It was another vigorous day in the livestock complex as the live cattle, feeder cattle and lean hog contracts all closed higher. The market's fundamentals continue to beg for the lean hog market to keep trading higher, and the new-found support in the cash cattle market is thankfully carrying both the live cattle and feeder cattle contracts to higher levels. Hog prices closed higher on the National Direct Afternoon Hog Report, up $1.38 with a weighted average of $99.19 on 9,231 head. May corn is up 6 1/4 cents per bushel and May soybean meal is up $2.70. The Dow Jones Industrial Average is up 16.02 points and NASDAQ is down 9.54 points.
There's been a moderate movement of cattle trade throughout the countryside, and even though I would have loved to see the entire market hold out and wait to trade until Thursday afternoon or Friday morning -- at least the market's advancements weren't of only $1.00 higher. Live cattle traded in many areas for $120 to $122 which is $3.50 higher in Texas when compared to last week, in Kansas it is around $3.00 higher, in Nebraska that is about $1.50 to $3.50 higher, and in Colorado it is just over $4.00 to $5.00 higher. Some asking prices are around $122 plus in the South and $195 to $197 in the North.
With boxed beef prices climbing sharply higher and showing no signs of cooling off, feedlots need to be on their A-game and need secure as much profitability, positioning and leverage in the market while they have the opportunity. It's been right at a year since fat cattle have traded for more than $120 and this should only be the beginning of the market's rally. As boxed beef prices continue to rally, feedlots need to get bolder about asking more for their cattle and demanding that packers pay up. Packers are getting paid more by stronger boxed beef prices, and the only way to trickle those funds down into the feeding sector is to demand it. Wednesday's slaughter is estimated at 120,000 head, 1,000 head more than a week ago and 19,000 head more than a year ago.
Boxed beef prices closed higher: choice up $3.54 ($266.31) and select up $3.89 ($255.19) with a movement of 117 loads (90.43 loads of choice, 10.42 loads of select, 5.02 loads of trim and 11.21 loads of ground beef).
THURSDAY'S CASH CATTLE CALL: Higher. The fat cattle market has a lot of moving pieces to manage right now. Packers are fully incentivized to support the cash cattle market as boxed beef prices are increasing and they continue to reap the profits of healthy beef demand. So, with that being said, fat cattle prices have a great opportunity to move the market far past $120, but it will take active marketing on behalf of feedlots.
There's an old saying that proclaims, "high corn rallies higher cattle prices," and based on how this week's market is trading, the saying is ringing pretty true. Cattle feeders would obviously like to keep their inputs low, but the biggest profit thief is when inputs are high and cattle are selling low. Thankfully, the encouraging rallying that's brewing in the cash cattle and live cattle market is helping keep the feeder cattle contracts elevated, even though corn prices closed slightly higher. April feeders closed $1.15 higher at $147.62, May feeders closed $0.90 higher at $152.67 and August feeders closed $0.92 higher at $161.87. At OKC West Livestock Auction in El Reno, Oklahoma, compared to last week, feeder steers sold $2.00 to $4.00 higher and feeder heifers traded steady to $2.00 higher. Steer and heifer calves that were long weaned and suitable for grass sold $3.00 to $5.00 higher as buyers are anxious for grass. The CME Feeder Cattle Index for April 6: up $0.28, $139.98.
Traders are starting to move their positions as the April contract is set to expire next week, and consequently the futures contracts for the summer months are finding ample support. April lean hogs closed $0.77 higher at $102.87, June lean hogs closed $2.27 higher at $107.90 and July lean hogs closed $1.77 higher at $106.37. The market's fundamentals are still holding strong and are prodding the market along to keep trading higher. Looking to Thursday, one major speed bump ahead could be a weaker export-sales report. Pork cutouts totaled 384.86 loads with 343.88 loads of pork cuts and 40.99 loads of trim. Pork cutout values: up $1.30, $110.69. Wednesday's slaughter is estimated at 494,000 head, 2,000 head more than a week ago and 21,000 head more than a year ago. Tuesday's how slaughter was revised to 482,000 head. The CME Lean Hog Index for April 5: up $0.24, $100.34.
THURSDAY'S CASH HOG CALL: Steady to somewhat higher. Packers moved the market higher again Wednesday afternoon and continue to buy a considerable amount of cash hogs day in and day out. With pork cutouts continuing to close higher, the market could continue to see packers supporting the cash market.