GENERAL COMMENTS:
Live cattle prices are trading a little higher at midday Monday, helped by a rebound in boxed beef prices. Feeders and lean hogs are trading lower with hogs still near their highest prices in a year.
LIVE CATTLE:
June live cattle futures are trading up $0.25 at $172.30, struggling to build bullish momentum after a quiet start Monday. Last week's $8.20 drop was largely about specs nervous about being long cattle, even though it remains difficult to see a threat to the safety of the country's beef supply. Friday's CFTC data showed noncommercials reduced net longs from 66,910 to 60,056 as of April 2. Later Monday, USDA will post weighted averages for last week's cash trade and it looks like southern trade was $2 lower, while northern trade was mostly $3 to $4 lower with a wider range of $295 to $298 traded. USDA estimated last week's cattle slaughter at 609,000, up 23,000 from the previous week. Dow Jones estimates Monday's slaughter at 115,000, down from 117,000 a week ago.
Last week's most bearish market factor was the drop in boxed beef prices as retailers showed their concerns about the impact news of bird flu in dairy cattle might have on beef cattle. There is no reason to believe milk or beef supplies are not safe and it remains to be seen if consumers are all that concerned, but choice boxed beef dropped $9.55 last week to $297.17 by Friday afternoon. Early Monday, there was a change of heart as USDA reported choice boxed beef up $4.59 at $301.76. Selects were up $6.78 at $301.48, roughly even with choice on 44 total loads.
Monday's radar is mostly clear for the Southern Plains with moderate to heavy precipitation expected from Texas to the southeastern U.S. the next few days. Temperatures are expected to be mild in the five-state region this week with highs in the 60s and 70s.
FEEDER CATTLE:
May feeder cattle are trading down $1.30 at $236.87, staying near their lowest prices in over two months after falling over $10 last week. Price swings in feeder cattle are known for their volatility and, given the historically low number of calves under 500 pounds in USDA's January inventory report, it is somewhat understandable how bearish surprises like the news of bird flu in older dairy cattle can temporarily hit futures prices. Fundamentally, however, the country is going to need more calf production and we don't see much evidence of that happening yet.
On the futures side, Friday's CFTC report showed noncommercials actually increased net longs from 1,674 to 2,505 as of April 2. On the cash side, the CME Feeder Index was priced at $248.97 as of Thursday, up $1.20 on the week and above Thursday's close in April futures at $242.70. Technically speaking, concerns about avian influenza have turned the trend of May feeder cattle prices down. It is encouraging that no new bearish news has come out since last Monday, but so far, the price trend remains down.
LEAN HOGS:
June lean hogs are trading down $0.25 at $107.65, taking a break after closing up 6.45 cents last week and ending at a new one-year high. After hog producers endured one of their least profitable years on record in 2023, it has been a remarkable turn of events to see June hog prices gain almost $18 so far in 2024, while producers also have the benefit of lower feed costs.
Along with the bullish turn in futures prices, cash prices are also in much better shape than they were at the end of 2023. Monday morning's report from USDA showed national negotiated cash hogs at $83.03, down from Friday afternoon's $86.70. The swine formula price was up 57 cents from Friday to $86.97. Also reflecting higher cash prices, the CME Lean Hog Index was projected at $87.05 for Friday, up $2.27 from a week ago.
So far in 2024, USDA estimates the hog slaughter is up 0.6% from a year ago, a fairly consistent pace. For Monday, Dow Jones' estimates hog slaughter at 471,000, down from 485,000 on Friday. Monday morning's report of pork cutout values jumped up $3.74 to $101.49, the highest since August 2023 and helped by a $17.00 jump in the price of bellies. Technically speaking, June hog prices are trading down from their highest June prices in over a year and the 2023 high of $109.12 is a possible seasonal target to watch for.
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