GENERAL COMMENTS:
It was a chaotic day for the livestock sector as the market scrambled to make sense of how a cyberattack on the world's largest meat packing company JBS would affect day-to-day operations and, ultimately, the long-term trajectory of the market. There's no denying when looking at the day's estimated slaughter figures that production was substantially cut. Now the question everyone asks continues to linger: How long will this go on? Unfortunately, no one knows. Hog prices averaged $108.92 on the National Direct Afternoon Hog report on 11,053 head with a five-day rolling average of $107.21. July corn is up 32 cents per bushel and July soybean meal is up $3.20. The Dow Jones Industrial Average is up 45.86 points and NASDAQ is down 12.26 points.
The CME new daily limits for both live cattle and feeder cattle contracts are now in effect. Live cattle now have a daily limit of $5.00 and an expanded limit of $7.50. Feeder cattle now have a daily limit of $6.25 and an expanded limit of $9.25.
LIVE CATTLE:
It was an emotionally intense day throughout the live cattle sector as the market tried to understand the world's developments, but largely just spent time spinning its wheels. Early in the day live cattle futures dove sharply lower, taking into account the onset of the JBS cyberattack. But by the day's end the market closed $2.00 lower as opposed to the earlier $3.00 lower level. June live cattle closed $2.32 lower at $113.55, August live cattle closed $2.00 lower at $116.60 and October live cattle closed $0.77 lower at $122.92. There weren't any cash cattle developments Tuesday, which is different than weeks past. Asking prices in the South are expected to be at $120 or better and the North has yet to share their asking prices. New showlists appear to be mixed, somewhat lower in Kansas and Texas, but higher in Nebraska and Colorado.
Monday's slaughter is estimated at 2,000 head. Tuesday's slaughter is estimated at 94,000 head -- 27,000 head less than a week ago and 21,000 head less than a year ago.
Boxed beef prices closed higher: choice up $3.59 ($334.56) and select up $5.55 ($306.45) with a movement of 139 loads (60.18 loads of choice, 28.66 loads of select, 36.49 loads of trim and 13.87 loads of ground beef).
WEDNESDAY'S CASH CATTLE CALL: Lower. Unless packers feel pressured to toe line and feel obligated to throw charity bids out on the table, prices this week will most likely be lower.
FEEDER CATTLE:
As if dealing with the cyberattack wasn't enough, the feeder cattle complex also had the pressure of a corn rally to manage. As corn prices jumped anywhere from 28 to 32 cents higher in the nearby contracts, the feeder cattle contracts had no leg to stand on technically to demand higher prices. Meanwhile, with the onset of rain in some parts of the United States, feeder cattle prices are seeing some support as grass pastures are getting moisture in certain areas. August feeders closed $2.20 lower at $149.15, September feeders closed $1.55 lower at $151.97 and October feeders closed $0.92 lower at $154.10. At Mitchell Livestock Auction in Mitchell, South Dakota, compared to last week, feeder steers weighing 900 to 1,000 pounds sold $3.00 to $6.00 higher and steers weighing 1,050 to 1,100 pounds sold steady. Feeder heifers weighing 650 to 950 pounds sold $1.00 to $5.00 higher, and a higher undertone was noted on heifers weighing over 950 pounds. The CME Feeder Cattle Index for 5/31/2021: up $0.21, $136.46.
LEAN HOGS:
The lean hog market leaned into Tuesday's uncertainty and closed higher despite the chaos circling. June lean hogs closed $1.37 higher at $118.62, July lean hogs closed $0.30 higher at $119.65 and August lean hogs closed $1.35 higher at $117.57. After the long weekend and limited production over the Memorial Day holiday, it wasn't surprising to see packers come in and buy upward of 11,000 hogs. But it was surprising given the unknown nature of the JBS mess. Pork cutouts totaled 344.31 loads with 300.24 loads of pork cuts and 44.08 loads of trim. Pork cutout values: up $0.53, $127.12. Monday's slaughter is estimated at 2,000 head. Tuesday's slaughter is estimated at 390,000 head -- 95,000 head less than a week ago and 28,000 head less than a year ago. The CME Lean Hog Index for 5/27/2021: up $0.36, $113.44.
WEDNESDAY'S CASH HOG CALL: Steady. Yes, hog supplies are tight. But until we know how long this cyberattack is going to affect the market, its hard telling how aggressive packers will be.
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