GENERAL COMMENTS
It was a rallying day for the live cattle and feeder cattle contracts as the markets were thrilled to see the bullish nature of Tuesday's WASDE report, but unfortunately the report didn't have the same encouraging news to share with pork producers. Hog prices closed lower on the Daily Direct Afternoon hog report, down $0.33 with a weighted average of $70.59 on 8,809 hogs. May corn closed down 3 at $6.51 and May soybean meal closed up $7.10 at $457.8. The Dow Jones Industrial Average is up 98.27 at 33,684.79.
LIVE CATTLE:
Tuesday's WASDE report was just the icing on the cake for the live cattle complex Tuesday. Not only are boxed beef prices continuing to print higher, but the cash cattle market is expected to trade higher again this week, and Tuesday morning's WASDE report painted an extremely optimistic outlook for the cattle complex. New contract highs were established in most of the live cattle contracts as traders continue to be reassured by the market's widespread support that its direction is indeed higher. April live cattle closed $0.93 higher at $172.3, June live cattle closed $0.25 higher at $163.95 and August live cattle closed $0.35 higher at $163.25. The cash cattle market didn't see any trade develop throughout the day, but bids could begin to develop as early as Wednesday. Asking prices in the South are noted at $174 to $175 but are still unestablished in the North. Tuesday's slaughter is estimated at 126,000 head, steady with a week and year ago.
Tuesday's WASDE report treated the beef and cattle markets mostly favorably. Beef production for 2023 was raised by 110 million pounds, with the second and third quarters of 2023 both seeing increases in beef production while the first and fourth quarters were decreased. The first quarter of 2023 saw a slight price decrease from last month's report, down $0.10 to average $160.90, but the rest of the quarters for the year saw price increases. The second quarter of 2023 is expected to average $169.00, which is $6.00 higher from last month, the third quarter is expected to average $162.00, which is $3.00 higher from last month, and the fourth quarter is expected to average $167.00, which is $3.00 higher than last month. 2023 beef imports were raised by 75 million pounds, but exports for the year also grew by 45 million pounds as demand from Asia countries remains incredibly strong.
Boxed beef prices closed mixed: choice up $2.19 ($295.1) and select up $3.64 ($282.04) with a movement of 88.14 loads (43.56 loads of choice, 18.61 loads of select, 9.40 loads of trim and 16.57 loads of ground beef).
WEDNESDAY'S CATTLE CALL: Higher. The cash cattle market will most likely trade higher again this week, but how much higher? Time will only tell.
FEEDER CATTLE:
It was a thrilling day for the feeder cattle complex as the contracts rallied throughout the day, only seeming to gain more momentum after Tuesday's supportive WASDE report was released and as corn prices remained unthreatening. April feeders closed $1.17 higher at $202.10, May feeders closed $2.20 higher at $207.82 and August feeders closed $1.35 higher at $224.35. Nearly all of the feeder cattle contracts were able to score new contract highs as the market continues to trade bullishly thanks to its amazing fundamentals of tight supplies and excellent demand. At Oklahoma National Stockyards in Oklahoma City, Oklahoma, compared to last week, feeder steers and heifers traded $5.00 to $9.00 higher, with instances as high as $12.00 higher. Light weight steers sold $6.00 to $8.00 lower, but steer calves weighing 500 to 600 pounds sold $8.00 to $10.00 higher. Feeder cattle supply over 600 pounds was 64%. The CME Feeder Cattle Index for April 10: down $0.32, $193.01.
LEAN HOGS:
The lean hog complex stood little chance of closing higher after receiving Tuesday's WASDE report. Production was decreased and quarterly prices were reduced, all of which left a cold blanket over the marketplace. Yes, pork cutout values were able to close slightly higher thanks to gains in both the ham and the belly, but traders felt more inclined to take the direction of Tuesday's WASDE report as a signal to the market's overall direction. April lean hogs closed $0.32 lower at $73.05, June lean hogs closed $1.30 lower at $87.85 and July lean hogs closed $1.40 lower at $90.75. Pork Cutouts totaled 315.03 loads with 290.97 loads of pork cuts and 24.06 loads of trim. Pork cutout values are up $0.40 at $77.46. The CME Lean Hog Index for April 6: down $0.24, $72.64. Tuesday's slaughter is estimated at 485,000 head, 4,000 head more than a week ago and 17,000 head more than a year ago. The CME Lean Hog Index for April 7: down $0.24, $72.64.
Mostly Tuesday's WASDE report wasn't the news that the pork and hog markets wanted to see. Pork production for 2023 was decreased by 50 million pounds as the latest Hogs and Pigs report highlighted that the December-February pig crop and producer farrowing intentions for March-May were lower than originally expected. The quarterly price projections for barrow and gilt prices were a bitter pill to swallow in Tuesday's report as all four quarters saw price reductions from a month ago with USDA accounting for the light/modest demand that pork cuts have been receiving. The first quarter was reduced by $1.17 to average $54.83, the second quarter fell $10 from last month to average $60.00, the third quarter fell by $6.00 to average $67.00 and the fourth quarter fell by $2.00 to average $62.00. Pork imports for 2023 grew by 60 million pounds from last month, but pork exports also grew by 30 million pounds.
WEDNESDAY'S HOG CALL: Steady. Packers haven't been overly aggressive in the cash hog market over the past week, which could drive them to need more hogs, but they're going to do so cautiously with demand as thin as it is.
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