GENERAL COMMENTS:
While both the live cattle and lean hog contracts danced around pressure, the feeder cattle contracts saw the corn market's weaker trade and jumped to higher prices. Hog prices closed lower on the National Direct Afternoon Hog Report down $1.16 with a weighted average of $109.85 on 5,645 head. July corn is steady and July soybean meal is steady. The Dow Jones Industrial Average is down 163.17 points and NASDAQ is down 3.90 points.
LIVE CATTLE:
The live cattle complex didn't take any chances with Wednesday's trade and closed higher in the nearby contracts, but the deferred contracts closed lower. The nearby contracts saw some modest gains but given the fact that the boxed beef market is expected to put up a seasonal top in the next couple of days, and that the cash cattle market will consequently feel pressured when that does indeed happen, traders wanted to be cautious. June live cattle closed $0.15 higher at $116.90, August live cattle closed $0.40 higher at $120.12 and October live cattle closed $0.10 higher at $124.62. There was some more cash cattle trade develop after the noon hour, but prices continue to trend in a steady to $1.00 higher (in the South) or steady to $1.00 lower (in the North). Southern live cattle are currently selling for $119 to $120 and Northern dressed cattle are selling for mostly $190 to $191. Wednesday's slaughter is estimated at 118,000 head, steady with a week ago.
The Fed Cattle Exchange Auction listed a total of 2,792 head, of which 336 actually sold, 2,456 head were listed as unsold, as they did not meet the reserve prices that ranged from $119 to $120. Opening prices ranged from $116 to $118.75. High bids ranged from $117.50 to $119.75. The state-by-state breakdown looks like this: Texas 1,972 total head, with 167 head sold at $119.00-$119.75, 1,805 head unsold; Nebraska 540 total head, with all 540 head unsold; Kansas 280 total head, with 169 head sold at $119.00, and 111 head went unsold.
Boxed beef prices closed higher: choice up $0.04 ($323.38) and select up $0.64 ($299.69) with a movement of 122 loads (56.24 loads of choice, 15.37 loads of select, 39.25 loads of trim and 11.60 loads of ground beef).
THURSDAY'S CASH CATTLE CALL: Steady with the week's tone. Seeing that there have been cattle trade in both the North and the South, prices will most likely trend with the week's average.
FEEDER CATTLE:
The corn market didn't close as low as it traded at some points throughout the day, but nevertheless, the slightly lower close still allowed for the feeder cattle contracts to secure gains through Wednesday's trade. May feeders closed $0.62 lower at $136.57, August feeders closed $0.95 higher at $152.87 and September feeders closed $0.75 higher at $154.27. The August contract wasn't able to concur, closing above the 40-day moving average, but the market continues to feel comfortable trading alongside the 100-day moving average. At Ozarks Regional Stockyards in West Plains, Missouri, compared to last week, steer calves weighing 500 to 750 pounds and heifer calves weighing 400 to 700 pounds traded $5.00 to $10.00 higher. All other weights were not comparable with the previous week. Demand was strong throughout the sale and given that the sale offered a large sampling, it was good to see buyers aggressive throughout the day. The CME Feeder Cattle Index for May 18: up $0.10, $133.80.
LEAN HOGS:
All in all, the lean hog contracts closed lower, even though pork cutouts closed higher -- and by a considerable measure. The market has a lot to manage right now given the fact that slaughter levels are flirting with the idea of scaling lower as supplies run thin, and consequently that subjects the cash market to volatile swings day in and day out. June lean hogs closed $0.30 higher at $110.95, July lean hogs closed $0.10 lower at $111.40 and August lean hogs closed $0.25 lower at $107.50. The lean hog market will be anxious to see how Thursday's export report treats the marketplace. Keeping close tabs on whether or not China is one of the biggest buyers gives some insight into how their own domestic recovery from African swine fever is doing. Pork cutouts totaled 258.96 loads with 220.97 loads of pork cuts and 37.99 loads of trim. Pork cutout values: up $1.95, $118.01. Wednesday's slaughter is estimated at 477,000 head, 4,000 head more than a week ago. Tuesday's hog slaughter was revised to 466,000 head, 12,000 head less than the originally stated 478,000 head. The CME Lean Hog Index for May 17: up $0.37, $111.79.
THURSDAY'S CASH HOG CALL: Steady to somewhat lower. Wednesday's estimated slaughter is stronger than a week ago, but Tuesday's slaughter was revised to lower levels. Seeing the pullback in processing speeds could indicated that packers aren't going to need to buy a large quantity of hogs in the upcoming days.
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