GENERAL COMMENTS:
Feeder cattle futures led the losses in the livestock market Friday, following through on the same old story of challenging input costs and forecasts for continued drought. The broader cattle market is likely just grateful that the hacker kerfuffle at JBS slaughter plants this week didn't cause more lasting damage. Friday's cash cattle trade kept steady with last week and steady with the trade noted earlier this week: mostly $120 for Southern live deals and mostly $191 for Northern dressed trade. Meanwhile, the six-month rally in lean hog prices continued upward Friday. Hog prices closed higher on the National Direct Afternoon Hog Report, up $0.95 with a weighted average of $109.40 on 7,855 head. July corn closed up 20 3/4 cents per bushel at $6.82 3/4 and July soybean meal closed up $4.60 per ton at $396.20. The Dow Jones Industrial Average is up 177 points and NASDAQ is up 240 points.
From Friday (5/28) to Friday (6/4), livestock futures scored the following changes: June live cattle up $0.95, August live cattle off $0.525, August feeder cattle off $1.42, September feeder cattle off $0.78, June lean hogs up $2.25, July lean hogs up $1.25.
LIVE CATTLE:
Nearby June live cattle futures closed up a nickel at $116.825, the August contract closed down $0.45 at $118.075, and the October contract closed down $0.60 at $124.05. This represented a weekly gain of almost a dollar, believe it or not, even after the short-term hacker catastrophe at JBS facilities which had to shut down without computer systems Tuesday. Nationwide slaughter numbers were back up to 119,000 head per day Friday, with another 98,000 head projected Saturday to make up some lost ground. Boxed beef prices dropped Friday afternoon but are still extremely strong: choice down $1.57 ($338.98) and select down $1.43 ($311.73) with a movement of 97 loads (58.44 loads of choice, 16.36 loads of select, 10.19 loads of trim and 11.64 loads of ground beef). Cash cattle trade continued at steady prices Friday, with Southern live business at $120 and Northern dressed trade at mostly $191, fully steady with last week's weighted average.
MONDAY'S CASH CATTLE CALL: Steady to $1 higher on next week's showlists. Asking prices at the end of this week remained steady or $1 higher than the price level where everything kept chugging along this week, and with robust beef demand out there, the industry may have to meet those offers.
FEEDER CATTLE:
The heaviest losses in the livestock sector were, of course, borne by the feeder cattle market, given its sensitivity to higher feed prices. Those feed prices were indeed higher Friday, with double-digit gains in corn futures. The corn chart hasn't yet retested $7 per bushel, but day-to-day volatility, like Friday's, is always going to make the feeder cattle trade more challenging. The August feeder contract lost $3.025 to close Friday at $149.925, the September contract fell $2.75 to $152.75, and the October contract dropped $2.425 to $154.95 per cwt. The CME Feeder Index for June 2: up $0.15 at $136.65.
LEAN HOGS:
The lean hog market continues to be the poster child for food price inflation and commodity inflation generally, driven by a weaker U.S. dollar and robust foreign demand, although most of the exports listed in this week's export sales report were headed to Mexico and not China this time. The June futures contract closed Friday up $0.125 after hitting a fresh contract high of $120.15, and the July contract remains the leader of the market, with a $1.60 higher close at $120.60. At least we can say hot, dry weather is good for grilling. Pork cutouts Friday afternoon total 304.12 with 282.12 loads of pork cuts and 22 loads of trim. Pork cutout values: up $1.11, $132.63, led by butts, ribs and bellies. Friday's hog slaughter was seen at 478,000 head, which is higher than a week ago or a year ago, as packers are still playing catch-up after the alarming start to the week. The CME Lean Hog Index for June 2: up $0.30, $114.05, and the projected lean hog index for June 3: up $0.70, $114.75.
MONDAY'S CASH HOG CALL: Steady to $1 higher. The upward trend in both pork values and hog futures values remains supportive.
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