Written Commentary
CATTLE
The market remains in an uptrend with June cattle experiencing a new contract high close yesterday. Short-term demand factors remain extremely bullish as consumer spendable income has experienced a temporary boost with stimulus payments, and the market is experiencing seasonally strong demand for April. In addition, the beef pipeline is expanding as more and more restaurants, food service companies and entertainment businesses reopen. Beef prices and cash prices look to continue to advance in the weeks just ahead. The USDA boxed beef cutout was up 70 cents at mid-session yesterday and closed $2.29 higher at $247.12. This was up from $234.84 the previous week and was the highest the cutout had been since June 8, 2020. Cash live cattle are continuing their trend of higher prices, but so far this week volume has been on the light side.
On Wednesday 184 head were reported at 116 in Kansas versus an average of 115.09 last week. In Nebraska 2,325 were reported at 118 versus 115.72 last week. And in Texas/Oklahoma 277 head were reported at 116.5-116.75 with an average of 116.59 versus 114.97 last week. April cattle closed near unchanged but June cattle closed moderately higher after choppy and two-sided trade early in the day. Traders await better news on the cash market activity which has been slow so far this week. The USDA estimated cattle slaughter came in at 119,000 head yesterday. This brings the total for the week so far to 358,000 head, up from 354,000 last week and 355,000 a year ago.
LEAN HOGS
June hogs closed moderately lower on the day but bounced well up from the lows. The market remains extremely overbought technically and the setback in pork values from last week’s high may have been enough to trigger some profit-taking from the longs. However, the USDA pork cutout, released after the close yesterday, came in at $107.52, up $2.22 from $105.30 on Tuesday but down from $109.30 the previous week. The market’s short-term cash fundamentals seem okay but the continued weakness in China pig prices would suggest that China imports from the US may eventually begin to decline. China’s national average spot pig price today was down 0.83% from yesterday. For the week prices are down 5%, down 9.9% for the month and down 29.7% year to date. If there was a major resurgence of ASF, prices would likely be trending higher; not lower.
The largest US meat packing union received a victory in federal court yesterday that will turn back a 2019 ruling which allowed hog slaughter plants to run without line speed limits. This is a negative longer-term factor for cash hog prices. The CME Lean Hog Index as of March 29 was 98.04 up from 97.38 the previous session and up from 93.47 the previous week. Iowa/southern Minnesota average weights increased to 287.6 pounds from 287.4 last week and 285.4 last year. The USDA estimated hog slaughter came in at 492,000 head yesterday. This brings the total for the week so far to 1.465 million head, up from 1.432 million last week and 1.462 million a year ago.
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