GENERAL COMMENTS:
Heading into the long weekend, the livestock complex closed mixed as traders' support was touch and go, and largely, the market agreed to let next week's complex sort out the fine details. Hog prices closed lower on the Daily Direct Afternoon Hog Report, down $1.67 with a weighted average of $109.68 on 4,736 head. July corn is up 12 1/4 cents per bushel and July soybean meal is up $4.10. The Dow Jones Industrial Average is up 575.77 points.
From Friday to Friday, livestock futures scored the following changes: June live cattle up $0.60, August live cattle up $0.85; August feeder cattle up $2.40, September feeder cattle up $2.30; June lean hogs up $1.53, and July lean hogs up $2.73.
LIVE CATTLE:
Heading into the weekend, the nearby live cattle contracts rounded out the week lower, while the deferred contracts held a mild rally ahead of the week's end. June live cattle closed $0.22 lower at $132.17, August live cattle closed $0.20 lower at $132.40 and October live cattle closed $0.12 lower at $138.05. Given that supplies of market-ready cattle are growing, and that packers sit on a healthy inventory of committed cattle, the market's trend is lower, both technically and fundamentally. What cattlemen need to cling to in the weeks ahead is slaughter data -- how many cattle are being killed on a weekly basis and how are carcass weighing performing? If packers continue to run a productive kill schedule, supplies will be worked through and hopefully the summer's low isn't unbearable. carcass weights are already decreasing, which means that packers will have to kill more cattle to get all the product they need. This week's cash cattle trade is looking like it's going to be less than 70,000 head but Monday's report will disclose the specifics. Throughout the week, Southern live cattle traded for $137 ($1.00 lower than a week ago) and Northern dressed cattle traded for $223 ($3.00 lower than a week ago).
Friday's slaughter is estimated at 120,000 head, 3,000 head less than a week ago and 3,000 head more than a year ago. Saturday's slaughter is projected to be around 25,000 head, 36,000 head less than a week ago and 8,000 head less than a year ago. This week's slaughter is estimated at 644,000 head, 36,000 head less than a week ago and 14,000 head more than a year ago.
Boxed beef prices closed higher: choice up $1.45 ($265.42) and select up $2.07 ($246.50) with a movement of 106 loads (48.25 loads of choice, 15.55 loads of select, 8.33 loads of trim and 33.73 loads of ground beef). Throughout the week choice cuts averaged $264.05 (up $3.02 compared to a week ago) and select cuts averaged $244.91 (down $0.88 compared to a week ago) and the week's total movement of cuts, grinds and trim totaled 632 loads.
TUESDAY'S CASH CATTLE CALL: Lower. Given that packers sit on ample supplies of cattle, they'll need to continue to buy enough cattle to keep procuring inventory for their deferred delivery needs, but otherwise their interest in cattle will remain limited.
FEEDER CATTLE:
With the corn complex rounding out the week on a higher note, and the live cattle complex not lending much support, the feeder cattle contracts ventured lower through Friday's end. August feeders closed $0.35 lower at $166.32, September feeders closed $0.42 lower at $169.30 and October feeders closed $0.72 lower at $171.82. The market will look for support again next week, but with live cattle trending lower, it's unlikely that feeders see much support infiltrate their marketplace as corn is still costly. Compared to two weeks ago at Stockmen's Livestock Exchange in Dickinson, North Dakota, feeder steers weighing 600 to 750 pounds traded $10.00 to $13.00 higher, and feeder heifers traded steady to $5.00 higher in a narrow comparison. The market saw extremely strong demand for weaned fall calves and yearlings. The market saw more interest than in weeks past as buyers are now able to kick the cattle, they buy out immediately onto grass. The CME Feeder Cattle Index for May 26: unavailable at this time.
LEAN HOGS:
The lean hog contracts traded mixed throughout the week, but the tone of the market remains strong. The key component of the lean hog complex's rally has been that both the futures market and fundamental aspects of the market (slaughter, consumer demand) have worked hand in hand to progress the market. Heading into next week's trade, the market will again yearn for strong consumer support as all hopeful that buying interest amps up heading into the summer months despite inflation conflicts. June lean hogs closed $0.70 lower at $110.40, July lean hogs closed $0.10 lower at $111.72 and August lean hogs closed $0.32 higher at $110.45. Pork cutouts total 283.12 loads wit 257.04 loads of pork cuts and 26.07 loads of trim. Pork cutout values: down $1.97, $106.16. Before heading into the long weekend, it is important to note that Germany has confirmed that a domestic pig farm near the French border has been confirmed to have African swine fever. The CME Lean Hog Index for May 25: up $0.53, $104.40.
Friday's slaughter is estimated at 456,000 head, 1,000 head less than a week ago and 31,000 head more than a year ago. Saturday's slaughter is projected to be around 11,000 head, 47,000 head less than a week ago and 10,000 head less than a year ago.
TUESDAY'S CASH HOG CALL: Higher. Packers will likely need to replenish their inventory after the long holiday weekend.
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