GENERAL COMMENTS:
With Monday's arrival, the support and ambition that carried the lean hog contracts higher last week has shown up once again. The cattle complex isn't as confident as the market sees mixed interest from traders and knows that its cash outcome is bleak. July corn is up 5 3/4 cents per bushel and July soybean meal is down $7.80. The Dow Jones Industrial Average is up 651.95 points.
LIVE CATTLE:
The nearby contracts of June, August and October are trading higher, but the premiums in the deferred months are continuing to slip away in the live cattle market. June live cattle are up $0.75 at $132.32, August live cattle are up $0.35 at $131.90 and October live cattle are up $0.12 at $137.55. With 2022 corn prices all trending above $7.30 per bushel, the cattle feeding business is continuing to be a challenge to pencil in, as inputs are bewildering. With last week's cash market committing 44% of its entire purchase for the deferred delivery (15 to 30 days out), this week's cash cattle market will be pressured again as showlists are growing and packers' need to support the cash market is continuing to wither away. Last week boxed beef prices did show an improvement from the week before, and moving ahead, monitoring beef slaughter and boxed beef prices will be incredibly important as it could be a signal how the weeks ahead will behave.
Last week's negotiated cash cattle trade totaled 89,873 head. Of that, 56% (50,021 head) are committed for the nearby delivery, while the remaining 44% (39,852 head) are committed for the deferred delivery.
Boxed beef prices are higher: choice up $1.53 ($263.70) and select up $2.16 ($245.18) with a movement of 67 loads (32.06 loads of choice, 10.54 loads of select, 4.63 loads of trim and 19.59 loads of ground beef).
FEEDER CATTLE:
The feeder cattle contracts are posing a modest rally after last week's solid five-day trading regression. Given that the feeder cattle contracts have plummeted to new lows, the fact that the corn contracts are trading mildly higher isn't pressuring for the time being. The feeder cattle contracts aren't expected to recover much position as input costs are exuberant and the live cattle market is heading into June with record on feed numbers and the undeniable fact that cash prices are going to get cheaper. August feeders are up $0.12 at $164.05, September feeders are up $0.07 at $167.07 and October feeders are up $0.15 at $169.72.
LEAN HOGS:
The lean hog market keeps trending higher as pork cut values show support again early in the week and traders are appearing more confident in pork demand as summer temperatures begin to favor the idea of grilling season. June lean hogs are up $1.10 at $109.97, July lean hogs are up $1.20 at $110.25 and August lean hogs are up $1.17 at $109.35. In order for the market to keep its upward trend, it's vital that pork cutout values continue to see support. There's a stark difference between the nearby market's reality and that of the deferred months. In the months of June, July and August, limited hog supplies and seasonal demand are expected to keep the market elevated, but come the later part of the year, supplies could become overwhelming and ultimately lead the market to lower price points.
The projected lean hog index for May 20 is up $0.91 at $102.08 and the actual index for May 19 is up $0.80 at $101.17. Hog prices are unavailable on the Daily Direct Morning Hog Report due to confidentiality. However, we can see that 2,731 head have traded and that the five-day rolling average now sits at $109.06. Pork cutouts total 158.97 loads with 127.00 loads of pork cuts and 31.97 loads of trim. Pork cutout values: up $0.71, $107.82
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