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Monday, April 5, 2021

Monday Midday Livestock Market Summary - Feeder Cattle Market Revs Up Its Engine

GENERAL COMMENTS:

Perhaps in an effort to catch up with the hog and live cattle markets, which continue to explore fresh contract highs day by day, on Monday the feeder cattle market is leading the futures gains on the livestock board with prices up more than $3 per hundredweight (cwt). Live cattle and hog contracts are higher too, of course, as well as stocks and soybeans and cotton and metals and many other assets. May corn is down 6 1/4 cents per bushel and May soybean meal is down $2.30 per ton. The Dow Jones Industrial Average is up 400 points and NASDAQ is up 250 points.

LIVE CATTLE:

Heading into grilling season with some anticipation of inflation in food prices generally and excitement for beef demand specifically, the market has sustained bullishness in live cattle prices at the start of this week. Feedlots knew packers were hungry for highly profitable volume last week and were able to demand higher prices -- dressed deals in the North at mostly $190, or $5 higher than the previous week, and live deals in the South at mostly $117, or $2 higher than the previous week. Futures are playing along Monday morning with the April contract up $1.475 at $121.50 and the June contract up as much as $2.10 to $124.65, another fresh contract high. Futures trading volume so far has been impressive for a Monday, but perhaps not too surprising amid the upward trend and after a three-day weekend of pent-up bullishness.

Boxed beef prices continue surging higher: choice up $4.84 ($257.69) and select up $1.66 ($248.63) with a movement of 59 total loads (26.98 loads of choice, 3.52 loads of select, 11.26 loads of trim and 17.19 loads of ground beef).

FEEDER CATTLE:

With gains of more than $3 per cwt, feeder cattle futures contracts are the clear leader of the bullish mood in livestock trade Monday morning. But even these hefty gains haven't yet been enough to overtake last week's chart highs, established back before the new volatility in feed grain prices. The April feeder cattle contract is up $3.225 at $147.10, the May contract is up $2.85 at $152.075, and the August contract is up $2.80 at $160.80. Elevated feed prices have been a known feature of the cattle feeding business in 2021 for several months already, so perhaps there's less concern about feed supplies than about the supplies and weights of calves while drought continues to spread across cattle country.

LEAN HOGS:

The S&P 500 Index opened higher with a gap Monday morning and surged to a new all-time high, boosting the exuberant bullishness felt by many financial markets, including the futures contracts for agricultural commodities like lean hogs. The April contract is $1.05 higher at $102.825 and the May contract is up $0.975 at $103.80. June is the highest-priced contract, up $0.95 at $107.275. Hams and bellies continue to drive the pork cutout higher day by day, suggesting retail businesses are looking ahead to strong summer demand. Last week the live hog futures at the Dalian Commodity Exchange in China experienced a bounce and, at 27,680 Chinese yuan per metric ton, would have an equivalent price of $191 USD per cwt. Clearly, there's still an economic motivation for China to continue importing U.S. pork, sustaining foreign demand alongside America's own domestic demand.

The projected CME Lean Hog Index for 4/2/2021 is up $0.72 at $100.10 and the actual index for 4/1/2021 was up $0.41 at $99.38. Pork cutouts Monday morning total 121.58 loads with 105.95 loads of pork cuts and 15.63 loads of trim. Pork cutout values: up $5.10, $114.61.




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