DTN Midday Livestock Comments 05/23 11:42
Hogs Trudge Higher to Start the Week
As packers committed 44% of last week's purchases to the deferred delivery,
this week's cash market will likely be pressured again as packers need to
support the cash market is growing thinner.
DTN Livestock Analyst
With Monday's arrival, the support and ambition that carried the lean hog
contracts higher last week has shown up once again. The cattle complex isn't as
confident as the market sees mixed interest from traders and knows that its
cash outcome is bleak. July corn is up 5 3/4 cents per bushel and July soybean
meal is down $7.80. The Dow Jones Industrial Average is up 651.95 points.
The nearby contracts of June, August and October are trading higher, but the
premiums in the deferred months are continuing to slip away in the live cattle
market. June live cattle are up $0.75 at $132.32, August live cattle are up
$0.35 at $131.90 and October live cattle are up $0.12 at $137.55. With 2022
corn prices all trending above $7.30 per bushel, the cattle feeding business is
continuing to be a challenge to pencil in, as inputs are bewildering. With last
week's cash market committing 44% of its entire purchase for the deferred
delivery (15 to 30 days out), this week's cash cattle market will be pressured
again as showlists are growing and packers' need to support the cash market is
continuing to wither away. Last week boxed beef prices did show an improvement
from the week before, and moving ahead, monitoring beef slaughter and boxed
beef prices will be incredibly important as it could be a signal how the weeks
ahead will behave.
Last week's negotiated cash cattle trade totaled 89,873 head. Of that, 56%
(50,021 head) are committed for the nearby delivery, while the remaining 44%
(39,852 head) are committed for the deferred delivery.
Boxed beef prices are higher: choice up $1.53 ($263.70) and select up $2.16
($245.18) with a movement of 67 loads (32.06 loads of choice, 10.54 loads of
select, 4.63 loads of trim and 19.59 loads of ground beef).
The feeder cattle contracts are posing a modest rally after last week's
solid five-day trading regression. Given that the feeder cattle contracts have
plummeted to new lows, the fact that the corn contracts are trading mildly
higher isn't pressuring for the time being. The feeder cattle contracts aren't
expected to recover much position as input costs are exuberant and the live
cattle market is heading into June with record on feed numbers and the
undeniable fact that cash prices are going to get cheaper. August feeders are
up $0.12 at $164.05, September feeders are up $0.07 at $167.07 and October
feeders are up $0.15 at $169.72.
The lean hog market keeps trending higher as pork cut values show support
again early in the week and traders are appearing more confident in pork demand
as summer temperatures begin to favor the idea of grilling season. June lean
hogs are up $1.10 at $109.97, July lean hogs are up $1.20 at $110.25 and August
lean hogs are up $1.17 at $109.35. In order for the market to keep its upward
trend, it's vital that pork cutout values continue to see support. There's a
stark difference between the nearby market's reality and that of the deferred
months. In the months of June, July and August, limited hog supplies and
seasonal demand are expected to keep the market elevated, but come the later
part of the year, supplies could become overwhelming and ultimately lead the
market to lower price points.
The projected lean hog index for May 20 is up $0.91 at $102.08 and the
actual index for May 19 is up $0.80 at $101.17. Hog prices are unavailable on
the Daily Direct Morning Hog Report due to confidentiality. However, we can see
that 2,731 head have traded and that the five-day rolling average now sits at
$109.06. Pork cutouts total 158.97 loads with 127.00 loads of pork cuts and
31.97 loads of trim. Pork cutout values: up $0.71, $107.82.
ShayLe Stewart can be reached firstname.lastname@example.org
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