April 22, 2014
Fed cattle, steady to higher
Feeder cattle, steady to higher
Lean hogs, steady to lower
Overnight stock futures trade suggests a near steady open on Wall Street.
Overnight livestock trade points steady to higher in fed and feeder cattle. Steady to lower hog futures suggest hogs are unlikely to recover from Monday's sharp selloff.
Cash fed cattle. USDA reported negotiated cash trade was at a standstill in all feeding regions on Monday.
Nebraska feedlots responding to a Dow Jones survey report offering 15,000 more cattle than last week. Colorado show lists are up 5,000 from last week. Kansas offerings are up 1,000. Texas show lists are down 8,000 from last week. That nets out to 13,000 more cattle on this week's show lists in the four states, which were up 13,000 from the previous week.
The bulk of last week's trade occurred at slightly lower prices than the prior week, as market participants braced for cattle numbers to expand in the weeks ahead.
Friday trading in the Texas Panhandle was slow on light demand. In Kansas trading and demand were moderate. For the week live sales sold $1 lower at $147 in both regions. Nebraska saw moderate trading and demand Friday. For the week live and dressed sales sold mostly steady with live sales from $150 to $151.50 and dressed sales at $240. In Colorado on Friday trading was slow on light demand. For the week live sales sold unevenly steady from $151 to $151.50. In the Western Corn Belt on Friday trading was slow on moderate demand. For the week live sales sold unevenly steady mostly at $150. Dressed sales sold steady to $1 higher at $240.
Monday's morning choice boxed beef cutout was up $1.69 at $228.04, with select up $1.87 at $217.10. Afternoon cutouts were higher on moderate to fairly good demand and light to moderate offerings. Choice was up $2.71 at $229.06, with select up $2.84 at $218.07 on 151 loads.
USDA estimated Monday's cattle slaughter at 103,000, down 12,000 from last Monday and down 19,000 from last year.
Cash feeder cattle. Compared to last week, Oklahoma National Stockyards reported Monday's feeder steers steady to $2 higher. Feeder heifers lightly tested and few sales steady. Steer and heifer calves steady. Quality mostly plain to average, few attractive. Cattle showed the complete range of thin to fleshy. Supply included several large drafts off graze out wheat. Demand for all classes moderate to good. Supply included 56% steers and 44% heifers. Supply weighing over 600 lbs was 80%.
Cattle futures. Fed cattle ended mixed on Monday. Front-month April faced pressure as last week's lower cash-market prices offset persistent strength in wholesale beef prices.
Expectations of seasonally rising fed cattle supplies have dampened recent cash and futures markets. But traders continue to eye historically high prices for wholesale beef. If investors believe consumers will stay willing to pay up for burgers, steaks and other beef products, processors have more incentive to bid aggressively for cattle.
Market participants are closely watching prices what retailers are willing to pay while stocking up for a seasonal uptick in demand for the U.S. grilling season. It's all a matter of what the consumer is willing to pay for beef as temperatures warm up.
Consumers will undoubtedly buy steak for the first cook out. But will they become regular repeat customers are current prices?
Friday's USDA Cattle on Feed Report will provide clearer insight into supplies. Some market participants contend cattle numbers could expand in the months ahead following an uptick in lighter-weight cattle placed into commercial feed yards last fall and winter.
On Monday, April fed cattle fell 75 cents to $143.45. Most-active June gained 17 cents to $134.55.
May feeder cattle rose 5 cents to $178.10. August gained 50 cents to $181.90.
Thus far the CME has listed no tender notices to deliver on the soon-to-expire April fed cattle contract. With April futures $5 to$7 below cash trade, no deliveries are likely.
Bottom line. Last week's light cash fed cattle trade at lower prices weighed on front-month fed cattle futures. Seasonally rising fed cattle supplies could bring a bit lower wholesale and retail prices, thereby spurring more consumer buying as grilling season heats up.
Cash hogs. Compared to Friday, on a plant by plant basis, Monday's weighted average base prices were $2.03 lower to $4.58 higher. The market trend was not well established. Trading was slow with light demand. Some plants were closed for Good Friday.
USDA's afternoon reports showed Monday's weighted-average:
* National base price down 18 cents at $113.06.
* Iowa-Minnesota up $1.72 at $114.07.
* Western Corn Belt up $1.52 at $115.47.
* Eastern Corn Belt was $1.02 lower at $110.56.
Price changes are compared to USDA's afternoon report for Friday.
USDA estimated Monday's hog slaughter at 273,000, down 104,000 from the previous week and down 136,000 from a year ago. Some plants were closed yesterday in observance of Easter.
USDA reported Monday's morning plant cutout up 55 cents at $121.89. Afternoon cutout values were:
FOB plant down $1.92 at $119.42.
FOB Omaha down $1.93 at $118.47.
Based on 232 total loads.
Slipping cutouts erode margins. Based on the new cutout Dow Jones estimated Monday's packer margin index at plus $1.03 per head vs. plus $7.97 Friday.
Friday's CME two-day lean hog index slipped for a twelfth straight day, sliding $1.21 to $119.66. Its recent peaks are $130.35 on April 2, $81.05 on Jan.10, $82.91 on Dec. 4, $91.48 on Oct. 24, $98.25 on Sept. 20 and $102.56 on Aug. 15. Recent lows are $79.91 on Jan. 20, $79.23 on Dec. 23 and $80.83 on Nov. 25.
Hog futures. Hogs ended sharply lower Monday as buying interest from processors appears to be easing and even bullish traders are beginning to insist on seeing slaughter reductions due to earlier baby pig losses to porcine epidemic diarrhea virus before being willing to push prices higher.
On Monday, most-active June hogs fell $2.47 to $122.35. Summer hogs all lost at least $2.47. Deferreds lost up to 70 cents.
Bottom line. Hogs slipped amid the recent sluggishness of wholesale pork prices. USDA reported wholesale prices down about $3 over the last week until Friday. Friday's recovery fueled a bit of optimism. But that was short lived as cutouts slipped almost $2 Monday.
The opinions of John Otte are not necessarily those of FarmProgress.com, Farm Futures.com, or the Penton Farm Progress Group.