GENERAL COMMENTS:
Tuesday's trade wasn't kind to the lean hog market, but the cattle contracts had another strong day even though the corn market tried to pressure the contracts into trading lower early in the afternoon. Hog prices are unavailable on the National Direct Afternoon Hog Report due to technical issues at UDSA. July corn is up 10 1/2 cents per bushel and July soybean meal is up $4.70. The Dow Jones Industrial Average is down 473.66 points and NASDAQ is down 12.43 points.
LIVE CATTLE:
Feedlots lightly tested this week's market in the North and were able to capture higher prices, but a large portion of the cattle that sold Tuesday afternoon are for delivery in the weeks of 5/24/2021 and 6/7/2021. Feedlots are feeling an immense amount of pressure right now. From the outrageous expense of corn, to the pressure of selling cash cattle for dismal prices, they have more to manage and more decisions to weigh through than most could even handle. It's easy to look at feedlots and point your finger and complain they let cattle go early in the week, but with daily cost of gains eating away at margins there's some relief in knowing you've got a secured delivery date and forgoing anymore of the gamble.
The board closed fully higher Tuesday afternoon and continues to be supported by stellar boxed beef prices. June live cattle closed $0.40 higher at $118.62, August live cattle closed $1.70 higher at $122.05 and October live cattle closed $1.60 higher at $126.15. Aside from trying to decide if Tuesday's cash cattle trade was a smart move or if it stole the market's opportunity to rally significantly, the other disappointing element of the live cattle market was Monday's slaughter correction. Slaughter speeds are expected to push this week's kill past 650,000 head, but with Monday's kill backed down to 112,000 head, the rest of the week is going to have to run full bore. Tuesday's slaughter is estimated at 118,000 head -- 3,000 head less than a week ago. Monday's cattle slaughter was revised to 112,000 head, that's 7,000 head less than the originally stated 119,000 head.
Boxed beef prices closed higher: choice up $3.26 ($312.37) and select up $2.58 ($296.34) with a movement of 106 loads (73.46 loads of choice, 11.40 loads of select, 7.46 loads of trim and 13.21 loads of ground beef).
WEDNESDAY'S CASH CATTLE CALL: Higher. With packers looking to escalate processing speeds and feedlots hungry for stronger prices, the market shouldn't have difficulty trading higher. The big question will be if all the cattle that sell higher come with a deferred delivery or not.
FEEDER CATTLE:
Feeder cattle futures were able to redeem themselves after trading fully lower earlier Tuesday when the corn market shot $0.20 higher in some of the nearby contracts. As the afternoon played out, the corn market's rally cooled and even though corn still closed $0.10 to $0.11 higher in the May and July contracts, feeder cattle contracts bounced back and closed modestly higher. May feeders closed $0.12 lower at $135.32, August feeders closed $0.15 higher at $148.85 and September feeders closed $0.40 higher at $150.47. Wednesday's WASDE report will be big for the feeder cattle complex as the market looks to gain a stronger understanding on how the corn outlook looks. At Russell Livestock Auction in Russell, Iowa, compared to two weeks ago steer calves under 550 pounds sold steady to $2.00 lower, while the heavier steers sold sharply higher. Heifer calves under 600 pounds sold $5.00 to $8.00 lower but heifers over 600 pounds were steady to sharply higher. Demand was exceptionally strong for the heavier-weighted offerings. The CME Feeder Cattle Index 5/10/2021: not available at this time.
LEAN HOGS:
Even though pork cutouts closed higher and slaughter continues to run at an aggressive speed given the number of hogs available, traders are not quick to jump in and support this week's lean hog market. June lean hogs closed $0.92 lower at $111.17, July lean hogs closed $1.27 lower at $111.42 and August lean hogs closed $1.35 lower at $106.75. Pork cutouts totaled 310.83 loads with 291.75 loads of pork cuts and 19.09 loads of trim. Pork cutout values: up $0.04, $113.20. Tuesday's slaughter is estimated at 485,000 head - 2,000 head less than a week ago. The CME Lean Hog Index 5/7/2021: up $0.88, $110.10.
WEDNESDAY'S CASH HOG CALL: Higher. Even if the board is trading lower, that doesn't change the fact that consumers are hungry and they are willing to pay high prices for pork, which means packers are going to want to continue to secure supplies to feed the market.
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