GENERAL COMMENTS:
Friday ended on the positive note for the cattle contracts, but not for the lean hog market. Come Monday, the live cattle market will be watching see if traders still favor pushing the market higher and feeders will be closely eyeing the corn market. Hog prices closed $3.13 loads on the Daily Direct Afternoon Hog Report with a weighted average of $112.09 on 3,480 head. July corn is down 3 1/4 cents per bushel and July soybean meal is down $7.00. The Dow Jones Industrial Average is down 348.58 points.
From Friday to Friday, livestock futures scored the following changes: June live cattle up $1.42, August live cattle up $1.45; August feeder cattle up $7.55, September feeder cattle up $7.00; June lean hogs down $0.20, July lean hogs down $0.97.
LIVE CATTLE:
It was a pivoting week for the live cattle market. Traders and cattlemen realize there are two very different but very real realities of the short- and long-term trajectories of the live cattle market. In the short-term, the bearish news stems from the fact that packers have record numbers of cattle on feed to work through. Thankfully, our export market continues to demand beef, but our domestic market has shown some signs of exhaustion as inflation pinches consumers' pocketbooks. Once the gluten of fat cattle get worked through though, the market's tone changes immediately. With beef cow processing mimicking that of the 1980s, it's undeniable that the nation will soon see cattle prices trend higher as demand outpaces supplies. In tying this all together, it seems as though the board started to realize this past week that the "long-term" realities of the market really aren't that far away and turned somewhat supportive.
June live cattle closed $0.02 lower at $133.60, August live cattle closed $0.27 lower at $133.85 and October live cattle closed $0.07 higher at $139.70. Throughout the week, cash cattle traded for $135 in the South and $222 in the North, both of which are $2.00 lower than a week ago.
Friday's slaughter is estimated at 126,000 head, 6,000 head more than a week ago and year ago. Saturday's slaughter is projected to be 96,000 head, 71,000 head more than a week ago and 3,000 head less than a year ago. This week's slaughter is estimated at 603,000 head, 41,000 head less than a week ago but 59,000 head more than a year ago.
Beef net sales of 17,900 mt for 2022 were down 11% from the previous week and 17% from the prior four-week average. The three largest buyers were Japan (6,000 mt), China (4,800 mt) and South Korea (2,700 mt).
Boxed beef prices closed higher: choice up $0.61 ($267.26) and select up $0.39 ($250.02) with a movement of 88 loads (52.82 loads of choice, 11.54 loads of select, 12.21 loads of trim and 11.61 loads of ground beef). Throughout the week choice cuts averaged $267.22 (up $3.17 from a week ago) and select cuts averaged $249.30 (up $4.39 from a week ago) and the week's total movement of cuts, grinds and trim totaled 509 loads.
MONDAY'S CASH CATTLE CALL: Steady to $1.00 lower. Showlists are still manageable, which favors sellers' position, but the fact that packers have so many cattle committed for the deferred delivery does not.
FEEDER CATTLE:
It was a rather impressive week for the feeder cattle contracts and, largely, the market's support came down to the fact that corn traded softer and that the countryside got moisture. August feeders closed $0.92 higher at $173.87, September feeders closed $0.82 higher at $176.30 and October feeders closed $0.60 stronger at $178.27. Thankfully, traders' stronger push was complimented by strong buying interest throughout sale barns this past week as buyers can now buy calves/feeders and kick them straight onto grass. Superior Livestock Market, Northern Video Sales and Western Video Market will all hold sales in roughly two weeks, which will give the market a better idea what feeder cattle will be worth this upcoming fall. The market's higher tone couldn't have come at a better time and sellers are now praying that the market keeps with its higher push, which will largely be determined by the corn market. Oklahoma's Weekly Cattle Auction Summary shared that, throughout the entire state compared to last week, feeder steers traded $2.00 to $6.00 higher and feeder heifers traded steady to $4.00 higher. Steer calves traded mostly steady, but heifer calves traded steady to $4.00 higher. Slaughter cows traded $1.00 to $2.00 higher and slaughter bulls sold $4.00 lower. The CME Feeder Cattle Index for June 2: unavailable at this time.
LEAN HOGS:
The lean hog market petered out by Friday's end, as the futures market, cash market and pork cutout values all closed lower. After an aggressive technical push on Wednesday, the market was able stay mostly elevated at its new price points, given that cash interest was strong and that pork cutout values were seeing consistent support. Seeing Friday's weaker close doesn't come as bewildering news as it's most likely that traders just stepped away from the sector ahead of the weekend and will regroup come Monday. June lean hogs closed $0.15 higher at $110.20, July lean hogs closed $1.42 lower at $110.75 and August lean hogs closed $1.70 lower at $108.05. Pork cutouts totaled 209.92 loads with 194.65 loads of pork cuts and 15.27 loads of trim. Pork cutout values: down $2.64, $109.38. Friday's slaughter is estimated at 478,000 head, 29,000 head more than a week ago and 1,000 head less than a year ago. Saturday's kill is projected to be around 145,000 head, 134,000 head more than a week ago and 45,000 head less than a year ago. The CME Lean Hog Index for June 1: up $0.12, $105.03.
Pork net sales of 31,900 mt for 2022 were down 13% from the previous week but up 15% from the prior four-week average. The three largest buyers were Mexico (13,000 mt), China (9,000 mt) and South Korea (3,900 mt).
MONDAY'S CASH HOG CALL: Higher. Given that packers weren't active in Friday's market, it's likely that they'll assess demand early next week and then get to buying.
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