GENERAL COMMENTS:
It was a thrilling day for the hog market as cash prices jumped nearly $10.00 higher, the board closed stronger and pork cutout values closed with a positive gain. Meanwhile, the cattle contracts suffered through Tuesday's market as both the live cattle and feeder cattle contracts neglected to see any supportive trader interest and cash prices traded lower. Hog prices closed higher on the Daily Direct Afternoon Hog Report, up $9.74 with a weighted average of $111.38 on 21,996 head. July corn is down 8 3/4 cents per bushel and July soybean meal is down $1.80. The Dow Jones Industrial Average is up 431.17 points.
LIVE CATTLE:
It was a disappointing day for the live cattle sector as the futures market closed lower and the cash cattle market began to trade at lower levels, but to the day's defense, it wasn't a complete wash, as slaughter speeds ran aggressively and boxed beef prices closed higher. June live cattle closed $0.17 lower at $133.00, August live cattle closed $0.42 lower at $133.47 and October live cattle closed $0.32 lower at $139.52. The South saw cattle trade for $138, which is $2.00 lower than last week. and Northern dressed cattle traded for $226 to $227. The problem with the cash cattle sold in the North is that the majority of them sold with the deferred delivery option for the week of June 6 -- roughly 21 days away. The steady, but consistent buying of deferred cattle will keep the cash cattle market from seeing anything but steady to weaker prices in the weeks ahead as supplies grow more plentiful and packers continue to manage their supplies strategically.
Tuesday's slaughter is estimated at 125,000 head, steady with a week ago and 5,000 head more than a year ago.
Boxed beef prices closed higher: choice up $0.17 ($260.48) and select up $2.52 ($248.19) with a movement of 118 loads (59.58 loads of choice, 28.22 loads of select, 7.09 loads of trim and 23.33 loads of ground beef).
WEDNESDAY'S CASH CATTLE CALL: Steady. Given that cattle have traded in both regions, prices will stay steady with the week's trend.
FEEDER CATTLE:
The feeder cattle market continued to trade lower throughout Tuesday's market as the morale throughout the cattle complex wasn't overly supportive. Corn prices did close lower but with the onset of cash cattle trading $2.00 to $3.00 weaker, and the live cattle contracts closing lower too, the market lacked aggressive supportive cues, which it would have needed in order to shake the market's lower and unenthusiastic tone. August feeders closed $0.65 lower t $166.77, September feeders closed $0.82 lower at $169.22 and October feeders closed $1.05 lower at $171.37. At Cattlemen's Livestock in West Point, Mississippi, compared to last week, on a run of 1,077 head feeder steers traded steady to $2.00 lower and feeder heifers traded steady to $4.00 lower. Slaughter cows and bulls both sold steady. The CME Feeder Cattle Index for May 16: down $0.73, $155.27.
LEAN HOGS:
In Monday's closing comments I noted that the lean hog market would need to see follow-through support in both the cash market and pork cutout values in order to keep traders enthused, and low and behold, the stars aligned for the lean hog market come Tuesday. The nearby contracts closed higher as support again found its way into pork cutouts and the cash hog market was insane. Tuesday's afternoon report shared that packers bought 21,996 head for a weighted average of $111.38, ranging from $98.00 to $115.00. That means the market's bottom bid held at $98.00 but the market's top bid jumped $7.00 to $115.00 compared to Monday's afternoon prices. That tells us that one of the packers was extremely short bought and needed hogs in a bad way. With grilling season nearly upon us, packers can't afford to be missing out on any potential profit that the retail counter offers as consumers have been a tough crowd as of late with inflation restricting everyone's spending habits. June lean hogs closed $1.32 higher at $105.15, July lean hogs closed $2.95 higher at $107.75 and August lean hogs closed $2.45 higher at $107.25. Pork cutouts totaled 366.42 loads with 341.04 loads of pork cuts and 25.38 loads of trim. Pork cutout values: up $0.56, $102.11. Tuesday's slaughter is estimated at 477,000 head, 3,000 head less than a week ago and 10,000 head more than a year ago. Monday's slaughter was revised to 470,000 head, 10,000 head less than what was originally stated. The CME Lean Hog Index for May 13: down $0.42, $100.07.
WEDNESDAY'S CASH HOG CALL: Steady to somewhat lower. Hog supplies are thin, and with packers wanting to make sure that they have enough hogs on the books for the weeks ahead, the cash market could see more interest again in Wednesday's market.
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