GENERAL COMMENTS:
It was a mostly disappointing day for the livestock complex as most of the contracts closed lower. Come Monday, hog producers are going to be seeking direction and cattlemen are going to be hoping that next week cash cattle prices can remain steady. Hog prices closed lower on the Daily Direct Afternoon hog report, down $1.10 with a weighted average of $70.89 on 3,460 hogs. July corn closed up 7 1/2 at $5.965 and July soybean meal closed up $1.50 at $426.1. The Dow Jones Industrial Average is up 546.64 at 33,674.38.
Friday to Friday, livestock futures scored the following changes: June live cattle down $3.55, August live cattle down $4.28; May feeder cattle down $8.45, August feeder cattle down $9.30; June lean hogs down $7.93, July lean hogs down $8.25; May corn up $0.17, July corn up $0.11.
LIVE CATTLE:
The live cattle market summoned a little support ahead of closing as the June 2023 and August 2023 contracts were able to close mildly higher, but the rest of the complex still closed lower. I'm encouraged to see that traders are respecting the market's 40-day moving average and kept the spot June contract above that threshold. Yes, packers were again able to drive cash cattle prices lower this week and gain some leverage in the market, but demand is still exceptionally strong and front-end supplies are thin: So, just how much lower will cash cattle prices get this summer? Time will tell. June live cattle closed $0.35 higher at $161.925, August live cattle closed $0.08 higher at $159.5 and October live cattle closed $0.28 lower at $163.575. Throughout the week, Southern live cattle have traded for mostly $172 which is $1.00 lower than last week's weighted average, and Northern dressed cattle have sold mostly for $281, which is $3.00 lower than last week's weighted average.
Friday's slaughter is estimated at 117,000 head, 11,000 head more than a week ago and 4,000 head more than a year ago. Saturday's slaughter is projected to be around 10,000 head. This week's slaughter is estimated at 623,000 head, 1,000 head less than a week ago and 38,000 head less than a year ago.
Boxed beef prices closed mixed: choice down $0.33 ($309.19) and select up $0.67 ($288.16) with a movement of 89.05 loads (59.10 loads of choice, 18.52 loads of select, 3.80 loads of trim and 7.63 loads of ground beef). Throughout the week choice cuts averaged $309.11 (up $0.11 from last week) and select cuts averaged $288.49 (up $0.15 from last week) and the week's total movement of cuts, grinds and trim totaled 514 loads.
MONDAY'S CATTLE CALL: Steady. Packers have now successfully gotten the cash cattle market to trade lower for three consecutive weeks. Higher trade next week is not likely, but keeping prices steady would still be commendable.
FEEDER CATTLE:
It was a gut-wrenching week for the feeder cattle complex. If you peeked at the futures complex at all throughout the week, you likely slid into a mild depression as all you witnessed was lower trade and lower closes. But is the futures market this past week a true representation of feeder cattle prices? I'd say no. Yes, the futures complex traded lower as traders reacted to the onset of yet again cheaper cash cattle prices and reacted to the corn market's mild gains throughout the week, but that doesn't change the fact that, long term, feeder cattle supply will not surpass demand in 2023. It's important to remember than even in bull-run years that there are days and weeks of lower trade, that doesn't mean the bull run is over. Cheaper cash cattle prices, higher corn and banking pressures sent the feeder cattle complex lower this past week, not the lack of demand. May feeders closed $1.13 lower at $202.525, August feeders closed $1.73 lower at $221.425 and September feeders closed $1.63 lower at $225.05. The Oklahoma Weekly Cattle Auction Summary shared that, throughout the week and through the entire state, feeder steers traded mostly steady, but steer calves sold $4.00 to $8.00 higher. Feeder heifers and heifer calves sold steady to $3.00 higher. Slaughter cows sold $2.00 to $4.00 higher, and slaughter bulls traded steady. Feeder cattle supply over 600 pounds was 62%. The CME Feeder Cattle Index for May 3: down $2.07, $199.46.
LEAN HOGS:
I understand that corn prices closed $0.06 to $0.07 higher, but pork cutout values closed higher too. A $2.00 to $3.00 decline ahead of Friday's closed seems rather over done to me, especially when you take into account that traders didn't just send the complex lower, but that they also broke through the long-term support plane. On Monday, all market participants will be looking for direction in the hog complex, and hog producers pray that demand will continue to allow pork cutout values to close higher so that traders can see a strong demand picture in the market's future and potentially raise the futures contract's prices as well. June lean hogs closed $3.37 lower at $83.77, July lean hogs closed $2.82 lower at $85.42 and August lean hogs closed $3.17 lower at $86.37. Pork Cutouts totaled 219.09 loads with 192.43 loads of pork cuts and 26.66 loads of trim. Pork cutout values are up $1.75 at $81.87. Friday's slaughter is estimated at 454,000 head, 4,000 head more than a week ago and 13,000 head more than a week ago. Saturday's slaughter is projected to be around 136,000 head. The CME Lean Hog Index for May 3: up $0.46, $74.24.
MONDAY'S HOG CALL: Steady. It's likely that packers wait until Tuesday or Wednesday before they aggressively procure hogs again in the cash market.
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