GENERAL COMMENTS:
The cattle contracts made a bit of a comeback throughout Wednesday's trade while the nearby lean hog contracts were left to trade lower. The market is still leery of what the long-term effects of the JBS's cyberattack are going to be. Even though their plants may be online, that doesn't mean they are back to full production. Hog prices closed lower on the National Direct Afternoon Hog Report, down $0.27 with a weighted average of $108.65 on 11,975 head. July corn is down 13 3/4 cents per bushel and July soybean meal is down $4.70. The Dow Jones Industrial Average is up 25.07 points and NASDAQ is up 19.86 points.
LIVE CATTLE:
Before you sing praises and jump up and down -- as you've surely heard that JBS is back online Wednesday -- I caution you. What the mainstream media won't understand about this situation is that even though plants are operational, that doesn't mean throughput is sufficient. The ramifications of this mess will haunt the industry likely for quite some time as plant speeds are still far below adequate levels. Boxed beef prices closed sharply higher, Wednesday's slaughter only processed 11,000 head more than Tuesday's kill and so as you can imagine, supplies are going to start stacking up in feedlots. Remember a year ago when the market's favorite buzzword was "backlog?" We will likely be using that term again,
June live cattle closed $3.57 higher at $117.12, August live cattle closed $2.65 higher at $119.25 and October live cattle closed $1.97 higher at $124.90. The cash cattle market saw some trade develop Wednesday afternoon at $120 in the South (steady to $1.00 higher than a week ago) and for $190 to $193 in the North, but mostly at $191 (fully steady). Wednesday's slaughter is estimated at 105,000 head, 15,000 head less than a week ago and 9,000 head less than year ago.
The Fed Cattle Exchange Auction listed a total of 11,159 head, of which 1,255 actually sold, 298 head were scratched from the auction, and 9,606 head were listed as unsold, as they did not meet the reserve prices that ranged from $117 to $120. Opening prices ranged from $116 to $119, high bids ranged from $119 to $119.50. The state-by-state breakdown looks like this: Texas 10,844 total head, with 1,255 head sold at $119 to $119.50, 9,363 head went unsold, and 226 head were scratched; Kansas 39 total head, all of which went unsold; Nebraska 204 total head, all of which went unsold.
Boxed beef prices closed higher: choice up $5.60 ($340.16) and select up $5.43 ($311.88) with a movement of 138 loads (64.69 loads of choice, 26.84 loads of select, 24.28 loads of trim and 22.18 loads of ground beef).
THURSDAY'S CASH CATTLE CALL: Steady. Seeing that there's been trade in both the North and the South, the week's trend is set.
FEEDER CATTLE:
The corn market closed lower and aided in the feeder cattle contracts desire to close higher after plunging lower Tuesday afternoon. August feeders closed $3.17 at $152.32, September feeders closed $2.82 higher at $154.80 and October feeders closed $2.40 higher at $156.50. The feeder cattle market continues to trade in a whiplash-like reaction to whatever the corn market does, as the market isn't getting the support it needs for the cash cattle market. At Unionville Livestock Market in Unionville, Missouri compared to two weeks ago, steers and heifers sold mostly $3.00 to $7.00 higher with the only exception being on heavier yearling steers which sold $1.00 to $2.00 lower. Slaughter cows sold steady to $2.00 higher. The CME Feeder Cattle Index for June 1: up $0.04, $136.50.
LEAN HOGS:
Slaughter speeds may not be up to par, but packers are hungry for more hogs and it was made clear in their buying quest throughout Wednesday's trade. Even though the cash market closed slightly lower, packers nearly bought 12,000 head, which is a huge move for the cash hog market. With there being problems with adequate throughput, packers see an opportunity to make more money on pork cuts and don't plan to miss out on the occasion. From a technical standpoint the market fought resistance as the market has climbed to new contract highs and traders are leery of the market given the vulnerability of both resistance levels and more volatile swings amid packing difficulties. June lean hogs closed $0.37 lower at $118.25, July lean hogs closed $1.17 lower at $118.47 and August lean hogs closed $0.77 lower at $116.80. Pork cutouts total 344.79 loads with 307.73 loads of pork cuts and 37.06 loads of trim. Pork cutout values: up $2.47, $129.59. Wednesday's slaughter is estimated at 439,000 head, 44,000 head less than a week ago and only 13,000 head more than a year ago. The CME Lean Hog Index for May 31: up $0.10, $113.54.
THURSDAY'S CASH HOG CALL: Steady to somewhat lower. Seeing that packers bought near 12,000 head Wednesday afternoon makes one wonder if they will be absent from the cash market in the days ahead.
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