GENERAL COMMENTS:
The live cattle and feeder cattle contracts have had a turn of events as the markets launched higher Wednesday. The live cattle contracts are running $2.00 to $3.00 higher, which is helping push the cash cattle market higher as well -- the perfect storm for feedlots. July corn is up 6 3/4 cents per bushel and July soybean meal is down $2.50. The Dow Jones Industrial Average is down 87.48 points.
LIVE CATTLE:
This week has fought hard to push the market higher and the feedlot's wishes of a strong futures complex and supported cash cattle market are coming true. As the board leaps $2.00 to $3.00 higher in nearby contracts, feedlots have grown stronger in the ask for steady prices in this week's cash market and are actually seeing some cattle trade for $1.00 higher. In the South a light movement of cattle has traded for $136, which is $1.00 higher than last week. In the North, there's been cattle traded for $141 live and bids are offered for $225 dressed. Given the strength of the futures, it's likely feedlots see the support they seek as the market's tone has grown considerably stronger. If August live cattle futures are able to close with the gusto they currently possess, that will have pushed the contract above both the 40- and 100-day moving averages and completely broke it outside of the sideways trading range it was trapped in.
The Fed Cattle Exchange Auction held Wednesday reported a total of 1,689 head of cattle, of which only two lots sold (Kansas 156 head at $136.50; California 111 head at $136.50).
Boxed beef prices are higher: choice up $0.97 ($272.39) and select up $0.45 ($250.01) with a movement of 62 loads (43.57 loads of choice, 8.63 loads of select, 5.57 loads of trim and 3.82 loads of ground beef).
FEEDER CATTLE:
The feeder cattle complex seems to care less that the corn market is trending mildly higher as the live cattle market jumps $2.00 to $3.00 higher and cash cattle are trading stronger too. The one component of the market that feeder buyers have been longing for has been higher prices in the live cattle market. Feeder buyers know supplies are soon to dwindle and finding feeders is going to become harder as the nation's beef cow herd has been culled so aggressively. But amid cost of gains that push $1.30 per day, the output value of fat cattle has to become more lucrative in order to justify the cost. Thankfully Wednesday's market is showing some promise of that. August feeders are up $2.87 at $175.32, September feeders are up $2.50 at $177.25 and October feeders are up $2.25 at $179.10.
LEAN HOGS:
The lean hog complex is seeming to absorb some of the energy that's driving the cattle contracts higher. After Tuesday's impressive cash hog trade, Wednesday's market hasn't seen near the interest and prices are trending lower, but thankfully that bearish note can be somewhat offset by the slightly higher tone n in the pork cutout value. July lean hogs are up $0.82 at $110.10, August lean hogs are up $0.77 at $107.87 and October lean hogs are up $0.37 at $94.02.
The projected CME Lean Hog Index for 6/7/2022 is down $0.32 at $107.48, and the actual index for 6/6/2022 is up $0.46 at $107.80. Hog prices are lower on the Daily Direct Morning Hog Report, down $2.22 with a weighted average of $114.12, ranging from $106.00 to $120.00 on 2,975 head and a five-day rolling average of $114.58. Pork cutouts total 147.89 loads with 135.62 loads of pork cuts and 12.27 loads of trim. Pork cutout values: up $0.50, $108.33.
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