GENERAL COMMENTS:
The futures complex is allowing the cattle contracts to trade higher, but the lean hog market isn't presented with the same luck. It may be that JBS is back online and some business is being done, but with the lackadaisical speeds that ran before the Memorial Day weekend the market needs to see processing speeds at full capacity in order to avoid meat price surges and backlogs building throughout feedlots. July corn is down 17 1/2 cents per bushel and July soybean meal is down $6.20. The Dow Jones Industrial Average is up 28.39 points and NASDAQ is up 4.55 points.
LIVE CATTLE:
The cyberattack on JBS may be well worked into the market at this point, but its ramifications are still rippling through as boxed beef prices jumped higher and Wednesday's kill is only expected to amount to a measly 105,000 head. Meanwhile, hearing the plants are open to some degree has allowed for the technical side of the market to bounce higher following Tuesday's doggish trade. June live cattle are up $2.37 at $115.92, August live cattle are up $1.52 at $118.12 and October live cattle are up $0.97 at $123.90. There's been a few head of cattle trade over the online auction, but for the most part the country's cash cattle business has been lacking. Unless slaughter speeds kick into high gear, packers may not need many cattle this week as they are only processing around 100,000 head per day, which is far from full capacity. According to Steve Kay with Cattle Buyers Weekly, full capacity in the U.S. is around 128,430 head per day. As you can see, only processing 105,000 head (give or take) will quickly back up supplies and create pressure on the market.
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, which 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; Illinois 72 total head, this lot was scratched from the auction.
Boxed beef prices are higher: choice up $5.32 ($339.88) and select up $5.99 ($312.44) with a movement of 80 loads (37.09 loads of choice, 16.19 loads of select, 13.68 loads of trim and 12.86 loads of ground beef).
FEEDER CATTLE:
Following Tuesday's tumbling trade, the feeder cattle contracts are making a comeback as the corn market trades modestly lower. August feeders are up $1.50 at $150.67, September feeders are up $1.57 at $153.55 and October feeders are up $1.27 at $155.37. With the spot contract now the heavily sought-after August contract, cow-calf producers are eyeing the contract closely as they hope the market warrants stronger prices this year than last year. It's hard telling what the market will do with never-ending chaos surrounding the packing industry and the possibility of supplies getting backed up. But, then again, with few cows lining the countryside fewer numbers could favor sellers in this scenario.
LEAN HOGS:
The nearby lean hog contracts are feeling the market's pressure from every angle Wednesday morning. The nearby contracts would like to continue to trade higher and match the modest rally seen in the deferred contracts, but with uncertainty still engulfing the JBS cyberattack, the market can't be overly excited. June lean hogs are down $1.10 at $117.52, July lean hogs are down $1.95 at $117.72 and August lean hogs are down $1.65 at $115.92. JBS is back online, but that doesn't mean they are back to full capacity -- which is evidenced as Wednesday's hog kill is only projected to be around 438,000 head.
The projected CME Lean Hog Index for 6/1/2021 is up $0.21 at $113.75 and the actual index for 5/28/2021 is up $0.10 at $113.54. Hog prices are higher on the National Direct Morning Hog Report, up $3.21 with a weighted average of $105.99, ranging from $99.84 to $115.00 on 7,471 head and a five-day rolling average of $105.21. Pork cutouts total 221.34 loads with 204.08 loads of pork cuts and 17.26 loads of trim. Pork cutout values: up $2.18, $129.30.
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