GENERAL COMMENTS:
Both the lean hog and feeder cattle contracts close higher, and other than the nearby contracts, so did the live cattle complex. The market is thankful to see slaughter speeds back to normal levels, though many still hope to see cattle processing run at a more rigorous pace in the weeks ahead. Hog prices closed lower on the National Direct Afternoon Hog Report, down $0.20 with a weighted average of $108.45 on 8,088 head. July corn is down 13 cents per bushel and July soybean meal is down $2.40. The Dow Jones Industrial Average is down 23.34 points and NASDAQ is down 141.82 points.
LIVE CATTLE:
The nearby contracts in the live cattle sector again closed lower but the deferred contracts held strong and rounded out the day higher. June live cattle closed $0.35 lower at $116.77, August live cattle closed $0.72 lower at $118.52 and October live cattle closed $0.25 lower at $124.65. One would think that the nearby live cattle contracts would have been able to close higher amid such strong boxed beef prices, but at some point they too are going to have to top, and with the uncertainty in the cash cattle market, we have plenty to be skeptical of. There was a little bit of trade that developed Thursday, all steady with Wednesday's price. Southern live deals have ranged from $119 to $120, mostly at $120, which is steady to $1.00 higher than a week ago, and Northern dressed cattle have traded mostly at $191, which is fully steady. Thursday's slaughter is estimated at 120,000 head, 1,000 head less than a week ago and 4,000 head more than a year ago.
Thursday's actual slaughter data shared phenomenal news, as for the week ending May 22, there were 672,197 head of cattle processed, which is the largest processing the industry has seen since the week of March 28, 2020, when there were 684,835 head processed. To add to the positive news, carcass weights were even lower! Steers averaged 888 pounds (down 6 pounds from the previous week) and heifers averaged 818 pounds (down 1 pound from the previous week). However, the industry desperately needs to increase its throughput to sufficiently supply consumers and to avoid a devastating backlog like what the industry had to trudge through last year.
Boxed beef prices closed higher: choice up $0.39 ($340.55) and select up $1.28 ($313.16) with a movement of 138 loads (94.39 loads of choice, 23.55 loads of select, 5.94 loads of trim and 13.85 loads of ground beef).
FRIDAY'S CASH CATTLE CALL: Steady. Seeing that there's been a moderate movement of both Northern and Southern cattle, the market will trade within its set prices for any trade on Friday.
FEEDER CATTLE:
With the corn market's lower close and the half-hearted effort from the live cattle contracts to trade higher, the feeder cattle contracts took the day's support for what it was and closed modestly higher. August feeders closed $0.62 higher at $152.95, September feeders closed $0.70 higher at $155.50 and October feeders closed $0.87 higher at $157.37. Recent rains here and there across the nation have been the feeder cattle market's saving grace as buyers are more apt to buy cattle when grass is growing. At Mitchell Livestock Auction in Mitchell, South Dakota, compared to last week, feeder steers weighing 850 to 1,100 pounds sold steady to $1.00 higher. Feeder heifers weighing 800 to 950 pounds sold steady to $2.00 higher, and an unevenly steady undertone was noted on heifers weighing over 950 pounds. The CME Feeder Cattle Index for June 2: up $0.15, $136.65.
LEAN HOGS:
The cash market saw another strong purchase from packers as they bought over 8,000 head Thursday afternoon, and after buying over 12,000 head Wednesday afternoon -- that's a big deal. Slaughter speeds still aren't tangoing with the 480,000-head level, but they are vigorous enough given the limited supply of market ready hogs lining the countryside to give the market a comforting peace of mind. With large purchases of hogs and strong pork cutout prices, the market saw no reason not to close higher. June lean hogs closed $1.12 higher at $119.37, July lean hogs closed $0.52 higher at $119.00 and August lean hogs closed $0.20 higher at $117.00. The CME Lean Hog Index for May 31: up $0.10, $133.54.
Pork cutouts totaled 290.81 loads with 251.33 loads of pork cuts and 39.47 loads of trim. Pork cutout values: up $1.93, $131.52. Thursday's slaughter is estimated at 470,000 head, 11,000 head less than a week ago and 30,000 head more than year ago.
Thursday's actual slaughter data shared that hog carcass weights continue to hold steady. For the week ending May 22, live weights averaged 288 pounds and dressed weights averaged 215 pounds -- both of which were steady with the previous week.
FRIDAY'S CASH HOG CALL: Lower. Seeing that packers have wildly jumped into the cash market over the last two days, their aggression in Friday's market will likely be minimal.
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