GENERAL COMMENTS:
By Friday's end, the livestock complex had turned mostly higher allowing all three of the contracts to see higher prices ahead of the weekend's arrival. Hog prices closed lower on the Daily Direct Afternoon Hog Report, down $2.95 with a weighted average of $74.35 on 3,159 head. July corn is up 4 cents per bushel and July soybean meal is up $1.50. The Dow Jones Industrial Average is down 8.89 points. The Friday to Friday livestock futures scored the following changes: June live cattle up $2.47, August live cattle up $2.95; May feeder cattle up $2.95, August feeder cattle up $7.55; June lean hogs up $0.33, July lean hogs down $0.10; May corn down $0.20, July corn down $0.10.
LIVE CATTLE:
Upon seeing the day's WASDE report, traders (without needing to think twice) turned the live cattle contracts higher and so much to the point where the contracts were mostly $1.00 higher. With the understanding that the market is going to possess thinner supplies in the months ahead and will likely continue to see excellent demand, traders felt confident pushing the contracts higher. June live cattle closed $1.45 higher at $164.40, August live cattle closed $1.65 higher at $162.45 and October live cattle closed $1.60 higher at $166.15. No substantial cash cattle trade developed throughout the day as largely the week's business was done with. Throughout the week Southern live cattle have traded for $170, which is $2.00 lower than last week's weighted average, and Northern dressed cattle have traded for mostly $280, which is $1.00 lower than last week's weighted average. The big question heading into Monday's market is: how will cattle trade next week? Northern feedlots were able to keep prices from trading more than $1.00 lower, which was a moderate accomplishment. So, if not many of the cattle bought this week were committed to the deferred delivery option, packers may have to pay steady prices next week for cattle.
Friday's slaughter is estimated at 124,000 head - 7,000 head more than a week ago and 4,000 head more than a year ago. Saturday's slaughter is projected to be around 16,000 head. This week's slaughter is estimated at 646,000 head -- 23,000 head more than a week ago and 5,000 head less than a year ago.
Friday's WASDE Report was rather favorable to the cattle and beef markets again this month. Beef production for 2023 was raised by 146 million pounds as both fed cattle and non-fed cattle slaughter speeds have been more aggressive than originally assumed. Thankfully this isn't expected to hinder quarterly steer prices, however. For the remaining three quarters of the year, every single quarter saw a higher anticipated price point than what April's WASDE report shared. The second quarter is now expected to average $172 (up $3.00), the third quarter is now expected to average $164 (up $2.00) and the fourth quarter is expected to average $169 (up $2.00). 2023 beef imports were increased by one million pounds, but 2023 beef exports rose by 89 million pounds.
Boxed beef prices closed mixed: choice down $1.11 ($304.61) and select up $0.10 ($284.68) with a movement of 115 loads (74.65 loads of choice, 15.85 loads of select, 14.66 loads of trim and 9.90 loads of ground beef).
MONDAY'S CATTLE CALL: Steady. It's impressive that Northern feedlots were able to keep prices from trending more than $1.00 lower, and with beef demand still high, there's a chance that prices could trade steady next week.
FEEDER CATTLE:
Even though the nearby corn contracts closed slightly higher, that wasn't enough to derail the feeder cattle contracts from closing higher Friday afternoon. As traders skimmed through the midmorning's WASDE report, all they could help but notice was excellent demand tightening supplies which should continue to drive live cattle and cash cattle prices higher; and consequently, make feeders even more sought after as well. May feeders closed $1.35 higher at $205.47, August feeders closed $2.90 higher at $228.97 and September feeders closed $2.67 higher at $231.97. The Oklahoma Weekly Cattle Auction Summary shared that throughout the entire state and when compared to last week, feeder steers traded mostly steady and feeder heifers sold steady to $3.00 higher. Stocker steers and steer calves sold steady to $5.00 higher, stocker heifers and heifer calves sold steady to $2.00 higher. Slaughter cows sold steady to $2.00 lower and slaughter bulls traded $1.00 weaker. Feeder cattle supplies over 600 pounds was 66%. The CME feeder cattle index 5/11/2023: up $1.12, $200.58.
LEAN HOGS:
Give credit where credit is due and the fact that nearby lean hog contracts were able to close higher is quite the accomplishment. The market wasn't blessed with an overly optimistic WASDE report, but still, traders felt confident allowing some of the nearby contracts to close higher ahead of the week's end. June lean hogs closed $0.22 higher at $84.10, July lean hogs closed $0.20 higher at $85.32 and August lean hogs closed $0.30 lower at $86.07. Pork cutouts totaled 207.95 loads with 182.74 loads of pork cuts and 25.21 loads of trim. Pork cutout values: up $0.19, $83.41. Friday's slaughter is estimated at 463,000 head - 9,000 head more than a week ago and 27,000 head more than a year ago. The CME lean hog index 5/10/2023: up $0.33, $75.40.
Friday's WASDE report shared mixed news for the hog and pork markets. 2023 pork production was raised by 21 million pounds based on recent slaughter data. Unfortunately, quarterly price projections were pulled back from what April's WASDE report depicted. Barrow and gilt prices in the second quarter are expected to average $56 (down $4.00), prices in the third quarter are expected to average $60 (down $7.00) and prices in the fourth quarter are expected to average $55 ($down $7.00). 2023 pork imports were raised by four million pounds, but 2023 pork exports were increased by 123 million pounds.
MONDAY'S HOG CALL: Lower. It's unlikely that packers will run into Monday's market and pay the cash hog market but attention ahead of knowing what demand for the week is going to look like.
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