GENERAL COMMENTS:
Seeing higher closes throughout the livestock contracts is a refreshing change! After Tuesday's tumultuous close in the cattle contracts, having a day to redeem some of the losses was gladly taken by both the live and feeder cattle contracts. Hog prices closed higher on the National Direct Afternoon Hog Report, up $1.73 with a weighted average of $116.93 on 8,325 head. July corn is up 11 3/4 cents per bushel and July soybean meal is up $2.90. The Dow Jones Industrial Average is up 97.31 points and NASDAQ is down 51.08 points.
LIVE CATTLE:
The live cattle contracts were able to close the day fully higher after Tuesday's sharply lower close. June live cattle closed $1.40 higher at $114.42, August live cattle closed $1.10 higher at $117.72 and October live cattle closed $1.35 higher at $123.10. Even though the day walked away with gains, the fact that choice boxed beef prices are above $300.00 and that fat cattle prices are at a measly $119.00 is still a tough, bitter pill to swallow. The next concern that the market has to worry about is when the boxed beef market puts in its seasonal top, how much will cash cattle prices have to give at that point? Wednesday's cash cattle trade was mostly quiet following Tuesday's trade with just a handful of cattle selling Kansas and Texas for $119. Wednesday's slaughter is estimated at 120,000 head, steady with a week ago.
The Fed Cattle Exchange Auction listed a total of 2,153 head, of which 1,091 actually sold, 202 head were scratched from the auction and 860 head were listed as unsold, as they did not meet the reserve prices that ranged from $118 to $120. Opening prices ranged from $117 to $117.50, high bids ranged from $117.50 to $119. The state-by-state breakdown looks like this: Texas 1,967 total head, with 1,038 head sold at $118.50-$119.00, 727 head unsold, and 202 head were scratched; Nebraska 118 total head, with 53 head sold at $117.75, 65 head went unsold; Kansas 68 total head, all of which went unsold.
Boxed beef prices closed higher: choice up $3.56 ($304.78) and select up $2.27 ($286.18) with a movement of 121 loads (73.22 loads of choice, 21.24 loads of select, 8.40 loads of trim and 18.51 loads of ground beef).
THURSDAY'S CASH CATTLE CALL: Steady. Seeing that there's already been a sizeable movement of cattle, any clean-up trade that does develop will most likely be for steady prices with the week's trend.
FEEDER CATTLE:
The corn market saw waves of support and then waves of pullback throughout Wednesday's trade, but thankfully the corn market's uncertainty allowed for the feeder cattle contracts to close higher after Tuesday's brutal beatdown. May feeders closed $1.72 higher at $131.47, August feeders closed $2.05 higher at $145.22 and September feeders closed $1.87 higher at $147.47. All in all, the feeder cattle contracts may have been able to win the day over and close higher, but the fact remains that input costs have calf buyers on edge, and their desire to dive into more cattle at this point is slim to none. Until there's pressure lifted off the market in the form of cheaper corn and higher fat cattle prices, the feeder cattle market has a tough road ahead. At OKC West Livestock Auction in El Reno, Oklahoma, compared to last week, feeder steers sold $2.00 to $5.00 lower and feeder heifers sold $3.00 to $4.00 lower. The CME Feeder Cattle Index for May 4: down $0.21, $132.55.
LEAN HOGS:
The resistance at $110.00 is a memory of the past as the lean hog complex just keeps on trading higher. June lean hogs closed $0.87 higher at $114.42, July lean hogs closed $1.05 higher at $114.47 and August lean hogs closed $1.32 higher at $109.80. Come Wednesday afternoon, the market really began to wonder what Thursday's export report will hold, but given how short cold storage supplies are, even a bearish export report won't likely put much of a damper on the lean hog parade as Americans want pork just as bad as anyone else. Pork cutouts totaled 274.65 loads with 235.63 loads of pork cuts and 39.02 loads of trim. Pork cutout values: up $0.73, $111.91. Wednesday's slaughter is estimated at 485,000, 2,000 head more than a week ago. The CME Lean Hog Index for May 3: up $0.27, $107.37.
THURSDAY'S CASH HOG CALL: Higher. With supplies as short as they are and grilling season attracting more and more households, it's likely that demand will continue to show interest in pork and packers will need to continue to support the cash market.
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