GENERAL COMMENTS:
Monday's market has been a rewarding marketplace for the lean hog enthusiasts as fundamental support and technical strength continue to rally hand in hand. But the same type of momentum isn't being attained in the cattle sector as feeder cattle contracts are pushed lower amid higher corn prices and the live cattle market is simply cautious and on edge. July corn is up 1/4 cent per bushel and July soybean meal is down $2.20. The Dow Jones Industrial Average is down 144.97 points and NASDAQ is up 17.29 points.
LIVE CATTLE
The live cattle market isn't confident in much. The nearby contracts are trading just mildly lower and the market's deferred contracts are barely trading above steady, which continues to point to the conclusion that traders are leery. The market is bound to see a seasonal high in boxed beef prices at some point, and Monday's midday printing of mixed prices makes some wonder if that day is coming sooner rather than later. June live cattle are down $0.50 at $116.32, August live cattle are down $0.12 at $117.95 and October live cattle are down $0.05 at $124.00. Last week's slaughter was ok at best. It's great that JBS was able to get back online in such a short matter of time, but running at 119,000 to 120,000 head a day doesn't beckon for a healthy marketplace. With consumer demand as robust as it is, and with boxed beef prices as astronomically high as they are, plants have got to find some way of increasing their daily outputs. This week's showlists are higher in all regions.
Boxed beef prices are mixed: choice up $0.76 ($339.74) and select down $1.23 ($310.50) with a movement of 55 loads (23.87 loads of choice, 19.45 loads of select, 7.72 loads of trim and 3.73 loads of ground beef).
FEEDER CATTLE
The choppy cadence sought between the corn market and feeder cattle contracts is found once again to start the week, as corn beats higher and the feeder cattle contracts chop lower. August feeders are down $0.12 at $149.80, September feeders are down $0.27 at $152.47 and October feeders are down $0.20 at $154.62. Thankfully, steady rain throughout parts of the Midwest and Southern Plains has granted the auction markets some support as cattle buyers are willing to bid on calves with pasture conditions looking better in some of those regions. Meanwhile, parts of the Northern Plains (especially North Dakota and Eastern Montana) continue to be plagued with severe drought and producers are having to make tough culling decisions. Throughout this upcoming week, the market will continue to closely monitor corn prices and weather patterns as both have long lasting ramifications on the market.
LEAN HOGS
June lean hogs are up $0.15 at $119.65, July lean hogs are up $1.67 at $122.27 and August lean hogs are up $1.67 at $119.25. The market is rallying on robust fundamental strength (higher pork cutout prices, a strong cash market and stellar trader interest). The market could be subject to some volatility if labor negotiations escalate at the Smithfield plant in Sioux Falls, South Dakota. The labor union has yet to accept a contract that they feel is fair, and if they aren't presented with a better contract, the plant could be subject to walk outs and a potential strike, which would obviously hinder production.
Hog prices are higher on the National Direct Morning Hog Report, up $0.85 with a weighted average of $106.66, ranging from $99.84 to $118.00 on 4,853 head and a five-day rolling average of $104.88. Pork cutouts total 163.94 loads with 125.11 loads of pork cuts and 38.84 loads of trim. Pork cutout values: up $3.23, $136.52. The projected lean hog index for June 4 is up $1.76 at $116.51 and the actual index for June 3 is up $0.70 at $114.75.
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