GENERAL COMMENTS:
It was a day when constant gains were seen throughout the livestock complex. The fundamental side of the hog market has some reassuring to do if the hog contracts are going to continue their upward climb through the later part of the week. Hog prices closed lower on the Daily Direct Afternoon Hog Report, down $6.72 with a weighted average of $106.25 on 3,061 head. July corn is up 7 1/2 cents per bushel and July soybean meal is down $7.40. The Dow Jones Industrial Average is up 618.34 points.
Monday's Cold Storage report shared that red meat supplies in freezers were up 4% from the previous month and up 16% from last year. Total pounds of beef in freezers were down 1% from the previous month but up 18% from last year. Frozen pork supplies were up 9% from the previous month and up 16% from last year. Stocks of pork bellies were up 3% from last month and up 67% from last year.
LIVE CATTLE:
The live cattle contracts rounded out the day fully higher, with the biggest gains seen in their nearby contracts. June live cattle closed $1.20 higher at $132.77, August live cattle closed $1.42 higher at $132.97 and October live cattle closed $0.95 higher at $138.37. The market sits in a bit of a predicament -- a bit of a waiting game. Yes, boxed beef prices closed higher and processing speeds continue to run vigorously, but the fact that packers have ample supplies of cattle committed in their deferred delivery and that supplies are going to become more overwhelming weighs negatively on the market. Seasonally the live cattle market always gets weaker in the summer months and the market is braced for that reality. Showlists are higher in all three feeding states this week, and that's likely going to be trend of the market until these record on feed numbers are worked through. There were a few cattle that traded in Kansas for $138 and it's noted that their headed to Nebraska where supplies are thinner. With that being said, trade isn't expected to really break loose until Tuesday or Wednesday, and even then, it's likely that packers don't pay that much attention to the cash market and that prices are lower.
Monday's slaughter is estimated at 125,000 head, 1,000 head more than a week ago and 8,000 head more than a year ago.
Last week's negotiated cash cattle trade totaled 89,873 head. Of that, 56% (50,021 head) are committed for the nearby delivery, while the remaining 44% (39,852 head) are committed for the deferred delivery.
Boxed beef prices closed higher: choice up $2.11 ($264.28) and select up $1.21 ($244.23) with a movement of 125 loads (62.56 loads of choice, 27.62 loads of select, 10.02 loads of trim and 24.74 loads of ground beef).
TUESDAY'S CASH CATTLE CALL: $2.00 to $3.00 lower. Given that packers have thousands of cattle committed to them for this time, it's unlikely that the cash market sees much support. Prices are likely to the lower and volumes thin.
FEEDER CATTLE:
The feeder cattle contracts closed higher as the market batted for a bit of a recovery after last week's tumultuous tumble. August feeders closed $1.70 higher at $165.62, September feeders closed $1.30 higher at $168.30 and October feeders closed $1.17 higher at $170.75. The corn contracts closed higher too, but after last week's sharp sell-off, the feeder cattle complex is far from any resistance pressure. At Oklahoma Regional Stockyards in Oklahoma City, Oklahoma, compared to last week at their midsession point feeder steers were trading $2.00 to $4.00 lower, and feeder heifers traded unevenly steady. Steer and heifer calves were trading $2.00 to $4.00 lower. The CME Feeder Cattle Index for May 20: down $0.33, $152.72.
LEAN HOGS:
The lean hog complex made it through the first trading day of the week with all its contracts closing higher and with slaughter keeping an aggressive pace. The market's disappointing components were what the cash market only saw 3,061 head trade (for weaker prices) and that pork cutout values dipped slightly. Heading into Tuesday's market, it wouldn't be surprising if traders were cautious as they look for follow-through fundamental support. June lean hogs closed $1.50 higher at $110.37, July lean hogs closed $1.85 higher at $110.85 and August lean hogs closed $2.05 higher at $110.22. Pork cutouts total 271.29 loads with 222.92 loads of pork cuts and 48.37 loads of trim. Pork cutout values: down $0.06, $107.05. Monday's slaughter is estimated at 473,000 head, 3,000 head more than a week ago and 6,000 head less than a year ago. The CME Lean Hog Index for May 19: up $0.80, $101.17.
TUESDAY'S CASH HOG CALL: Steady. Normally I'd say that even with a slightly lower cash market on a Monday, Tuesday should show more promise, but upon knowing how many hogs packers bought last week, and with pork cutout values wavering ever so slightly, packers may not jump aggressively into this week's cash market until the market shows more promise fundamentally.
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