GENERAL COMMENTS
Active futures contracts were higher for live cattle and feeder cattle Thursday, supported by reports of higher cattle trade in Kansas and Nebraska. Hog futures were also higher despite bearish possibilities in Thursday afternoon's Hogs and Pigs report.
LIVE CATTLE:
June cattle closed up $1.35 at $161.00 Thursday, a fifth consecutive higher close and now within a dollar of its contract high. Cattle prices have been helped by an easing of concerns around this month's bank failures and Thursday brought bullish news from the cash arena. Southern live trade was reported, mostly around $167, up $4 from last week, but also some higher. Dressed trade in Nebraska was reported at $270 to $272, up $5 and more from last week. With one day left in March, Thursday's close in June cattle recovered all but 35 cents of the sell-off triggered by this month's banking worries.
USDA estimated Thursday's cattle slaughter at 126,000, up 2,000 from a week ago and 1,000 more than expected Thursday morning. The active slaughter pace is a good sign retail demand remains active, despite concerns about the economy. It also helps that boxed beef prices are holding mostly steady this week. Thursday afternoon's boxed beef prices settled at $279.20 for choice and at $268.46 for selects, both below, but within a dollar of last Friday's closes.
FRIDAY'S CATTLE CALL: Steady to lower with the final day of the month sometimes prone to strange behavior.
FEEDER CATTLE:
May feeder cattle extended this week gains, closing up $1.92 at $204.45 Thursday, a third impressive higher close this week and within three dollars of its contract high. As explained above, this week's cash trade is once again, showing packers having to bid cattle higher to get the supplies they need. It is difficult to see any meaningful expansion in available cattle numbers anytime soon, meaning that everyone knows more feeder cattle will be needed.
Technically speaking, spot prices of feeder cattle are at their highest level since 2015 and show no sign yet of ending the uptrend. As long as retail demand for beef remains active, it is difficult to see much downside potential for feeder prices. The latest CME Feeder Cattle Index was up $1.08 at $191.27 for Wednesday, March 29.
LEAN HOGS:
June lean hogs closed up 77 cents at $91.60 Thursday as traders adjusted positions ahead of USDA's report. Shortly after 2 p.m. CDT, USDA said all hogs and pigs totaled 72.86 million head on March 1, up 0.2% from a year and as expected. A closer look however, showed the Dec. 1 inventory revised up, from 73.119 million head to 74.399 million head. Weight breakdowns also showed the number of hogs weighing 180 pounds are more were up 2.1% from a year ago. Both those factors are apt to keep cash hog prices under bearish pressure for at least a month.
Deferred hog contracts, on the other hand, found arguments for support in the farrowing intentions. March-May intentions were less than expected and down 1% from a year ago. June-August intentions were down 3% from a year ago. The December-February pig crop was up 0.3% from a year ago, but slightly less than expected
One positive for hog prices has been an active slaughter price, but that had a hiccup Thursday. USDA estimated Thursday's hog slaughter at 478,000, 6,000 head less than was estimated Thursday morning and down from 490,000 a week ago. Wednesday afternoon's Daily Direct Hog report showed an average negotiated hog price of $75.95 and a market formula average of $73.81, continuing the bearish trend in cash hogs. Thursday afternoon's carcass value was down $1.47 at $78.79, pressured by losses in every cut, but ribs. CME's lean hog index for March 29, 2023, was projected down 23 cents at $75.77.
FRIDAY'S HOG CALL: Steady to lower in April, but steady to higher in back months.
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