GENERAL COMMENTS:
It was another mixed day for the livestock complex as both the live cattle and feeder cattle markets closed higher, yet the cash cattle complex traded a few more cattle in the North for $288. Meanwhile, the lean hog complex plunged lower throughout Thursday's market as demand remains a key concern for the pork complex. Hog prices closed lower on the Daily Direct Afternoon hog report, down $0.75 with a weighted average of $66.92 on 4,880 hogs. May corn closed down 8 1/2 at $6.638 and July soybean meal closed down $3.30 at $448.7. The Dow Jones Industrial Average is down 110.39 at 33,786.62.
LIVE CATTLE:
It was a mixed day for the live cattle complex as the futures market upheld its end of the bargain and closed higher, but some cash cattle trade developed in the North for $288, which is $2.00 lower than last week's weighted average. I'm not convinced that Friday won't still see higher trade as the week's volume of cattle traded has been light this far. More likely than not, Friday's Cattle on Feed report has brought some skepticism into the market, which a normal trading week wouldn't have to worry about. Even though Friday's COF report is anticipated to be neutral/supportive in its nature, the grand unveiling of the report always adds hesitancy to the complex ahead of its reveal. April live cattle closed $1.33 lower at $174.1, June live cattle closed $0.75 higher at $164.35 and August live cattle closed $0.68 higher at $163.425. Thursday's slaughter is estimated at 128,000 head, 3,000 head more than a week ago and 7,000 head more than a year ago.
Beef net sales of 19,100 mt for 2023 were up noticeably from the previous week and 47% from the prior four-week average. The three largest buyers were South Korea (5,500 mt), Japan (4,200 mt) and Mexico (2,800 mt).
Thursday's actual slaughter data shared that, for the week ending April 8, steers averaged 892 pounds, which is 6 pounds lighter than the previous week and 20 pounds lighter than the same week a year ago. For the same week, heifers averaged 828 pounds, which is 1 pound lighter than a week ago and 12 pounds lighter than a year ago.
Boxed beef prices closed mixed: choice up $1.07 ($306.99) and select down $2.72 ($288.74) with a movement of 100.08 loads (68.06 loads of choice, 17.69 loads of select, 4.28 loads of trim and 10.05 loads of ground beef).
FRIDAY'S CATTLE CALL: Steady to $1.00 to $2.00 higher. Yes, cattle have now traded in both regions, but the week's movement is still thin and there's still a chance that the feedlots that are holding out for more money could see higher prices on Friday.
FEEDER CATTLE:
With the nearby corn contracts closing $0.08 to $0.10 lower and the live cattle futures contracts able to secure their higher tone through closing, the feeder cattle complex rallied through Thursday's end with little to no trouble. It's amazing to me to continue to watch the bullish nature of the August 2023 through October 2023 contracts. As those contracts either trade above or slightly below $230.00, it's jaw dropping to monitor the spread between the spring 2023 and summer 2023 feeder cattle contracts. For a long time now, traders have taken into account the fact that supplies will be tighter in the second half of the year, but at what point does the market cool down and say: that fact has already been configured into the equation? At this point, no one knows where the top is and it's safe to say this bullish run is teaching everyone a thing or two. April feeders closed $0.35 higher at $205.025, May feeders closed $1.88 higher at $212.35 and August feeders closed $2.75 higher at $229.525. At Winter Livestock Auction in Pratt, Kansas, at their midsession point, compared to last week, there weren't enough feeder steers sold to truly develop an accurate market trend. But feeder heifers weighing between 600 and 975 pounds sold $2.00 to $5.00 lower. The CME Feeder Cattle Index for April 19: down $2.32, $203.91.
LEAN HOGS:
Hog prices plunged lower through Thursday's market as traders obviously didn't receive enough fundamental support to sustain prices above the support plane established last week. But now that the complex has traded beneath that level, the next question is: will prices trend sideways or continue to pressure the downside of the market? Time will only tell, but better pork demand would help the scenario no doubt. June lean hogs closed $1.35 lower at $85.07, July lean hogs closed $1.20 lower at $88.15 and August lean hogs closed $1.10 lower at $89.37. Pork cutout values did see an increase from Wednesday's close, but that largely stems from $7.22 increase in the belly. Pork Cutouts totaled 287.16 loads with 253.57 loads of pork cuts and 33.59 loads of trim. Pork cutout values are up $1.34 at $78.15. Thursday's slaughter is estimated at 483,000 head, 1,000 head less than a week ago and 3,000 head more than a year ago. The CME Lean Hog Index for April 18: down $0.07, $71.57.
Pork net sales of 36,100 mt for 2023 were up 33% from the previous week but down 3% from the prior four-week average. The three largest buyers were Mexico (13,100 mt), Japan (4,600 mt) and Australia (4,200 mt).
FRIDAY'S HOG CALL: Lower. Given that packers haven't shown the cash market much interest this week, they'll likely keep with that trend through Friday's market.
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