GENERAL COMMENTS:
It was another mixed Monday for the livestock complex as the cattle complex stumbled throughout Monday's market thanks to Friday's Cattle on Feed report, but the lean hog market closed higher. Hog prices closed lower on the Daily Direct Afternoon hog report, down $0.09 with a weighted average of $65.93 on 4,795 hogs. July corn closed down 7 3/4 at $6.075 and July soybean meal closed down $6.20 at $437.4. The Dow Jones Industrial Average is up 66.44 at 33,875.40.
LIVE CATTLE:
The live cattle market closed mostly lower, other than in its immediate contracts (April and June), which were able to sneak by Monday's close with mildly higher ends. More than anything, it was last Friday's Cattle on Feed report that drove the contracts lower Monday as this was the first time that traders had the opportunity to trade the report and its conclusions. While I don't think that traders took the right approach in viewing Friday's report, the contracts still closed lower. April live cattle closed $0.33 higher at $174.3, June live cattle closed $0.03 higher at $164.55 and August live cattle closed $0.10 lower at $163.45. It is refreshing, however, to see that packers only got 18% of last week's negotiated cash cattle sales committed to the market's deferred delivery. The cash cattle market should be able to keep prices steady this week so long as boxed beef demand remains strong. New showlists appear to be mixed, higher in Kansas, but lower in Texas and Nebraska/Colorado. Monday's slaughter is estimated at 124,000 head, 3,000 head more than a week ago and steady with a year ago.
Last week's negotiated cash cattle trade totaled 73,778 head. Of that, 82% (60,275 head) were committed to the nearby delivery, while the remaining 18% (13,503 head) were committed to the deferred delivery. Last week Southern live cattle sold for $175, which is fully steady in Texas but $1.00 lower in Kansas when compared to the previous week. Northern dressed cattle traded for mostly $288, which is $2.00 lower than the previous week's weighted average.
Boxed beef prices closed higher: choice up $0.52 ($307.12) and select up $0.90 ($288.7) with a movement of 69.81 loads (44.35 loads of choice, 11.95 loads of select, 8.32 loads of trim and 5.19 loads of ground beef).
TUESDAY'S CATTLE CALL: Steady to somewhat higher. The cash cattle market has the potential to trade higher again this week, but the effects of last week's COF report could also keep the market from trading higher as well.
FEEDER CATTLE:
Even with nearby corn prices drifting anywhere from $0.07 to $0.12 lower, the feeder cattle contracts weren't able to close higher as the market was solely fixated on last Friday's Cattle on Feed report and the slight difference that came between the USDA figures and analyst estimates. Friday's Cattle on Feed report painted a clear picture -- placements were higher than expected as Texas and Oklahoma continue to struggle with drought, and as some feeder cattle buyers procured cattle more aggressively early on, as they know supplies are only going to get thinner the further we get into 2023. But even with that fundamental understanding, traders opted to drive the contracts lower as they're approach to looking at the COF report is simply just viewing whether or not the USDA numbers perfectly line up with analyst estimates. April feeders closed $1.23 lower at $202.55, May feeders closed $1.65 lower at $210.75 and August feeders closed $0.55 lower at $229.325. At Joplin Regional Stockyards in Carthage, Missouri, compared to last week and at their midweek session, feeder steers were selling $2.00 to $5.00 higher and feeder heifers were selling steady to $2.00 higher. Feeder cattle supply over 600 pounds was 41%. The CME Feeder Cattle Index for April 21: down $0.86, $202.24.
LEAN HOGS:
The lean hog complex was able to keep its gains through Monday's close, but will the market's technical ambition be enough to sustain the rally through Tuesday without any substantial backing from the fundamentals? I'm concerned that, until we see better pork demand, volatile fluctuations in the market are likely. Nevertheless, the lean hog contracts were able to close higher throughout Monday's market as traders kept with Friday's rally spirit. June lean hogs closed $1.27 higher at $87.35, July lean hogs closed $1.30 higher at $90.10 and August lean hogs closed $1.27 higher at $91.22. Again, pork cutout values closed lower, which was largely influenced by a $6.73 decrease in the belly, and then followed by a $4.28 decrease in the ham. Pork Cutouts totaled 268.23 loads with 205.61 loads of pork cuts and 62.62 loads of trim. Pork cutout values are down $1.75 at $78.68. Monday's slaughter is estimated at 469,000 head, 7,000 head more than a week ago and 9,000 head more than a year ago. The CME Lean Hog Index for April 20: down $0.10, $71.31.
TUESDAY'S HOG CALL: Lower. With pork cutout values continuing to struggle, it's very unlikely that packers will drive cash prices higher given that supplies of market-ready hogs are ample.
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