GENERAL COMMENTS:
Monday's commodities are mostly higher with livestock starting lower on the week, discouraged by expensive feed prices that are rising again. May corn is up 9 cents and May soybean meal is up $5.10. The Dow Jones Industrial Average is up 53 points, even though traders are expecting several rate hikes in 2022.
LIVE CATTLE:
June cattle are trading $1.10 at $134.75 lower at midday, continuing to be held down by expensive feed costs and a pressure to liquidate cattle in areas where drought is chronic and feed costs are high. Last week's cash trade is expected to show up in Monday's summary reports at roughly $138 in the South and somewhere between $222 and $225 in the North. While June cattle prices remain under pressure, October and December contracts show smaller losses Monday and have maintained gradual uptrends since November, both expecting to see higher prices from cattle's current misfortunes.
Last week's slaughter totaled 639,000 and was down 20,000 on the week. The overall slaughter pace so far in 2022 is running up 0.3% from a year ago and the good news is that coronavirus concerns are fading, slowly becoming a non-issue.
Dow Jones estimates Monday's cattle slaughter at 119,000, down from 123,000 last week. Monday morning's choice boxed beef prices were up $1.16 at $268.30 and selects were down 90 cents at $261.62 with a total load count of 31. Both boxed beef prices finished higher last week with selects up $10.38, a sign of good retail demand that helps to ease concerns about the possible bearish effects of rising grocery bills.
Friday's report from the Labor Department showing nonfarm payrolls up 431,000 in March was less than expected but was also another good month of job growth for the economy.
FEEDER CATTLE:
May feeder cattle are down $2.50 at $163.62, still pressured by expensive corn prices trading 9 cents higher Monday. For a market that has been dealing with rising corn prices since October, May feeder cattle prices have actually done well to hold above support at $160; but that level may soon be challenged. The CME Feeder Index was at $156.05 as of Thursday, still below the April feeder contract trading at $159.42 on Monday. Technically, May feeder cattle are encountering resistance at $170, but can also look out and see the August contract priced near $175, anticipating a time when liquidation pressures in live cattle should ease and more feeders will be needed.
LEAN HOGS:
June lean hogs are trading down $3.77 at $116.67, still pressured in the aftermath of Wednesday's USDA inventory report that showed all hogs at 72.2 million head, down 2% from a year ago. Lighter hogs were down 1%, but hogs weighing over 120 pounds were down 4% from a year ago. It is difficult to see how the report explains Monday's lower prices, but Friday's CFTC data showed noncommercials in hogs added 7,209 to net longs in the week ended March 29, the day before the report. The current sell-off likely reflects disappointment from speculators looking for the report to be more bullish than it was. More importantly, hog slaughter so far in 2022 is running down 6.6% from a year ago, so it seems highly likely the market is lacking available hogs, no matter what USDA's report says. Dow Jones estimates Monday's hog slaughter at 475,000, the same as last week. Monday morning's swine formula base prices slipped to $99.35, but continues to follow the higher futures price for June hogs. One slight bearish concern is that pork's cutout value may have stalled, dropping $6.30 last week. Monday morning however, pork carcass jumped $8.23 to $111.83, boosted by a $34.15 jump in pork bellies. Technically speaking, uptrends remain intact for June hogs as well as for the October and December contracts. June hogs may have support around $115, the site of the 50-day average.
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