GENERAL COMMENTS:
It was an exhilarating day for the livestock complex as weaker corn prices incentivized traders of the livestock markets aggressively. No cash cattle trade was reported, but business could begin to develop some time Wednesday at the earliest. Hog prices on the Daily Direct Afternoon Hog Report averaged $75.15 on 4,106 head. July corn is down 10 cents per bushel and July soybean meal is down $9.60. The Dow Jones Industrial Average is down 69.17 points.
LIVE CATTLE:
It was a thrilling day throughout the live cattle complex as traders ran the market sharply higher to celebrate the onset of cheaper corn prices. The live cattle complex has been nothing short of amazing this past year as thin supplies and unwavering demand have kept prices elevated and on an upward trek. The nearby contracts of June, August and October 2023 all scored new contract highs by Tuesday's end. June live cattle closed $1.52 higher at $168.87, August live cattle closed $2.00 higher at $167.17 and October live cattle closed $1.72 higher at $171.32. No cash cattle business was reported throughout the day as feedlots are assessing their showlists after the long weekend. Packers were aggressive in last week's market, buying just shy of 100,000 head. It's a coin toss on what cash cattle prices will do this week because the fact remains that front-end supplies of market-ready cattle are incredibly thin. But again, packers were aggressive in last week's market. New showlists appear to be mixed: higher in Kansas, somewhat higher in Texas, but lower in Nebraska/Colorado. Tuesday's slaughter is estimated at 126,000 head -- steady with a week ago and 1,000 head less than year ago.
Most of last week's negotiated cash cattle trade took place Wednesday, but there was a little clean-up trade later on Thursday and Friday. Northern dressed cattle ranged from $280 to $287, but mostly sold at $285 to $286, which is $4.00 to $5.00 higher than the previous week's weighted averages. Southern live cattle traded from $170 to $174, which was steady in Kansas but $1.00 higher in Texas. Last week's negotiated cash cattle trade totaled 99,646 head. Of that 70% (69,770 head) were committed to the nearby delivery while the remaining 30% (29,876 head) were committed to the deferred delivery.
Boxed beef prices closed higher: choice up $1.03 ($304.96) and select up $2.85 ($287.77) with a movement of 115 loads (73.41 loads of choice, 20.71 loads of select, 7.64 loads of trim and 13.40 loads of ground beef).
WEDNESDAY'S CATTLE CALL: Higher. Feedlots understand just how close to the knife packers are in their bought inventory and they fully intend to use this time as an opportunity to advance the market while the opportunity lasts.
FEEDER CATTLE:
It was a whirl wind type of day for the feeder cattle complex as corn prices closed lower and finally gave the feeder cattle market the opportunity to trade substantially higher. Incredible demand and limited supplies have been the driving force of the cattle market's rally. But drought, moisture and feed prices remain troubling concerns for the industry. So, when traders saw the corn complex trading lower at Tuesday's start, they took the opportunity at hand and ran the feeder cattle contracts $3.00 higher by day's end. August feeders closed $3.85 higher at $237.77, September feeders closed $3.57 higher at $240.67 and October feeders closed $3.45 higher at $242.47. The nearby contracts August, September and October of 2023 all closed at new contract highs. This bull market is continuing to show its strong nature and, given how depleted the U.S. cowherd is, I tend to believe there's a lot more days like these to come. The CME Feeder Cattle Index 5/26/2023: not available at this time.
LEAN HOGS:
The lean hog complex rallied throughout all of Tuesday's market as traders couldn't help but be optimistic as corn prices were falling. The real question now in the hog complex is whether or not a bottom is being established. The market will still face many challenges in the months and years ahead to adapt to Prop12, but Tuesday's higher tone did spark some optimism throughout the hog sector. June lean hogs closed $4.75 higher at $80.82, July lean hogs closed $4.75 higher at $79.52 and August lean hogs closed $4.75 higher at $78.80. It was encouraging to see afternoon pork cutout values higher, which was largely thanks to a $6.39 jump in the belly and a $3.00 jump in the rib. Pork cutouts totaled 366.97 loads with 342.16 loads of pork cuts and 24.81 loads of trim. Pork cutout values: up $1.48, $83.68. Tuesday's slaughter is estimated at 480,000 head -- 1,000 head less than a week ago and 12,000 head more than a year ago. The CME Lean Hog Index 5/25/2023: down $0.32, $80.48.
WEDNESDAY'S HOG CALL: Higher. With pork cutout values rounding out the day higher and the futures complex seeing some support, packers could be more active in Wednesday's cash market.
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