GENERAL COMMENTS:
It was a day of sharp losses for the entire livestock complex. Hog prices closed lower on the Daily Direct Afternoon Hog Report, down $1.93 with a weighted average of $106.36 on 5,014 head. July corn is up 3 cents per bushel, and July soybean meal is down $1.90. The Dow Jones Industrial Average is down 103.81 points.
LIVE CATTLE:
At this point, the live cattle market has more questions than it does answers. After two years of wildly high beef prices, the economy's weakened state has driven consumers into recalculating their grocery needs, and consumers are picking cuts that stretch their dollar the furthest. With that being said, the market is in a bit of a panic as, historically, boxed beef prices would see strong support heading into the nation's prime grilling season. But as of late, boxed prices have been shaky. Nevertheless, with the unclear outcome of boxed beef prices this summer and a retreating futures market and record on-feed numbers, feedlots are starting to sweat about what this summer could mean for fat cattle prices.
June live cattle closed $1.92 lower at $131.65, August live cattle closed $1.87 lower at $132.77 and October live cattle closed $2.07 lower at $139.85. Both boxed beef prices and slaughter speeds closed strong for the day -- both of which are incredibly important factors to watch in the weeks ahead. The cash cattle market didn't see much more business develop as the week's trade is essentially done with. Throughout the week, Southern live cattle have traded at $140 and Northern dressed cattle have traded at $230. Thursday's slaughter is estimated at 124,000 head -- steady with a week ago and 9,000 head more than a year ago.
May's WASDE report highlighted that beef production grew from a month ago as non-fed and fed cattle slaughter speeds continue to remain aggressive. From April, beef production grew by 132 million pounds, and red meat production grew by 100 million pounds from last month. It was especially interesting to note the quarterly price projections as May's report shared the first-quarter projects for 2023, which holds a significant premium to the prices anticipated for 2022. Compared to last month, the second quarter is expected to average $140 ($1 higher), the third quarter held steady at $136, the fourth quarter is expected to average $145 ($2 higher), and the first quarter of 2023 is expected to average $150. Beef exports grew by 56 million pounds, and beef imports also grew by 105 million pounds. For 2023, beef exports are down from 2022 on lower beef production and higher prices, and beef imports are lower on tight global supplies. For 2023, cattle prices are forecast above 2022 on tighter supplies.
Thursday's actual slaughter data shared that for the week ended March 30, 2022, steers averaged 901 pounds (down 5 pounds from the week before), and heifers averaged 833 pounds (down 4 pounds from the previous week).
Boxed beef prices closed higher: choice up $2.12 ($257.20) and select up $2.18 ($244.36) with a movement of 137 loads (94.38 loads of choice, 19.38 loads of select, 8.06 loads of trim and 15.18 loads of ground beef).
FRIDAY'S CASH CATTLE CALL: Steady with the week's trend. Some clean hog trade could develop, but, largely, the bulk of this week's business is done.
FEEDER CATTLE:
The feeder cattle contracts couldn't escape the sharp blows that came with being a livestock contract in Thursday's market. As the corn complex shot $0.03 to $0.17 higher in its nearby contracts, the feeder cattle contracts gasped for air and plummeted mostly $3 lower. The market's steep regression pulled prices back to points not seen since last fall. May feeders closed $1.27 lower at $156.87, August feeders closed $3.47 lower at $166.52 and September feeders closed $3.50 lower at $169.67. At Hub City Livestock Auction in Aberdeen, South Dakota, on a run of 4,113 head compared to last week, the best test the market saw was on steers weighing 850 to 950 pounds, as they traded steady to $2 higher, and those weighing 1,000 to 1,050 pounds traded fully steady. The tested group of heifers was on those weighing 700 to 800 pounds, and they traded steady. The CME feeder cattle index 5/11/2022: up $0.37, $156.61.
LEAN HOGS:
It wasn't a good day for the lean hog contracts either. June lean hogs closed $3.37 lower at $97.47, July lean hogs closed $3.70 lower at $97.85 and August lean hogs closed $2.97 lower at $98.97. The market saw a somewhat supportive export report, which showed a 10% increase from the week before and noted that China was the second most aggressive buyer for the week. But once the market saw Thursday's WASDE report and the grim demand outlook that's projected for the second half of the year, the market's decline was set in stone. Pork cutouts totaled 336.97 loads with 323.14 loads of pork cuts and 13.83 loads of trim. Pork cutout values: down $0.89, $98.60. Thursday's slaughter is estimated at 477,000 head -- 1,000 head fewer than a week ago and 4,000 head fewer than a year ago. Wednesday's hog slaughter was revised to 476,000 head -- 6,000 head fewer than what was originally stated. The CME lean hog index 5/10/2022: down $0.17, $101.26.
Thursday's WASDE report shared that pork production for 2022 fell by 36 million pounds, as the industry isn't expected to be as aggressive in the first, second and fourth quarters as stated in last month's report, which is largely affected by lighter carcass weights. May's WASDE report also showed a decline in quarterly prices as pork demand isn't as strong as it was in years past. Compared to last month, the second quarter is expected to average $77 (down $3), the third quarter is expected to average $76 (down $1), the fourth quarter is expected to average $66 (down $3), and the first quarter of 2023 is expected to average $66. Pork imports grew by 8 million pounds, and exports fell by 14 million pounds.
Pork net sales of 26,300 mt for 2022 were up 10% from the previous week and 14% from the prior four-week average. The three primary buyers were Mexico (9,600 mt), China (4,700 mt) and South Korea (3,800 mt).
FRIDAY'S CASH HOG CALL: Lower. Thursday's cash market showed that packers have gotten most of their needs for the week already covered as prices dipped lower and a considerably smaller volume sold. It's likely that Friday's market faces the same tone.
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