GENERAL COMMENTS:
Feeder cattle and lean hog futures fell by triple digits to start the week, pressured by another surge of suddenly higher feed prices. And this wasn't just a pocket of patchy trade in illiquid markets; there was a heavy volume of selling interest for nearby contracts throughout Monday's session. On the National Direct Afternoon Hog Report, negotiated prices were down $1.38 to a weighted average price of $99.49 on 4,544 head, and the five-day rolling average was $103.09 per cwt. The cash cattle market is getting off to an unusually early start for the week, with light trade reported in parts of the South at $138, fully steady with last week's weighted averages. May corn moved up 15 1/2 cents per bushel to $7.50 1/2 and May soybean meal was up $5.10 per ton to $455.10. The Dow Jones Industrial Average was up 103.87 points and the NASDAQ was up 298.37 points.
LIVE CATTLE:
Monday's lower futures trade has done some damage to the idea of a recovery, bringing the April chart back within $4 of its early March low at around midday. April futures ultimately closed only $0.65 lower at $138.00, the June contract closed $0.925 lower at $134.925, and the August contract closed $0.70 lower at $136.20. Light cash cattle trade is already being seen in the South Monday afternoon at $138, fully steady with last week's weighted averages. A few scattered bids have also been reported in parts of Nebraska at $223 dressed/$140 live, but most producers have yet to reveal any clear asking prices.
Monday's slaughter was seen at 121,000 head, which is 2,000 head more than a week ago and 16,000 more than a year ago.
Boxed beef prices were mixed Monday: choice was up $0.90 ($268.04) and select down $0.82 ($261.70) with a movement of 63 loads (39.74 loads of choice, 10.72 loads of select, 7.04 loads of trim and 5.28 loads of ground beef).
TUESDAY'S CASH CATTLE CALL: Steady or stronger bids on Monday already probably surprised the feedlots, who now may feel pretty confident asking for mild gains over last week's $138 live/$222-$225 dressed price levels.
FEEDER CATTLE:
A humongous export sale of corn to China (over 1 million metric tons all at once) reported Monday morning set feed prices churning higher again, and the feeder cattle futures market responded with a predictable sell-off. The April feeder cattle contract closed down $3.20 at $158.375, the May contract closed down $3.65 at $162.475, and farther out, the October contract closed down $1.975 at $178.725. Fortunately, cattle feeders are still approaching the sale barns with good demand in recent weeks, particularly for grass-type calves, and especially in the regions of the country where recent precipitation has given folks a little more optimism about pasture conditions. However, for today's spring calves that are destined for a fall marketing timeframe, the insurance and hedging opportunities are slipping away, with fall futures contracts finding new 2022 lows amid recognition that high feed costs are likely to be a problem for the foreseeable future.
LEAN HOGS:
Summer lean hog futures contracts experienced the heaviest selling volume throughout the livestock sector Monday, trimming their premium spreads over the nearby. The April lean hog futures contract closed down $1.85 at $99.45; the May closed down $3.875 at $109.30; and the June closed down $4.30 at $116.15. It's not that there's any overwhelming supply of animals in the nationwide inventory or anything, but instead, there seems to be a sense that the recent rally may have taken prices a little higher than what's sustainable. Particularly at a time when China has 26 million residents of Shanghai on COVID-19 lockdown, the pork market may be experiencing a gap in export demand. Even domestically, cutout values have been volatile lately, but ham prices nevertheless look favorable compared to other proteins while grocery shoppers buy for their upcoming Easter meals. Monday's afternoon pork cut-out report showed the overall carcass value up $2.75, to $106.35, with 303.79 total loads (258.62 loads of cuts and 45.17 loads of trim). The CME Lean Hog Index for March 31: down $0.50, at $102.63, and the projected Index for April 1 is down $0.22, at $102.41.
TUESDAY'S CASH HOG CALL: Steady to $1 lower. Negotiated swine prices have been slipping day by day amid packers' uncertainty, now below $100 per cwt, and although they may eventually find a place to pause their losses, the tone of bearish futures trade may spill over throughout the market.
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