GENERAL COMMENTS:
It was another mixed day for the livestock complex as the feeder cattle market was able to capitalize on the corn complex's weakness, but both the live cattle and lean hog markets closed lower. Cheaper cash prices drove the live cattle complex slightly lower, and the disappointing ruling of the SCOTUS with Prop 12 drove the lean hog market to close lower. Hog prices closed higher on the Daily Direct Afternoon hog report, up $0.19 with a weighted average of $77.31 on 9,730 hogs. July corn closed down 11 3/4 at $5.823 and July soybean meal closed up $11.90 at $431.4. The Dow Jones Industrial Average is down 221.82 at 33,309.51.
LIVE CATTLE:
The live cattle complex rounded out Thursday's trade lower as the market was slightly disappointed to see that, even after a stiff standoff between packers and Northern feedlots, dressed cattle in the North still sold $1.00 cheaper than last week's weighted average. On the bright side, it does beat trading $2.00 lower earlier in the week like the Southern plains did. But even so, traders let the contracts drift lower through Thursday's end. June live cattle closed $0.05 lower at $162.95, August live cattle closed $0.37 lower at $160.80 and October live cattle closed $0.45 lower at $164.55. Around the noon hour, there was some Northern sales reported at $280, which is $1.00 lower than last week's weighted average. Thus far this week most Southern deals have been marked at $170, which is $2.00 lower than last week's weighted average. Thursday's slaughter is estimated at 126,000 head, 6,000 head more than a week ago and 2,000 head more than a year ago.
Thursday's actual slaughter data shared that for the week ending April 29 steers averaged 890 pounds, which is 2 pounds lighter than the previous week and 11 pounds lighter than a year ago. For the same week, heifers averaged 824 pounds, which is 1 pound lighter than the previous week and nine pounds lighter than a year ago.
Beef net sales of 16,600 mt for 2023 were down 18% from the previous week but up 16% from the prior four-week average. The three primary buyers were South Korea (4,400 mt), Japan (3,700 mt) and Canada (3,100 mt).
FRIDAY'S CATTLE CALL: Steady. Given that trade has now developed in both regions, any more trade that does develop on Friday will likely stay with the week's trend.
FEEDER CATTLE:
With the nearby corn contracts closing anywhere from $0.07 to $0.13 lower, the feeder cattle contracts opted to trade higher despite the fact that live cattle market closed lower. May feeders closed $1.25 lower at $204.12, August feeders closed $0.92 higher at $226.07 and September feeders closed $0.92 higher at $229.30. Feeders saw it promising that Northern cash cattle sales were only reported $1.00 cheaper than last week's weighted average, even though all cash cattle enthusiasts would have liked to have seen the market trade steady this week as opposed to lower. At Winter Livestock Auction in Pratt, Kansas, compared to last week, feeder steers weighing 700 to 950 pounds sold steady to $2.00 lower and feeder heifers weighing 600 to 800 pounds sold steady to $2.00 lower, but the thin fleshed heifers did ring the bell and sold $6.00 higher. Feeder cattle supply over 600 pounds was 90%. The CME Feeder Cattle Index for May 9: down $0.05, $199.4.
LEAN HOGS:
It's amazing that the lean hog complex was able to close as well as it did as the ramifications of the SCOTUS ruling on Prop 12 will gravely affect the pork industry in the years to come. Thursday morning news broke that the SCOTUS sided with California and will not allow for any pork to be sold in the state that does not meet CA's production standards. Todd Neeley covered the ruling Thursday and grimly wrote, "Proposition 12 makes it a criminal offense and civil violation to sell whole pork meat in California unless the pig it comes from is born to a sow that was housed within 24 square feet of space and in conditions that allow a sow to turn around without touching an enclosure. Proposition 12 applies to any uncooked pork sold in the state, regardless of whether it was raised in California."
The lean hog complex traded lower throughout most of Thursday's market as the complex couldn't shake the doomsday feeling of the SCOTUS's decision. Yes, pork cutout values closed noticeably higher, but that had little affect on the market Thursday. Not to mention, the reason why the carcass price was able to close $1.48 higher was because of the $17.76 jump in the belly, which continues to be an extremely volatile cut. June lean hogs closed $0.30 lower at $83.87, July lean hogs closed $0.85 lower at $85.12 and August lean hogs closed $0.77 lower at $86.37. Pork Cutouts totaled 271.77 loads with 255.94 loads of pork cuts and 15.83 loads of trim. Pork cutout values are up $1.48 at $83.22. Thursday's slaughter is estimated at 468,000 head, 3,000 head less than a week ago and 2,000 head less than a year ago. The CME Lean Hog Index for May 9: up $0.43, $75.07.
Pork net sales of 30,000 mt for 2023 were down 39% from the previous week and 28% from the prior four-week average. The three primary buyers were Japan (9,900 mt), China (5,600 mt) and Mexico (5,500 mt).
FRIDAY'S HOG CALL: Lower. Given that packers were again active in Thursday's market, it leads me to believe that they likely procured all the hogs they needed Thursday, and that Friday's cash trade will be thin.
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