GENERAL COMMENTS:
It was another gangbuster day for the livestock complex as deteriorating corn prices give the market even more incentive to trade higher. No substantial cash cattle trade developed, but trade will likely begin to take place on Thursday as packers won't be able to sit this week's market out entirely. Hog prices closed higher on the Daily Direct Afternoon Hog Report, up $11.47 with a weighted average of $86.62 on 22,741 head. July corn is steady and July soybean meal is steady. The Dow Jones Industrial Average is down 124.99 points.
LIVE CATTLE:
The live cattle complex kept with its rallying nature throughout Wednesday's market as traders continue to run the contracts higher thanks to exceptional fundamental support. No substantial cash cattle trade has been reported yet as feedlots aren't worried about marketing their pens too soon given how close to the knife packers are. Yes, packers bought just shy of 100,000 head in last week's cash market, but with front-end supplies of market-ready cattle alarmingly thin, they'll likely need to be active in this week's market again. Bids of $171 were offered in Kansas and bids of $285 dressed were offered in Nebraska, but feedlots elected to pass them by. Cash cattle trade should begin to develop throughout Thursday's market as packer interest will likely grow. June live cattle closed $0.25 higher at $169.12, August live cattle closed $0.50 higher at $167.67 and October live cattle closed $0.45 higher at $171.77.
Wednesday's slaughter is estimated at 127,000 head, 5,000 head more than a week ago and 1,000 head less than a year ago.
Boxed beef prices closed mixed: choice up $0.88 ($305.84) and select down $0.62 ($287.15) with a movement of 137 loads (84.71 loads of choice, 25.88 loads of select, 14.70 loads of trim and 11.55 loads of ground beef).
THURSDAY'S CATTLE CALL: Higher. I believe that this week's cash cattle market will likely trade somewhat higher as packers simply cannot afford to be short bought and go without cattle when beef demand is as strong as it is.
FEEDER CATTLE:
The feeder cattle contracts charged onward and forward throughout Wednesday's market as traders continue to see opportunity in the market amid a weaker corn complex. What's so encouraging about the market's rally is that its being seen and traded both technically and fundamentally. Traders are seeing the bullish fundamentals of the market's short supplies and unwavering demand and are choosing to reflect that positive outlook throughout the futures complex. With demand for both calves and feeders exploding as grass grows, the feeder cattle market remains in an incredibly strong positive especially as corn prices are trading lower. August feeders closed $1.40 higher at $239.17, September feeders closed $1.55 higher at $242.22 and October feeders closed $1.65 higher at $244.12. At Winter Livestock Auction in Dodge City, Kansas, compared to last week, feeder steers weighing 750 to 950 pounds sold $10.00 to $12.00 higher, but a big load of feeder steers weighing 1,019 pounds sold for $199.50 which is $25.00 higher. Feeder heifers weighing 600 to 900 pounds sold $10.00 to $12.00 stronger. Slaughter cows and bulls sold steady. The CME Feeder Cattle Index for May 30: not available at this time.
LEAN HOGS:
complex closed higher, pork cutout values closed higher and cash prices closed substantially higher. It will be interesting to see how the market trades on Thursday as Wednesday's open did create a gap and, at some point, traders will have to fill the hole. So, then the question becomes: is the market hot enough to keep trading higher or will traders take a more cautious approach moving forward after trading the market higher over the last two days? Time will tell, but again, strong pork demand remains a crucial component of the market's ability to sustain a higher trek. June lean hogs closed $1.75 higher at $82.57, July lean hogs closed $3.80 higher at $83.32 and August lean hogs closed $3.05 higher at $81.85. Pork cutouts totaled 297.68 loads with 266.04 loads of pork cuts and 31.64 loads of trim. Pork cutout values: up $1.59, $85.27. Wednesday's slaughter is estimated at 480,000 head, 8,000 head more than a week ago and steady with a year ago. The CME Lean Hog Index for May 29: down $0.40, $80.08.
THURSDAY'S HOG CALL: Steady. It's likely that packers didn't get all the hogs they needed bought in Wednesday's market, but its also likely that they won't be willing to pay as much as they did Wednesday afternoon.
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