GENERAL COMMENTS:
Lean hog futures contracts moved mostly lower during Wednesday's futures trade, but that was before the quarterly USDA Hogs and Pigs report revealed bullish numbers of lower inventories than pre-report estimates suggested. The reaction Thursday could be interesting, with fresh contract highs easily within reach. On the National Direct Afternoon Hog Report, negotiated prices were up $1 to a weighted average price of $104.93 on 13,143 head, and the 5-day rolling average was $105.58 per cwt. Cash cattle business Wednesday matched the neutral tone of the mixed futures trade. A light live trade has been reported in the South at $138, fully steady with the bulk of last week's business. Some asking prices remain firm around $140 to $142 in the South and $224 to $226 in the North. May corn moved up 11 3/4 cents per bushel to $7.38, and May soybean meal was up $7.10 per ton to $473.10. The Dow Jones Industrial Average is down 65 points, and the NASDAQ is down 168 points.
LIVE CATTLE:
Live cattle traders felt most comfortable staying within previously tested price ranges Wednesday, and this included both futures and cash traders. The April contract closed $0.725 lower at $140.175, the June closed $0.475 lower at $138, and the August closed $0.025 higher at $138.55. Cash deals that were made Wednesday for live cattle in Texas, Kansas and Nebraska were fully steady with last week's weighted average price: $138 per cwt (or $221 on a dressed basis in Nebraska). More aggressive asking prices are still out there to be tested on Thursday, and packers may have the appetite to meet them in the near term. A bid of $225 for higher-quality animals in Iowa reveals some sense of that willingness. Longer-term, more abundant fed cattle supplies may start crowding the market in May onward, as suggested by last week's Cattle on Feed numbers.
Wednesday's slaughter was seen at a hefty 125,000 head, which is 1,000 head more than a week ago and 7,000 more than a year ago.
Boxed beef prices were higher: choice up $2.04 ($266.54) and select up $2.62 ($257.46) with a movement of 85 loads (58.87 loads of choice, 7.4 loads of select, 2.63 loads of trim and 15.66 loads of ground beef).
THURSDAY'S CASH CATTLE CALL: Steady to $1 higher. Thursday's cash trade is most likely to follow in line with Wednesday's light trade, which was fully steady with last week, but if there is a bias in one direction or another, it may lean toward the bullish needs of packers running at a stiff pace this week and likely through the next month.
FEEDER CATTLE:
On Wednesday, feeder cattle futures gave back some of their big Tuesday gains, but the charts could still be characterized as being in an upward trend of recovery. March feeder cattle futures closed down $0.725 at $155.975. This contract will converge at the end of the month with the CME Feeder Cattle Index (up $0.12 to $155.41 on 3/29). Meanwhile, the April futures contract closed down $0.675 at $163.675, and the May contract closed down $0.50 at $168.90. With average cash corn prices back above $7 per bushel, the feeder cattle market remains vulnerable to profitability hits from the volatile swings that occur in global feed grains prices from day to day amid geopolitical uncertainty in the Black Sea region. The quarterly Grain Stocks report due out Thursday morning will likely also inject another dose of volatility to feed prices.
LEAN HOGS:
USDA's quarterly Hogs and Pigs Report, released Wednesday afternoon after the futures market closed, may confirm lean hogs' recent bullish tilt. The overall U.S. inventory is down 3% since last quarter and down 2% since last year. Prior to the report, traders were expecting to see the quarterly pig crop move higher by 1.3%, but instead it fell by 1%. Traders were expecting Jun-Aug farrowing intentions to be higher than last year by 0.5%, but instead it's looking like they will be smaller by 6%. Across the calendar, really, all the inventory numbers of both market-weight hogs and breeding animals seem to be contracting -- and faster than traders were expecting to see -- which means tight supply issues could continue to add a bullish tone to this market for the foreseeable future. Summer futures contracts are easily within reach of hitting some fresh contract highs when trade resumes Thursday morning. The nearby April lean hog futures contract closed Wednesday down $1.525 at $104.525, the May closed down $1.775 at $117, and the June closed down $0.400 at $124.225. Wholesale pork prices dropped slightly Wednesday, with the afternoon pork cut-out report showing the overall carcass value down $0.22 to $103.72. There were 242.90 total loads (214.80 loads of cuts and 28.10 loads of trim). The CME Lean Hog Index for 3/28: up $0.63, $103.56, and the projected Index for 3/29 is up $0.10, $103.66.
THURSDAY'S CASH HOG CALL: Higher. Inventory tightness adds urgency to packers' bids, even in the near term, with market hogs over 180 pounds shown to be 4% fewer than last year at this time.
No comments:
Post a Comment