The cattle complex was able to add some
position back into its market ahead of Monday's close, but the lean hog
complex still closed fully lower. Consumer demand will greatly affect
both the cattle and hog markets again this week. Hog prices are higher
on the Daily Direct Afternoon Hog Report, up $2.45 with a weighted
average price of $89.35 on 1,553 head. July corn is down 2 3/4 cents per
bushel and July soybean meal is down $5.20. The Dow Jones Industrial
Average is down 205.25 points.
It was nerve-racking to watch the live cattle
complex trade throughout the morning as the complex was testing new lows
for the current trading range, but thankfully before Monday's end,
traders saw the support in the boxed beef complex and pulled the
contracts higher. June live cattle closed $0.47 higher at $182.02,
August live cattle closed $0.42 higher at $178.87 and October live
cattle closed $0.10 higher at $180.90. It will be vital to the futures
complex's success that the market's fundamentals come in strong this
week as cash cattle prices traded lower last week. Feedlots and packers
will again go toe-to-toe this week, and it's anyone's guess on how cash
prices will land. There's an argument to be made that if beef demand
remains strong that packers will need to procure more cattle to ensure
that they have enough beef to market, but there's also a strong argument
in the fact that packers have been active in the cash market over the
last month and have built up a considerable supply already. So much of
the market's short-term direction will depend on consumer support.
Monday's slaughter is estimated at 120,000 head -- incomparable to last
week but steady with a year ago. New showlists appear to be mixed,
higher in Kansas, but lower in Texas and Nebraska/Colorado.
Last week's negotiated cash cattle trade
totaled 73,431 head. Of that 73% (53,578 head) were committed to the
nearby delivery, while the remaining 27% (19,853 head) were committed to
the deferred delivery. Last week Southern live cattle traded for mostly
$186 which is $1.00 lower than the previous week's weighted average,
and Northern dressed cattle traded for mostly $301 which is $3.00 lower
than last week's weighted average.
Boxed beef prices closed higher: choice up
$2.40 ($315.60) and select up $1.99 ($303.70) with a movement of 90
loads (52.34 loads of choice, 18.18 loads of select, zero loads of trim
and 19.72 loads of ground beef).
TUESDAY'S CATTLE CALL: Steady to somewhat
lower. Given that packers bought 73,000 head in last week's cash market
and committed 73% of them to the nearby delivery likely means that
they're going to try to hold up cash prices again this week.
The feeder cattle complex was able to move its
deferred contracts slightly higher ahead of the day's close although
the nearby contracts still closed slightly lower. Thankfully demand in
the countryside is continuing to perform extremely well, which may lend
the market some support later throughout the week. Next week Superior's
Corn Belt Classic will be the first test of the online video auctions
for the year and will also help producers forecast what they may be able
to expect for their feeder cattle sales later this year. August feeders
closed $0.20 lower at $256.20, September feeders closed $0.25 lower at
$257.87 and October feeders closed $0.12 lower at $258.85. Today's lower
close seemed to be more technically driven by the outside pressure of
the market than an accurate representation of what the market is doing
fundamentally. At Oklahoma National Stockyards in Oklahoma City,
Oklahoma compared to the last sale two weeks ago steers over 750 pounds
sold steady to $3.00 higher but steers under 750 pounds sold $3.00 to
$7.00 higher. Heifers over 650 pounds traded $1.00 to $3.00 lower, but
heifers under 650 pounds sold $3.00 to $7.00 higher. Feeder cattle
supply over 600 pounds was 71%. The CME feeder cattle index 5/31/2024:
up $2.53, $250.77.
The lean hog complex attempted to trade higher
earlier in the day, but the market ultimately ended up closing lower
with the lack of pork demand being the market's current demise. Pork
cutout values closed lower yet again, with every single cut seeing a
lower price by the day's end. But the butt's $2.74 decline and the ham's
$2.68 decline were the biggest drops for the day. June lean hogs closed
$0.70 lower at $93.65, July lean hogs closed $0.85 lower at $96.27 and
August lean hogs closed $0.87 lower at $95.62. Pork cutouts totaled
280.43 loads with 246.83 loads of pork cuts and 33.60 loads of trim.
Pork cutout values: down $1.82, $101.43. Monday's slaughter is estimated
at 483,000 head -- incomparable to last week but 19,000 head more than a
year ago. The CME lean hog index 5/30/2024: up $0.49, $91.49.
TUESDAY'S HOG CALL: Steady. Packers showed
more interest in the cash market than I expected given that it's only
Monday, which could signal that they're short bought on hogs.
