GENERAL COMMENTS:
Both the live cattle and feeder cattle contracts are trading lower as the market finds Friday's Cattle on Feed report problematic as both on feed numbers and placements where higher than expected, but still lower than a year ago. Meanwhile, the lean hog complex is trading higher as its market finds technical support early on but will soon need to see better demand if it's to continue to trade higher. July corn is down 5 3/4 cents per bushel and July soybean meal is down $0.60. The Dow Jones Industrial Average is down 52.45 points.
LIVE CATTLE:
As traders chew the fat off last week's Cattle on Feed report, it's no surprise that the live cattle contracts are trading lower Monday morning as traders negatively react to the report. June live cattle are down $0.45 at $164.07, August live cattle are down $0.60 at $162.95 and October live cattle are down $0.67 at $167.17. Thankfully, even though the futures market is off to a weaker start, seeing that packers didn't have many cattle committed to the deferred delivery option is reassuring. One way that packers will be able to pump the brakes on the cash cattle market is by either slowing down processing speeds, or by procuring more inventory through the deferred delivery option, which limits their need to support the spot cash cattle trade. Last week's bobble in cash cattle prices could have been because the market was anxiously awaiting Friday's Cattle on Feed report. I expect prices to trade steady to somewhat higher this week.
Last week's negotiated cash cattle trade totaled 73,778 head. Of that, 82% (60,275 head) were committed to the nearby delivery, while the remaining 18% (13,503 head) were committed to the deferred delivery. Last week Southern live cattle sold for $175, which is fully steady in Texas but $1.00 lower in Kansas when compared to the previous week. Northern dressed cattle traded for mostly $288 which is $2.00 lower than the previous week's weighted average.
Boxed beef prices are higher: choice up $0.25 ($306.85) and select up $1.26 ($289.06) with a movement of 28 loads (19.34 loads of choice, 5.69 loads of select, zero loads of trim and 3.42 loads of ground beef).
FEEDER CATTLE:
It's no surprise that the feeder cattle contracts are trading lower as Monday is trader's first opportunity to trade the news shared in Friday's Cattle on Feed report. The report wasn't earth shattering by any means, but the actual USDA figures fell outside analyst's projections, which bearishly affects the reports as traders seem to only care about how the report differs between anticipated figures and the actual USDA findings. It's likely that the feeder cattle complex trades lower for the next day or two but come Wednesday enough time may have passed to where traders can look beyond Friday's report and again find comfort in the market's fundamentals. May feeders are down $2.15 at $210.25, August feeders are down $1.07 at $228.80 and September feeders are down $1.07 at $231.35.
LEAN HOGS:
The lean hog complex is keeping with Friday's energized spirit as the market continues to trade higher. June lean hogs are up $1.20 at $87.27, July lean hogs are up $1.25 at $90.05 and August lean hogs are up $1.10 at $91.05. The market is currently receiving ample technical support, but in order for it to continue to trade higher, finding some fundamental support in the form of consistent demand from customers will be essential. But with hog supplies overbearing the market currently, that may be a reality that's not foreseen until the third quarter.
The projected lean hog index for April 21 is down $0.13 at $71.18 and the actual index for April 20 is down $0.10 at $71.31. Hog prices on the Daily Direct Morning Hog Report average $66.05, ranging from $65.00 to $70.00 on 4,570 head and a five-day rolling average of $66.92. Pork cutouts total 130.30 loads with 109.06 loads of pork cuts and 21.24 loads of trim. Pork cutout values: down $0.13, $80.30.
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