GENERAL COMMENTS:
Losses in the livestock markets Thursday were led by lean hog futures, which dropped by more than $3 per cwt in heavy profit-taking trade volume after the quarterly Hogs and Pigs report. On the National Direct Afternoon Hog Report, negotiated prices were down $2.61 to a weighted average price of $102.32 on 8,455 head, and the 5-day rolling average was $104.72 per cwt. Cash cattle are seeing a light trade developing in parts of the North at $222 to $225, which is $1 to $4 higher than last week. The high end of these sales is by a regional and set for delivery the week of April 18; the $222 is set for delivery the week of April 11. Asking prices for cattle left on showlists are around $140 in the South and $225-plus in the North. May corn moved up 10 3/4 cents per bushel to $7.48 3/4 and May soybean meal was down $5.60 per ton to $467.50. The Dow Jones Industrial Average is down 474 points and the NASDAQ is down 185 points.
LIVE CATTLE:
Losses in the live cattle futures market Thursday seem positively calm in comparison to the flailing prices of other ag markets. The sturdy strength of seasonally rising beef prices may help to underpin the stability of live cattle prices. The April contract closed $0.80 lower at $139.375, the June closed $0.875 lower at $137.125, and the August closed $0.475 lower at $138.075. Cash deals picked up momentum from Wednesday into Thursday, with Northern dressed business being marked at $222 to $225, which is $1 to $4 higher than last week's weighted averages. Global demand in the near term and optimistic prospects for domestic demand this spring and summer help keep beef prices on track, and packers are running at a substantial pace this week. Thursday's slaughter was seen at 121,000 head, which is 1,000 head fewer than a week ago but 6,000 more than a year ago. Boxed beef prices were significantly higher: choice up $1.35 ($268.39) and select up $4.88 ($262.34) with a movement of 96 loads (66.82 loads of choice, 9.69 loads of select, 4.19 loads of trim and 14.86 loads of ground beef).
FRIDAY'S CASH CATTLE CALL: $1 to $4 higher than last week. Packers have demonstrated their willingness to pay up for near-term supply, especially for higher-grading animals.
FEEDER CATTLE:
Feed grains (corn) have lost out to oilseeds (soybeans) in the U.S. farmer's planting intentions for spring 2022, according to USDA's annual Prospective Plantings report released Thursday morning, which sent feed prices skyrocketing and feeder cattle falling in response. The April futures contract closed down $2.275 at $161.40, the May contract closed down $2.35 at $166.55, and farther out, the October contract for the babies on the ground today closed down $2.225 at $181.825. The March feeder cattle contract will go off the board at $155.90, compared to the CME Feeder Cattle Index, which has been moving sideways above $155 for the past week or so ($155.41 on 3/29). Perhaps even more concerning to cattle producers in certain regions, the U.S. Drought Monitor showed a 0.6 percentage point expansion of D3 Extreme drought, now at 17.14% of the continental United States, including a now-larger patch in central Nebraska. Recent precipitation across the continent hasn't been enough to seriously improve the uncertain prospects for pasture and range this spring, either for feeding market animals or to support the breeding herd. But depending on where you are, some sale barns are still seeing good or very good demand (and steady prices) for the calves and backgrounded cattle being brought in, even for grass-type cattle.
LEAN HOGS:
It's surely no coincidence that the steepest Thursday losses in lean hog futures took place in the same contract that experienced the heaviest trading volume: the June contract, which may previously have attracted bullish interest from traders who could now cash out those profits after the quarterly Hogs and Pigs report was released. The nearby April lean hog futures contract closed Thursday down $2.775 at $101.75; the May closed down $3.425 at $113.575; and the June closed down $3.60 at $120.625. Despite the volatility of this one trading session, the market is generally supported by strong pork prices this week. Thursday's afternoon pork cut-out report showed the overall carcass value up $4.00 to $107.72, led by volatile ham prices up $19.88. There were 358.50 total loads (328.94 loads of cuts and 29.57 loads of trim). Meanwhile, there are the longer-term bullish supply implications of a diminishing breeding herd, especially when high feed prices through the foreseeable future could pressure the herd even further. The CME Lean Hog Index for 3/29: up $0.10, $103.66, and the projected Index for 3/30 is down $0.53, $103.13.
FRIDAY'S CASH HOG CALL: Steady. Market hogs over 180 pounds were shown to be 4% fewer than last year at this time, but packers may have already done most of the work they need to get supplies in place for the weekend.
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