GENERAL COMMENTS:
The active contracts of cattle, feeders and lean hogs are all starting higher Monday, thanks to higher boxed beef prices for cattle and higher cash trade of hogs.
LIVE CATTLE:
Starting a new week, live cattle futures are higher at mid-morning Monday with the August contract up $1.40 at $173.25, still well below the levels cash cattle traded at last week. Last week's cash trade was roughly $8 higher for live cattle in the South and $10 for dressed trade in the North, hitting record prices around $300 and some above. USDA will have new weighted averages out a little later Monday. Boxed beef prices finished $23.00 higher for choice and $14.78 higher for selects last week, strong indications of retail demand, despite concerns about the economy. Monday morning, choice boxed beef was up $3.66 at $336.59 and selects were up $3.81 at $309.52 on 29 total loads.
The weekend saw widespread coverage of light to moderate rain amounts across the Southern Plains, helpful for the restoration of pasture. Temperatures will remain high in Texas this week, near or into triple digit readings. Dow Jones estimates Monday's cattle slaughter at 125,000, the same as a week ago. So far in 2023, cattle slaughter is down 3.5% from a year ago, but beef production is down 4.8%, due to lighter weights, as well as lower numbers of cattle available.
FEEDER CATTLE:
At midmorning Monday, August feeder cattle are up $0.20 at $239.20, down from last week's contract high at $245.17. Although last week's higher cash cattle trade was a bullish influence for feeders, recent concerns about dry early conditions for the country's corn crop are offering some bearish concern for feeder prices. On Wednesday afternoon, traders will be watching for the Federal Reserve's next decision on interest rates, a possible concern for all commodity prices. So far, beef demand has remained strong in 2023, despite concerns about the economy. As long as retail beef demand remains active, the upward trend in August feeder cattle is likely to continue. The latest CME Feeder Index was at $226.18 for Thursday, June 8, well below the August futures price.
While drought remains a concern for much of the Midwest, many western areas have benefited from rains in 2023 and pasture conditions are looking more promising. Colorado, Kansas and Missouri have better chances for moderate rains this week, as do Idaho and western Montana.
LEAN HOGS:
At midmorning Monday, July hog futures are trading up $2.52 at a new one-month high of $92.15, continuing a streak of buying that started after Memorial Day weekend, prompted by news that USDA was helping the market with a $50 million pork purchase. There is also a possibility last minute sales are being made to California, although it is not completely clear when stores will have to be done with older pork products.
Here on Monday, Dow Jones estimated Monday's hog slaughter at 469,000, even with last week. So far in 2023, hog slaughter is up 1.3%, but pork production is only up 0.5%. Friday's WASDE report showed USDA expects 6.635 billion pounds of pork production in the second quarter, slightly less than a year ago. Production in the third quarter is expected to be a little lower at 6.605 billion pounds, but that would be up 1% from a year ago. The approach of the July 1 deadline for California's new Proposition 12 requirements come with a lot of uncertainty as to how the industry will adjust. USDA anticipates barrows and gilts will average $60 per hundredweight in the third quarter or roughly $81 lean.
Cash hog prices in Monday morning's Daily Direct Hog report are off to a strong start with national negotiated trades averaging 91.98 cents per pound and the swine formula base averaging 82.57 cents. Pork cutouts were down 35 cents at $88.04 Monday morning with lower trade in loins and bellies. CME's most recent lean hog index was projected at $83.30 for Thursday, June 8, 2023.
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