GENERAL COMMENTS:
It was a rallying day for both the live cattle and lean hog markets as both sought out higher prices following Monday's weaker close. Meanwhile, the feeder cattle complex wasn't as lucky, as the modestly higher trade in the corn market rocked the feeder cattle market's confidence and sent prices trading lower once again. Hog prices closed higher on the National Direct Afternoon Hog Report, up $0.91 with a weighted average of $111.01 on 8,329 head. July corn is up 5 3/4 cents per bushel and July soybean meal is down $4.10. The Dow Jones Industrial Average is down 267.13 points and NASDAQ is down 75.41 points.
LIVE CATTLE:
At this point, the live cattle market will take any day that wishes to close higher, regardless of the rhyme or reason. June live cattle closed $1.40 higher at $116.75, August live cattle closed $1.30 higher at $119.72 and October live cattle closed $1.12 higher at $124.52. With the complex well below both the 40- and 100-day moving averages, the market has room to trade before running into resistance. The boxed beef market closed higher Tuesday afternoon but seasoned cattlemen know all too well that the market's days of higher prices will most likely come to a halt here in the next week or two as the market looks to make a seasonal high. At which point, the cash cattle market will see even more resistance from packers as their margins start to adjust to weaker boxed beef prices. Along with higher boxed beef prices, the live cattle market could have felt some encouragement from the announcement that Argentina has posted a 30-day government mandated ban on all cattle exports. Demand isn't an issue for today's market, but more marketing opportunities are always welcomed. The cash cattle market saw some light trades develop in the South were cattle traded for $119 to $120 live, which is $1.00 higher than last week's business, and in the North for $190 to $191, which is fully steady with last week's business. The Texas Cash Pool was able to market 617 head at $189 FOB. Other packers offered bids of $118.80 and $120.00. Tuesday's slaughter is estimated at 120,000 head, 2,000 head more than a week ago.
Boxed beef prices closed higher: choice up $3.72 ($323.34) and select up $2.16 ($299.05) with a movement of 114 loads (51.03 loads of choice, 22.61 loads of select, 28.42 loads of trim and 11.82 loads of ground beef).
WEDNESDAY'S CASH CATTLE CALL: Steady. With boxed beef prices most likely to peak in the next 10 days to two weeks, packers will be extra mindful about their buying practices.
FEEDER CATTLE:
It would have been great to see the feeder cattle complex trade higher again following Monday's stronger close, but the higher rally accomplished in the corn market took the feeder cattle market's spirit away. May feeders closed $0.72 lower at $137.20, August feeders closed $0.82 lower at $151.92 and September feeders closed $0.70 lower at $153.52. All in all, the feeder cattle market continues to be hand-in-hand to the corn market as the cash cattle market isn't helping alleviate any pressure in the feedlot sector. Unfortunately, this back and forth nature of one day higher, one day lower, type of trade will likely continue until more reasonable levels are attained in the corn market or until the cash cattle market sees a significant uptick in prices. At Tulsa Livestock Auction in Tulsa, Oklahoma, compared to last week, steers sold $5.00 to $7.00 lower and heifers sold $3.00 to $6.00 higher. The quality was deemed good throughout the sale and demand was moderate to strong at times. Slaughter cows sold $5.00 to $7.00 higher and slaughter bulls sold $6.00 higher. With a total of 404 cows and bulls being sold, 73% of them went to packers. The CME Feeder Cattle Index for May 17: down $0.20, $133.70.
LEAN HOGS:
The lean hog market grew stronger as the day went on and some nearby contracts were even able to close upward of $2.00 higher. June lean hogs closed $2.00 higher at $110.65, July lean hogs closed $2.55 higher at $111.50 and August lean hogs closed $2.42 higher at $107.75. The cash hog market saw a much better day as there was a strong number of hogs purchased and prices were close to $1.00 higher than Monday's trade. Looking to Wednesday's trade is where the tricky part lies. Will packers be absent from the cash market the rest of the week as they bought aggressively in Tuesday's market or will demand continue to be strong enough to keep them involved in the market? Pork cutouts totaled 358.17 loads with 330.96 loads of pork cuts and 27.20 loads of trim. Pork cutout values: down $0.51, $116.06. Tuesday's slaughter is estimated at 478,000 head, 7,000 head less than a week ago. The CME Lean Hog Index for May 14: up $0.49, $111.42.
WEDNESDAY'S CASH HOG CALL: Steady. It's a tossup whether packers will need to aggressively seek out hogs in Wednesday's market, as they bought a sizeable number Tuesday afternoon.
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