Written Commentary
CATTLE
The market remains in a solid uptrend as the continued strong advance in beef prices to the second highest level ever could be a key factor to help drive cash markets even higher. A further advance in the cash markets will leave futures holding an only small premium to the cash and demand factors look to remain positive well into May. June cattle closed higher on the day and the buying pushed the market up to new contract highs for the 4th session in a row. It was an outside day up. News that cash cattle traded moderately higher this week helped to drive the market higher. Cash live cattle prices are running around $2.50-$3.00 higher than last week. In Kansas on Wednesday, 14,661 head were reported at 118/121 with an average price of 120, up from 117.07 last week.
In Nebraska 5,172 were reported at 120-123.75 with an average price of 122.07 versus an average of 118.41 last week. And in Texas/Oklahoma 9,412 traded at 119-121 with an average of 120.08 versus an average of 116.64 last week. The USDA boxed beef cutout was up $2.55 at mid-session yesterday and closed $3.54 higher at $266.31. This was up from $247.12 the previous week and was the highest the cutout had been since June 4. Prior to the unprecedented run to $475.39 in May 2020, the highest the cutout on record had been $265.59 from May 2015. The USDA estimated cattle slaughter came in at 120,000 head yesterday. This brings the total for the week so far to 345,000 head, down from 358,000 last week but up from 313,000 a year ago.
LEAN HOGS
The continued strong advance in the pork cutout market has helped keep buyers active and the market in a strong uptrend. Pork exports for February reached 591.9 million pounds, down 10% from last year and down sharply from the peak in March of last year at 701.6 million pounds. Exports represented 26.1% of total production for the month of February. China imported 138.3 million pounds as compared with 253.3 million as the monthly record from May, 2020. We continue to believe that the African swine fever scare in China may slow the expansion some, but China pork production is still on the rise. China’s national average spot pig price today was down 3.2%. For the week prices are down 9.5%, down 11.4% for the month and down 37.2% year to date. The market remains in a strong uptrend with June hogs closing sharply higher to new contract highs. August hogs closed sharply higher but did not reached new highs while October and December hogs closed higher and into new contract highs.
Ideas that short-term pork demand remains strong with the seasonal decline in production and this has helped support more buying. The USDA pork cutout, released after the close yesterday, came in at $109.34, up $1.77 from Tuesday and $107.52 the previous week. This was the highest the cutout had been since May 15, 2020. The average hog weight for Iowa-Southern Minnesota as of April 3 was 287.3 pounds, down from 287.6 the previous week but up from 284.7 a year ago. The CME Lean Hog Index as of April 5 was 100.34 up from 100.10 the previous session and up from 98.04 the previous week. The USDA estimated hog slaughter came in at 494,000 head yesterday. This brings the total for the week so far to 1.301 million head, down from 1.465 million last week and 1.431 million a year ago.
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