GENERAL COMMENTS:
The cattle and hog contracts have seemed to switched places as the lean hog market finally finds support after a grueling downward trend and the cattle contracts are now shrinking lower as corn regains some momentum. Cash cattle have begun to trade in the North for $232 and in the South for $140. July corn is up 1 1/2 cents per bushel and July soybean meal is down $4.80. The Dow Jones Industrial Average is down 72.32 points.
LIVE CATTLE:
Timing really is everything. As we watch the live cattle market's trade trek through Wednesday, it's not that surprising to see the futures market trending lower after two extremely strong days earlier in the week, and it's not surprising to see cash cattle trading, or even surprising to see them trading with time. I'm not one that likes to see cattle trading with time because it typically robs the upcoming weeks of any hopes of finding true price discovery in the marketplace and potentially higher prices that come with active market participation. However, understanding seasonal trends is important too and is the reason why it's not surprising to find packers buying up cattle in today's market with time. Feedlots are willing to sell cattle with time today because the market is on the brink of undergoing a seasonal transition. Upon May's arrival, not only can we expect nicer spring weather, but also that calf-fed fats are going to saturate the market overnight. As feedlots know and understand this seasonal change, they're willing to take today's prices even if that means the cattle won't leave for another two to three weeks as it gives them an opportunity to lock in a price and guarantee that they'll get their cattle traded.
Some light business has developed in parts of the North at $232, which is steady with last week. Some of these deals are set with delivery for next week and some for the weeks of May 16 and May 23. A light trade is also developing in the South at $140, which is also steady with last week. Bids of $146 are being offered in Nebraska, Colorado and Iowa at this point. June live cattle are down $0.15 at $135.17, August live cattle are down $0.15 at $137.15, and October live cattle are up $0.10 at $144.62.
Tuesday's slaughter was up to par, but heading into Wednesday afternoon, continuing to monitor slaughter speeds remains incredibly important because if packers start slowing down processing speeds showlists could greatly suffer in the upcoming weeks.
Boxed beef prices are higher: choice up $0.15 ($259.70) and select up $0.11 ($247.45) with a movement of 80 loads (45.26 loads of choice, 8.40 loads of select, 6.94 loads of trim and 19.64 loads of ground beef).
FEEDER CATTLE:
As the nearby corn contracts attempt to shake the downward trend that's been the theme of the corn market this week, the feeder cattle contracts are drawing back as an uptick in corn prices comes as bad news. May feeders are down $0.02 at $162.37, August feeders are down $0.37 at $175.82 and September feeders are down $0.32 at $178.02. With the live cattle complex not likely to lend much support Wednesday, the feeder cattle contracts will likely play the game of cat and mouse with the corn sector all day.
LEAN HOGS:
The lean hog complex has found support in Wednesday's market and the contracts are back to trading $2.00 to $3.00 higher. Steady $2.00 gains are seen all throughout the marketplace, but it is interesting to note that the October and December 2022 contracts lead the market with the stoutest gains as they push well over $3.00 higher. June lean hogs are up $2.55 at $104.75, July lean hogs are up $2.42 at $106.25 and August lean hogs are up $2.07 at $106.42. Seeming to complement the futures market move is Wednesday's strong cash hog market where 6,949 head have already traded and the market's been able to demand a top bid of $111.00. If pork cutout values can close the day on a stronger note, then this move may be able to work its way into Thursday's trade.
The projected CME Lean Hog Index for 5/3/2022 is down $0.11 at $101.04, and the actual index for 5/2/2022 is down $0.44 at $101.15. Hog prices are averaging $104.24 on the Daily Direct Morning Hog Report, with ranges from $95.00 to $111.00 and on 6,949 head and a five-day rolling average of $101.24. Pork cutouts total 150.02 loads with 127.75 loads of pork cuts and 22.26 loads of trim. Pork cutout values: down $0.80, $104.76.
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