Written Commentary
CATTLE
June cattle closed lower on the session Thursday after posting a contract high which is a bearish technical development. Talk of the overbought condition of the market and ideas that futures are holding a strong premium to the cash market were seen as factors to limit the buying. The USDA boxed beef cutout was up $2.02 at mid-session Friday and closed $2.88 higher at $252.85 and the highest the cutout had been since June 8. Cash live cattle ended last week on a firmer note, with prices about $2/cwt higher than the previous week. Average dressed steer weights for the week ending March 20 came in at 901 pounds, down from 904 the previous week but up from 898 a year ago. Weights normally decline at this time of the year. US beef export sales for the week ending March 25 came in at 18,741 tonnes. Cumulative sales for 2021 have reached 441,226 tonnes and the highest on record. The largest buyer this week was Japan at 5,989 tonnes followed by China at 5,897 and South Korea at 2,601. South Korea has the most commitments so far for 2021 at 121,118 tonnes, followed by Japan at 99,972, China at 64,617.
USDA estimated cattle slaughter came in at 105,000 head Friday and 33,000 head for Saturday. This brought the total for last week to 609,000 head, down from 649,000 the previous week and down 3.5% from a year ago. Beef production for the week was down 2.6% from last year. Friday’s Commitments of Traders report showed managed money traders were net buyers of 3,682 contracts of live cattle for the week ending March 30, increasing their net long to 83,237. Non-commercial & non-reportable traders were net buyers of 6,473, increasing their long to 89,980.
LEAN HOGS
The short-term supply/demand fundamentals remain supportive for the market with June hogs moving up to new contract high on Thursday. Traders see prices high enough to eventually expect an expansion in the US, and China is still an active buyer of US pork even though traders expect China to back away from the US market soon. The hog market closed moderately higher on the session Thursday with June hogs posting a new contract high. Continued strong export sales, a seasonal decline in slaughter and positive demand emerging from the reopening of the economy are all factors which have helped support. The USDA pork cutout on Friday came in at $108.44, up 88 cents from $107.56 on Thursday and $106.45 the previous week. This was the highest the cutout had been since March 24. The CME Lean Hog Index as of March 30 was 98.50 up from 98.04 the previous session and up from 93.85 the previous week. US pork export sales for the week ending March 25 came in at 61,009 tonnes, up from 38,701 the previous week and the highest they have been since February 25 and above the 4-week average of 42,606. Cumulative sales for 2021 have reached 840,507 tonnes, up from 814,288 a year ago and the highest on record. Cumulative sales moved above year ago levels two weeks ago and have been there since. The five-year average is 549,982 tonnes.The largest buyer this week was China at 29,714 tonnes, followed by Mexico at 15,786. China has made the most purchases so far for 2021 at 242,837 tonnes, followed closely by Mexico at 242,012. China’s purchases this week are their largest since September 10, 2020.
The USDA estimated hog slaughter came in at 455,000 head Friday and 59,000 head for Saturday. This brought the total for last week to 2.470 million head, down from 2.544 million the previous week and down 4% from a year ago. Pork production for the week was down 2.9% from last year. Actual US pork production for the week ending March 20 came in at 549.0 million pounds, down from 561.5 the previous week and down 8.9% from last year. Friday’s Commitments of Traders report showed managed money traders were net buyers of 2,017 contracts of lean hogs for the week ending March 30, increasing their net long to 78,112. Non-commercial & non-reportable traders were net buyers of 4,832, increasing their net long to 87,981.
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