GENERAL COMMENTS:
June live cattle are trading modestly higher for a fourth consecutive day as the market shakeout from concerns in the banking system appear to be diminishing. June lean hogs are trading lower with ongoing concerns about a recent expansion of hog numbers that will likely show up in Thursday's USDA report.
LIVE CATTLE:
Live cattle futures are slightly higher at mid-morning Wednesday with the June contract up 60 cents at $159.50. It is no secret cattle numbers are down and this week's prices have been helped by an easing of concerns about recent bank failures. So far this week, boxed beef prices have been steady to higher, a good sign of active retail demand. Slaughter has also stayed active with Dow Jones estimating 126,000 on Wednesday, even with last week.
As often happens when cattle supplies are tight, cash trade is slow to develop this week and there may be some interruption in the North with more winter storms expected from South Dakota to Michigan Friday and early next week. The sell-off of cattle prices in March related to fears about the banking system shook some specs out of their long positions, but fundamentally, this market continues to have its eyes set on higher prices as long as there continues to be plenty of demand for available cattle.
Boxed beef prices were mixed early Wednesday: choice up $0.46 at $281.09 and select down $0.79 at $269.57 with a movement of 60 loads (37.43 loads of choice, 8.90 loads of select, 4.91 loads of trim and 9.18 loads of ground beef).
FEEDER CATTLE:
At mid-morning Wednesday, May feeder cattle are up $1.42 at $202.22, holding firm after Monday's $3.82 jump. Outside fears about the economy took prices to one-month lows in March, but that limited of a sell-off shows how firm feeder prices are. The obvious support is coming from those that know more feeders will be needed in the months ahead as cattle supplies struggle to keep up with beef demand. A chance for greener pastures in the northwestern Plains this spring also suggests an opportunity for holding back cattle in 2023.
Overall, spot feeder cattle prices are trading near their highest prices since 2015 and remain well-supported in spite of the strain of high feed costs. The CME Feeder Index posted $191.34 for Monday, March 27, up $3.56 from a week ago.
LEAN HOGS:
At mid-morning Wednesday, June hog futures are trading down $2.05 at $90.67, unable to hold a gain for the week with USDA's Hogs and Pigs report due out at 2 p.m. CDT Thursday. USDA's same report for December 1 said all hogs totaled 73.1 million head, down 2% from a year ago, but given the behavior of cash prices since then, it seems reasonable to say there have been more hogs available than expected. Pre-report surveys suggest the March 1 inventory will be up slightly from a year ago, near 72.5 million head. It will also be interesting to see if any December totals get revised upward.
Cash hog prices in Wednesday's Daily Direct Hog morning report remained under pressure with negotiated trades averaging 75.95 cents per pound and the swine formula base averaging 74.44. USDA's morning pork report posted Wednesday's cutouts up $1.16 at $81.16, helped by a $13.54 gain in bellies. USDA reported 147.28 loads of pork cuts and 28.66 loads of trim. Hog slaughter remains active and was estimated by Dow Jones at 484,00 for Wednesday, up 1,000 from last week. CME's lean hog index was projected at 73.05 for Thursday, up 41 cents from a week ago. The projected lean hog index for 3/27/2023 is down $0.32 at $76.25, and the actual index for 3/24/2023 is down $0.42 at $76.57.
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