GENERAL COMMENTS:
It was an excellent day for the livestock complex as the contracts closed higher, and in terms of the lean hog complex, fundamental support was stellar. Heading into Thursday's trade, the live cattle market is hoping that feedlots stick together and can rally the cash market into holding out until packers pay up at least a $1.00. Hog prices closed higher on the Daily Direct Afternoon Hog Report, up $4.10 with a weighted average $115.68 on 19,443 head. July corn is down 22 1/4 cents per bushel and July soybean meal is down $2.10. The Dow Jones Industrial Average is down 176.89 points.
LIVE CATTLE:
The live cattle contracts jumped on the livestock market's bandwagon and closed fully higher, but the market isn't completely sold on what to do in terms of this week's cash cattle market. There's been some cattle trade in the South for $135, which is $2.00 lower than last week, and a handful of cattle have sold in the North for $222 to $222.50, which is $2.00 to $2.50 lower than last week. The cattle that traded in the North for $222.50 were mostly to a regional and committed for the week of June 13. As feedlots watched the board trade throughout Wednesday, and considering the fact that their showlists are manageable and carcass weights are declining, some feedlots aren't sure they need to be strong armed into selling cattle cheaper, and are holding out for better money. With the market having only traded around 25,000 head of cattle thus far this week, the market could still see some changes in prices ahead of the week's close, especially if the board holds strong. June live cattle closed $2.27 higher at $132.80, August live cattle closed $2.52 higher at $132.90 and October live cattle closed $1.75 higher at $137.90.
Wednesday's slaughter is estimated at 125,000 head, steady with a week ago and 17,000 head more than a year ago.
Boxed beef prices closed mixed: choice down $0.12 ($267.42) and select up $0.26 ($248.91) with a movement of 146 loads (90.30 loads of choice, 36.47 loads of select, 5.25 loads of trim and 14.01 loads of ground beef).
THURSDAY'S CASH CATTLE CALL: $1.00 higher in the North. The South has seen more cattle trade and so it's unlikely that they'll see their price point change much, but the North holds the possibility of seeing cattle trade higher as feedlots are working together and holding out for more, it seems.
FEEDER CATTLE:
The corn market's sharp $0.20 to $0.22 regression helped propel the feeder cattle contracts higher and, following last weekend's shot of moisture, the complex was ready to rumble. August feeders closed $4.60 higher at $169.72, September feeders closed $4.27 higher at $172.40 and October feeders closed $4.07 higher at $174.77. DTN Lead Analyst, Todd Hultman, explained the corn market's situation by saying, "There is no big, obvious fundamental change to explain the sudden drop in corn prices, but two contributing factors are Russia's offer to allow exports of grain from Ukraine and Tuesday's report of planting progress from USDA. Regarding Russia's offer, the U.N. is trying to cut a deal to make it happen, but so far, no official from the West or Ukraine has shown a willingness to fulfill Russia's demand to ease sanctions. Late Tuesday, USDA said 86% of corn was planted and 61% of it had emerged, both close to their five-year average pace for this time of year." Regardless of the rhyme or reason why corn prices have dropped, cow-calf producers are elated to see corn prices dropping and hope that, long term, it will relieve some pressure from the feeder cattle market. With the nation's largest video sales schedule to host their first debuts for the 2022 market in two weeks, the timing of the corn market's retreat is aligning beautifully for cow-calf producers. At Winter livestock Auction in Dodge City, Kansas, compared to last week, feeder steers weighing 875 to 975 pounds traded $3.00 to $8.00 higher. Feeder heifers weighing 800 to 975 pounds traded $5.00 to $6.00 stronger. Demand for cattle over 800 pounds was excellent. Slaughter cows traded $10.00 to $12.00 higher and slaughter bulls sold $5.00 higher. The CME Feeder Cattle Index for May 31: up $0.14, $153.36.
LEAN HOGS:
The lean hog market saw its nearby contracts round out the day higher while its deferred contracts closed slightly lower. June lean hogs closed $1.82 higher at $109.80, July lean hogs closed $4.42 higher at $112.42 and August lean hogs closed $2.50 higher at $108.92. But the market's big advancements were seen in its fundamental facets as the cash hog market saw nearly 20,000 head trade at $4.10 higher, and pork cutout values also closed stronger. Given the robust fundamental push that Wednesday's market saw, it wouldn't be surprising to see the market trend higher come Thursday. Pork cutouts total 293.37 loads with 266.14 loads of pork cuts and 27.23 loads of trim. Pork cutout values: up $2.31, $110.02. Wednesday's slaughter is estimated at 477,000 head, 5,000 head more than a week ago and 31,000 head more than a year ago. Tuesday's slaughter was revised to 469,000 head, 11,000 head less than what was originally stated. The CME Lean Hog Index for May 30: up $0.22, $105.15.
THURSDAY'S CASH HOG CALL: Steady. Thursday's cash market is a tough call. Seeing that close to 20,000 head traded in Wednesday's market is huge for the cash hog sector, but given that packers are jumping pack into the market after a long-holiday weekend, they still could need some more hogs as prime summer grilling days linger ahead of the market.
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