Written Commentary
CATTLE:
The turn higher in the beef market might be a factor to help support an uptrend in the cash market in the weeks ahead, and this could support a smaller discount of June cattle to the cash market. The pickup in the slaughter pace combined with a drop off in weights last week are factors which are positive as Packer’s are in a position to bid higher for cash. The USDA boxed beef cutout was up 43 cents at mid-session yesterday and closed $1.64 higher at $272.11. This was up from $268.04 the previous week and was the highest the cutout has been since February 14. June cattle closed moderately higher on the session yesterday and managed a bounce to a four day peak.
HOGS:
June hogs closed moderately higher on the session with an outside day up. The market has traded in a tight trading range for the fourth session in a row, all inside of the April 5 trading range. Given the oversold condition of the market, it will not take much in the way of positive demand news in order to expect a recovery bounce. However, with the high weights and a large premium of June futures to the cash market, the upside looks limited. The USDA pork cutout, released after the close yesterday, came in at $103.73, up $3.39 from Friday but down from $104.18 the previous week. The CME Lean Hog Index as of April 7 was at $100.06, down from 100.68 the previous session and from 102.63 the previous week.
The USDA estimated hog slaughter came in at 475,000 head yesterday. This was down from 477,000 last week and down from 484,000 a year ago. Friday’s Commitments of Traders report showed managed money traders were net sellers of 11,382 contracts of lean hogs in just one week, reducing their net long to 57,749. US monthly pork exports for February fell to 486.2 million pounds, down 18% from last year. Exports represented just 22.4% of total production versus a peak of 33% in May 2021.
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