GENERAL COMMENTS:
The corn market's weakness allowed for the feeder cattle contracts to gain a significant $2.00 to $3.00 through Tuesday's trade. The live cattle contracts rounded out the day mostly higher, seeing just modest pushback in their nearby contracts. The lean hog complex saw its contracts close lower but the market's pork cutouts and cash market both saw substantial support, which could mean that the market stands a chance at trading higher come Wednesday. Hog prices closed higher on the Daily Direct Afternoon Hog Report, up $6.33 with a weighted average of $112.58 on 8,900 head. July corn is down 14 1/2 cents per bushel and July soybean meal is up $4.60. The Dow Jones Industrial Average is up 48.38 points.
LIVE CATTLE:
The live cattle market saw mild gains in its deferred contracts, but the June and August contract rounded out the day slightly lower. June live cattle closed $0.05 lower at $132.72, August live cattle closed $0.22 lower at $132.75 and October live cattle closed $0.25 higher at $138.62. Seeing the deferred months add a little to their contracts is incredibly important as it not only affects the live cattle market and its prices, but the feeder cattle sector too. In a month, early feeder cattle buyers will be looking at summer sales to fill some of their orders, and if the deferred months of the live cattle market aren't promising, it's hard to buy cattle with feed as expensive as it is. The cash cattle market saw a little bit of trade develop in the South where live deals were marked at $137 ($1.00 lower than last week). Bids of $138 were offered in Nebraska but they weren't taken. A very few head of cattle traded in Iowa, but certainly not enough to say that any sort of trend was established for the North. Some cattle did trade in Tuesday's market, but especially in the North prices are still undetermined for the week.
Tuesday's slaughter is estimated at 125,000 head, steady with a week ago and 3,000 head more than a year ago.
Boxed beef prices closed mixed: choice down $0.63 ($263.65) and select up $1.12 ($245.35) with a movement of 165 loads (92.38 loads of choice, 31.35 loads of select, 9.28 loads of trim and 32.01 loads of ground beef).
WEDNESDAY'S CASH CATTLE CALL: Steady to $1.00 lower. Given that feedlots let bids pass them by in the North, there's a slim chance that feedlots may be able to hold the market steady in the North. The biggest problem is that packers have a significant number of cattle already committed to them in the deferred delivery, so they won't be pressured into buying anything they don't want to.
FEEDER CATTLE:
The feeder cattle contracts rallied aggressively throughout Tuesday's market and used the day's opportunity of a weaker corn complex to quickly add back some position. August feeder cattle closed $2.52 higher at $168.15, September feeders closed $2.77 higher at $171.07 and October feeders closed $2.72 higher at $173.47. The corn contracts ended up closing $0.13 to $0.14 lower in their nearby contracts as the news of China and Brazil reaching an export agreement that would allow Brazil to export corn into China (pending China's Ag Ministry's approval) worried the market. China is and will likely always be a wildcard, so closely monitoring this development is crucial. The CME Feeder Cattle Index for May 23: up $0.45, $153.17.
LEAN HOGS:
The lean hog complex closed lower as the market hungered for fundamental support and wasn't confident in the day's midday reports that support would be sufficient. June lean hogs closed $1.35 lower at $109.02, July lean hogs closed $1.80 lower at $109.05 and August lean hogs closed $1.22 lower at $109.00. Given that both pork cutout values and cash prices saw substantial support in the day's closing reports, the ball will again be in traders' court as the fundamental side of the market closed stronger. Ribs and bellies saw the biggest price jumps -- ribs up $3.58 ($203.75) and bellies up $6.75 ($174.43). The cash market significantly picked up its pace as just shy of 9,000 head traded and prices were $6.33 higher. Pork cutouts total 304.45 loads with 264.65 loads of pork cuts and 39.80 loads of trim. Pork cutout values: up $1.19, $108.24. Tuesday's slaughter is estimated at 473,000 head, 4,000 head less than a week ago and 9,000 head less than a year ago. Monday's slaughter was revised to 464,000 head, 9,000 head less than what was originally stated. The CME Lean Hog Index for May 20: up $0.91, $102.08.
WEDNESDAY'S CASH HOG CALL: Steady to somewhat higher. Given that pork cutout values showed support through Tuesday's close, it's likely that packers are active in Wednesday's market.
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