.02 at $124.60. The tricky part is knowing when the boxed beef market is going to put in a top and head south. And knowing how fast cash cattle prices are going to deteriorate once the boxed beef high is in. There are a few cash cattle deals being reported in the North at mostly steady prices with the week's trend. Asking prices of cattle left on showlists are around $120 in the South and $192-plus in the North. Thus far there's only been a light movement of cattle, so more business needs to develop either Thursday afternoon or Friday.
Beef net sales of 56,900 metric tons (mt) for 2021 -- a marketing year high -- were up noticeably from the previous week and from the prior four-week average. The three largest buyers were Netherlands (33,700 mt), China (9,200 mt) and Japan (5,900 mt).
Boxed beef prices are higher: choice up $0.14 ($323.52) and select up $2.07 ($301.76) with a movement of 45 loads (22.62 loads of choice, 9.61 loads of select, 6.24 loads of trim and 6.95 loads of ground beef).
FEEDER CATTLE:
It seems to be as fickle as rolling the dice, but today the doubles landed in favor of the corn market, which consequently has put pressure on feeder cattle contracts. May feeders are down $1.15 at $135.42, August feeders are down $2.02 at $150.85 and September feeders are down $2.02 at $152.25. The market felt some additional technical pressure build as the August contract grew extremely close to trading alongside the 40-day moving average. If traders were going to support that movement, they were going to need to be confident in their upward advancement. And, with cash cattle holding basically steady and boxed beef prices expected to top any day now, the risk seemed a little more daunting than what the reward granted.
LEAN HOGS:
Even though Chinese pork prices have fallen, and the country is understood to be rebuilding their own domestic supply, the encouragement from Thursday morning's export report helped add some gusto to the lean hog complex. June lean hogs are up $1.07 at $112.05, July lean hogs are up $2.32 at $113.75 and August lean hogs are up $1.82 at $109.32. The midday pork cutout value is more than $1.00 stronger, but we know all too well that we can't put our faith in the midday but instead need to wait for the afternoon prices. If pork cutout values do indeed close higher Thursday afternoon, the market stands a fair chance at trading potentially higher again Friday with demand supporting the marketplace.
The projected CME Lean Hog Index for 5/19/2021 is down $0.19 at $111.41 and the actual index for 5/18/2021 is down $0.15 at $111.60. Hog prices are lower on the National Direct Morning Hog Report, down $3.09 with a weighted average of $106.52, ranging from $101.68 to $115.50 on 4,036 head and a five-day rolling average of $107.36. Pork cutouts total 178.58 loads with 158.63 loads of pork cuts and 19.95 loads of trim. Pork cutout values: up $1.28, $119.29.
Pork net sales of 19,200 mt reported for 2021 were up 29% from previous week but down 1% from the prior 4-week average. The three largest buyers were Mexico (8,300 mt), Japan (3,600 mt) and China (3,100 mt).
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