GENERAL COMMENTS:
The lean hog complex rounded out the day higher as pork cutout values found support in the afternoon, but unfortunately, the same support didn't seep over into the cattle complex. Boxed beef prices closed lower and no cash cattle trade developed, so traders had little support to keep the market trading steady or somewhat higher.
Hog prices closed lower on the Daily Direct Afternoon Hog Report, down $1.46 with a weighted average price of $91.79 on 6,084 head and a five-day rolling average of $92.43. July corn is down 8 1/2 cents per bushel and July soybean meal is down $4.70. The Dow Jones Industrial Average is up 172.13 points.
LIVE CATTLE:
Wednesday's market was a swing and a miss for the live cattle complex as traders cringed at the unveiling of weaker box prices. The combination of financially strained consumers amid growing beef production is weighing negatively on the market as cattlemen and traders alike desperately want to see the seasonal spring boxed beef rally go into play. But at this point, boxes remain volatile as demand is lagging.
June live cattle closed $1.15 lower at $176.47, August live cattle closed $1.30 lower at $174.22 and October live cattle closed $1.47 lower at $177.45. The cash cattle market couldn't lend any support either as no trade has developed yet. Asking prices are noted in the South at $186 to $187 but aren't yet established in the North. Packer interest should improve on Thursday, but it wouldn't be surprising to see trade delayed until Friday.
Wednesday's slaughter is estimated at 123,000 head -- steady with a week ago and 2,000 head less than a year ago.
Boxed beef prices closed lower: choice down $1.82 ($296.67) and select down $4.09 ($288.25) with a movement of 145 loads (87.96 loads of choice, 25.48 loads of select, 9.36 loads of trim and 22.46 loads of ground beef).
THURSDAY'S CATTLE CALL: Steady to somewhat lower. Given that packers are operating with red margins, they'll likely try to get cattle cheaper and with time as they're slowly wanting to build inventory up around them.
FEEDER CATTLE:
Even with countryside demand and nearby corn prices closing $0.08 lower, the feeder cattle complex floundered through Wednesday's trade. One would think that the moisture being received across parts of the Northwest would encourage the feeder cattle complex, but traders seem to have their eyes locked on boxed beef prices and nothing else.
May feeders closed $1.95 lower at $240.20, August feeders closed $2.02 lower at $252.40 and September feeders closed $2.05 lower at $253.40. At Hub City Livestock Auction in Aberdeen, South Dakota, compared to last week, the best test was on steers weighing 850 to 899 pounds which traded $7 to $9 higher with instances up to $13 higher. Steers weighing 900 to 949 pounds sold steady to $4 higher. Feeder cattle supply over 600 pounds was 97%. The CME feeder cattle index May 7: not available at this time.
LEAN HOGS:
The lean hog complex wasn't without its struggles Wednesday, but by the day's close, the market was able to see most of its contracts round out the day higher. Only the late summer 2024 contracts (July and August) closed lower and only mildly so. Hopefully, Friday's WASDE report will give the market a better sense of summertime demand and if supportive, the contracts may even be able to recover some more position.
June lean hogs closed $0.40 higher at $98.72, July lean hogs closed $0.05 lower at $102.45 and August lean hogs closed $0.10 lower at $101.72. The biggest reason contracts closed higher is afternoon consumer support came to fruition and the afternoon carcass price closed higher. Pork cutouts totaled 261.28 loads with 209.19 loads of pork cuts and 52.10 loads of trim. Pork cutout values: up $2.20, $99.29.
Wednesday's slaughter is estimated at 477,000 head -- 3,000 head less than a week ago and 12,000 head more than a year ago. The CME lean hog index for May 6: up $0.23, $91.03.
THURSDAY'S HOG CALL: Lower. Given that packers have bought a sizeable volume of hogs already this week, it's likely that hog prices will be lower on Thursday.
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