GENERAL COMMENTS:
While the cattle contracts kept with their descend through closing Friday, the lean hog complex opted to grow stronger as the day traded on. Hog prices closed higher on the Daily Direct Afternoon Hog Report, up $2.46 with a weighted average of $112.97 on 7,040 head. July corn is down 4 1/2 cents per bushel and July soybean meal is up $4.60. The Dow Jones Industrial Average is down 49.67 points.
From Friday to Friday, livestock futures scored the following changes: June live cattle off $0.50, August live cattle off $0.80; May feeder cattle off $4.47, August feeder cattle off $4.10; June lean hogs up $8.13, July lean hogs up $7.80.
LIVE CATTLE:
It was a painstaking week for the live cattle complex. The cash cattle market traded $2.00 to $3.00 lower, packers bought very few cattle compared to the last month's standard, and throughout most of the week the board was severely pressured. June live cattle closed $0.07 higher at $131.57, August live cattle closed $0.47 lower at $131.55 and October live cattle closed $0.57 lower at $137.42. Unfortunately, the market's pressure isn't expected to ease any time soon. As packers strategically bought cattle over the last month with the deferred delivery option, their need to pick up more cattle in the spot cash market is thin. This works beautifully for them as they can opt out of supporting the cash cattle market for the next couple of weeks and watch showlists grow, which will again support their position when they need to step back into the cash market. Throughout the week, Southern live cattle traded for $136 to $138, $2.00 lower; and Northern dressed cattle traded for $223 to $228, $3.00 lower than last week's market.
The May 1 on feed report listed 12.0 million head, up 2% from May 2021, the highest May 1 inventory since the series began in 1996. Placements in April totaled 1.81 million head, 1% below last year; marketing's in April totaled 1.89 million head, 2% less than the prior year; other disappearance in April totaled 54,000 head, 2% under the same time last year. Click here to read DTN's full COF comments:
Friday's slaughter is estimated at 123,000 head, 3,000 head more than a week ago and 4,000 head more than a week ago. Saturday's slaughter is projected to be around 58,000 head, 16,000 head more than a week ago and 22,000 head less than a year ago. This week's slaughter is estimated at 680,000 head, 23,000 head more than a week ago and 8,000 head more than a year ago.
Boxed beef prices closed mixed: choice up $0.47 ($262.17) and select down $3.04 ($243.02) with a movement of 90 loads (41.68 loads of choice, 15.65 loads of select, 17.56 loads of trim and 14.75 loads of ground beef). Throughout the week choice cuts averaged $261.03 (up $4.08 from a week ago) and select cuts averaged $245.79 (up $2.61 from last week) and the week's total movement of cuts, grinds, and trim totaled 525 loads.
MONDAY'S CASH CATTLE CALL: $2.00 to $3.00 lower. With packers having cattle committed well into June, their likelihood of supporting the cash market in the weeks ahead in little to none. Prices will likely be lower and volumes will be thin.
FEEDER CATTLE:
It was another day when the feeder cattle contracts traded lower as the market summoned virtually no support. It was hard for the feeder cattle contracts to gain any momentum as the live cattle market saw its deferred contracts erode, which bodes negatively for feeders as it steals some of their upward potential. May feeders closed $0.72 lower at $153.40, August feeders closed $1.27 lower at $163.92 and September feeders closed $0.90 lower at $167.00. Oklahoma's Weekly Cattle Auction Summary shared that, compared to last week, feeder steers sold $1.00 to $3.00 lower and feeder heifers traded $3.00 to $6.00 lower. Demand was light to moderate for feeder cattle throughout the week, as the corn prices held feeders lower and the live cattle market lent no support. The auction summary noted that, "an interesting note for the week though was the percent of feeder cattle being sold. This week, compared to last week for the state, Oklahoma was down about 5% in cattle being sold over 600 pounds. Some individual sales showed a decline in cattle sold over 600 pounds by about 10%. This is a big deal, as typically many cattle are moving off graze-out wheat this time of year." Steer and heifer calves sold $2.00 to $8.00 lower and multiple sales reported an increase of un-weaned calves selling. Slaughter cows traded steady to $2.00 higher, and lean cows traded $5.00 higher, slaughter bulls traded $1.00 higher. The CME Feeder Cattle Index for May 19: down $0.41, $153.05.
LEAN HOGS:
It was a day of widespread wins for the lean hog complex as pork cutout prices closed higher, the cash market saw a significant volume trade at higher money and the futures market grew stronger as the day traded on. June lean hogs closed $3.57 higher at $108.87, July lean hogs closed $2.02 higher at $109.00 and August lean hogs closed $2.05 higher at $108.17. Ham prices saw the biggest jump in Friday's closing report, as they grew $9.65 stronger and were followed closely by picnic prices, which jumped $6.07 from Thursday. The futures market's performance was phenomenal throughout the week, but the cash market's ability to push prices higher and sell significant volumes of hogs this past week cannot be overlooked either. This past week was a perfect storm for the lean hog market as, fundamentally, the market was supported through good action in the cash market and, technically speaking, traders were active participants in the market too. So long as pork cutouts continue to print higher figures, then the market stands a strong chance at summoning support again next week. Pork cutouts totaled 215.54 loads with 196.42 loads of pork cuts and 19.12 loads of trim. Pork cutout values: up $3.65, $107.11. Friday's slaughter is estimated at 457,000 head, 19,000 head more than a week ago and 6,000 head less than a year ago. Saturday's slaughter is projected to be around 58,000 head, 10,000 head more than a week ago and 27,000 head more than a year ago. The CME Lean Hog Index for May 18: up $0.29, $100.37.
MONDAY'S CASH HOG CALL: Steady to somewhat higher. The cash market saw stellar interest throughout the week, and given that pork demand seems to be gaining momentum, it's likely that packers are aggressive in next week's market too.
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