GENERAL COMMENTS:
The cattle market witnesses few days that surpass the excitement and joy that came from the market Thursday. Cash cattle prices traded $7.00 to $9.00 higher and once again the momentum in the cash sector sent both the live cattle and feeder cattle contracts soaring. Hog prices closed lower on the Daily Direct Afternoon Hog Report, down $0.04 with a weighted average of $86.58 on 19,990 head. July corn is down 1 1/2 cents per bushel and July soybean meal is up $8.00. The Dow Jones Industrial Average is up 153.30 points.
LIVE CATTLE:
Weeks like this don't often happen for the live cattle market. It was the first day of the cattle market's new CME limits (listed below) and even though traders didn't max out the contracts to their limits, they traded sharply higher. June live cattle closed $5.77 higher at $174.90, August live cattle closed $4.70 higher at $172.37 and October live cattle closed $4.10 higher at $175.87. New all-time contract highs were seen throughout most of the live cattle contracts, and it's important to note that's largely because of the dynamic nature of this week's cash cattle market. Packers grew tired of playing games with feedlots and finally upped their bids around the noon hour and got cattle bought in both regions. Northern live cattle traded for mostly $292, which is $8.00 higher than last week's weighted average, and Southern live cattle traded for $175 to $180, but mostly $178 to $180, which is $7.00 to $9.00 higher than last week's weighted averages. This week's cash cattle market rang new highs for the cash sector as packers couldn't afford to be short bought going into next week's market.
I think that it's an appropriate time to note that the success in Thursday's market is because of the advancements made in the cash sector. In bull markets, traders look to the market's fundamentals to guide their way and, without a strong cash cattle market, where would traders be able to find this kind of strength from? Grid deals have their place, formula deals have their place, but the cash cattle market is the heart of the cattle complex and without it, the cattle market wouldn't be the same.
The CME's new daily limit for the live cattle contract is $6.75, with an expanded limit of $10.00. The CME's new daily limit for the feeder cattle contract is $8.25, with an expanded limit of $12.25.
Thursday's slaughter is estimated at 127,000 head, 2,000 head more than a week ago and 2,000 head less than a year ago.
Boxed beef prices closed mixed: choice up $0.60 ($306.44) and select down $0.83 ($286.32) with a movement of 147 loads (98.78 loads of choice, 25.25 loads of select, 3.13 loads of trim and 19.85 loads of ground beef).
FRIDAY'S CATTLE CALL: Steady. Given that prices have now traded in both regions, any more clean-up trade that develops will likely be steady with the prices seen Thursday.
FEEDER CATTLE:
Sure, the nearby corn contracts closed mostly $0.08 higher, but with the live cattle market closing $4.00 to $5.00 higher, feeders couldn't have cared less what the corn complex did -- they knew it was time to rally! The feeder cattle market had a tremendous day as the contracts closed anywhere from $2.00 to $4.00 higher thanks to the added encouragement of the cash cattle market. August feeders closed $2.47 higher at $241.65, September feeders closed $2.72 higher at $244.95 and October feeders closed $2.85 higher at $246.97. At Mitchell Livestock Auction in Mitchell, South Dakota, compared to last week, steers weighing 1,000 to 1,100 pounds sold steady to $2.00 higher. Heifers weighing 850 to 950 pounds sold $4.00 to $5.00 higher. Feeder cattle supply over 600 pounds was 95%. The CME Feeder Cattle Index for May 31: not available at this time.
LEAN HOGS:
The cattle market's excitement didn't sweep over into the lean hog complex as its market closed mostly lower. The spot June contract was able to close higher as traders felt confident thanks to steady demand in recent pork cutout values. June lean hogs closed $0.97 higher at $83.55, July lean hogs closed $1.27 lower at $82.05 and August lean hogs closed $1.82 lower at $80.02. Exports will be released Friday morning and traders are hopeful they'll see some extra demand from the report. Pork cutouts totaled 232.55 loads with 192.51 loads of pork cuts and 40.04 loads of trim. Pork cutout values: up $0.41, $85.68. Thursday's slaughter is estimated at 480,000 head - 12,000 head more than a week ago and 6,000 head more than a year ago. The CME Lean Hog Index for May 30: down $0.55, $79.53.
FRIDAY'S HOG CALL: Lower. Since Thursday's afternoon prices were lower and since packers have already bought a generous volume in this week's cash market, it likely means they won't participate much come Friday.
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