GENERAL COMMENTS:
The biggest news heading into Wednesday afternoon is hands-down the spike in corn prices and the positive developments starting to take place in the cash cattle market. Feedlots are going to be on edge this week as cost of gains continue to be problematic for their bottom line. But, as with all bits and pieces of information, having an emotional reaction to a spike in corn prices isn't healthy. Stick to your plan feedlots; high corn isn't usually a good reason to sell steady cattle. May corn is up 25 cents per bushel and May soybean meal is up $24.50. The Dow Jones Industrial Average is up 15.96 points and NASDAQ is up 249.15 points.
LIVE CATTLE:
The market has had its first glimpse of what cash cattle may be able to achieve this week, as cattle in Nebraska sold for $118 on the morning's online auction. Feedlots may feel frightened by the latest advancements in the corn futures; but stand your ground and hold true to what the week can offer you. Higher corn prices weigh heavily on feedlot margins as cost of gains creep higher but selling fat cattle at steady/cheaper prices won't help their margins either. Thankfully, the live cattle contracts aren't having a depressing day like the feeder cattle contracts are and are only trading mildly lower. April live cattle are steady at $120.97, June live cattle are down $0.30 at $121.97 and August live cattle are down $0.40 at $120.85. Bids of $184 are being offered in Nebraska but other than that the countryside is still quiet.
The Fed Cattle Exchange Auction listed a total of 4,489 head, of which 1,160 actually sold; 3,329 head were listed as unsold as they did not meet the reserve prices, which ranged from $116 to $120. Opening prices ranged from $115 to $118, high bids ranged from $115.50 to $118. The state-by-state breakdown looks like this: Kansas 110 total head, with 36 head sold at $116, 74 head went unsold; Nebraska 3,032 total head, with 951 head sold at $118, 1,943 head went unsold; Texas 1,347 total head, with 173 head sold at $116.50, 1,174 went head unsold.
Boxed beef prices are higher: choice up $0.70 ($245.53) and select up $1.63 ($237.55) with a movement of 60 loads (38.73 loads of choice, 6.52 loads of select, 5.69 loads of trim and 9.15 loads of ground beef).
FEEDER CATTLE:
Today, I'm pretty sure Johnny Cash is looking down from Heaven and is saying, "Yeah, that right there is a ring of fire boys," and then breaks out in song singing, "Feeder cattle fell down into a deep ring of fire; corn shot higher and the cost of gains keep a rollin'; and it burns, burns, burns -- the ring of fire, the ring of fire."
Goodness gracious if you were ever curious what a $0.25 rally in the corn market could do to the feeder cattle contracts, look no further, and don't look long because it's painful. April feeders are down $3.62 at $43.20, May feeders are down $4.37 at $147.77 and August feeders are down $3.42 at $156.82. With Wednesday morning's USDA Prospective Planting numbers coming out, the corn market shot higher upon finding fewer acres planted than expected. USDA said corn planted area for all purposes in 2021 is estimated at 91.14 million acres, up from 90.82 million in 2020, but less than what was anticipated.
LEAN HOGS:
The lean hog market isn't having an overly confident day as the technical pressure from the board still lingers and packers aren't pushing the cash market higher heading into the shortened holiday weekend. April lean hogs are down $0.25 at $100.67, June lean hogs are down $0.82 at $105.15 and July lean hogs are down $0.77 at $104.12. Keeping an eye on slaughter speeds will be important as Friday nears and keeping close tabs on where the day's cutout values close will also be important too as it helps monitor consumer demand. Once the Easter holiday passes, we will have a better understanding of where the market truly sits without any holiday disruptions disturbing the marketplace.
The projected two-day CME Lean Hog index for 3/29/2021 is up $0.66 at $98.04, and the actual index for 3/26/2021 is up $1.40 at $97.38. Hog prices are lower on the National Direct Morning Hog Report, down $0.37 with a weighted average of $95.73, ranging from $92.00 to $99.50 on 4,485 head and a five-day rolling average of $94.69. Pork cutouts total 186.88 loads with 151.55 loads of pork cuts and 35.32 loads of trim. Pork cutout values: up $4.54, $111.43.
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