A sharp spike in corn prices sent the cattle contracts spiraling lower Thursday as input costs are alarmingly high.
Thanks to the rally in the corn market, cattle futures have nose-dived lower and are only feeling the pressure build as time goes on. Meanwhile, lean hog futures are trying to keep their upward rally, though there is some pressure building in the nearby contracts. May corn is up 25 cents per bushel and July soybean meal is up $9.80. The Dow Jones Industrial Average is down 51.74 points and NASDAQ is up 30.78 points.
It’s been a rough day for cattle futures and even though the live cattle market isn’t seeing sharp losses like the feeder cattle contracts, their inability to rally a higher cash cattle market is equally as painful. April live cattle are down $1.45 at $118.32, June live cattle are down $1.00 at $116.30 and August live cattle are down $1.02 at $116.92. Even though this week’s slaughter is running aggressively and most likely going to be around 650,000 to 660,000 head and boxed beef prices are higher than a year ago — feedlots don’t hold enough leverage in the current market to move the cash cattle market higher regardless of what the fundamentals are. Light trade has developed in the North at $192, which is $4.00 lower than a week ago and bids of $118 have surfaced in Kansas. Asking prices are around $121 to $122 in the South and $196 plus in the North.
Beef net sales of 24,600 metric tons (mt) reported for 2021 were up 57% from the previous week and 38% from the prior 4-week average. The three largest buyers were South Korea (7,800 mt), Japan (6,200 mt) and China (3,100 mt).
Boxed beef prices are higher: choice up $0.93 ($281.39) and select up $2.91 ($274.79) with a movement of 63 loads (33.94 loads of choice, 14.65 loads of select, 5.21 loads of trim and 9.04 loads of ground beef).
Pain, sheer pain is what the feeder cattle complex is experiencing as May corn rallies 25 cents to $6.50 per bushel and July corn rallies the same amount to $6.31. With corn prices making hellacious jumps day in and day out, the feeder cattle contracts have been trading lower; but Thursday trade is sending the contracts sharply lower. May feeders are down $3.80 at $135.80, August feeders are down $4.22 at $147.70 and September feeders are down $3.87 at $150.07. Until the corn market stabilizes or begins to fall lower, the feeder cattle contracts don’t have much ground to stand on as the live cattle complex isn’t having luck at rallying cash cattle prices.
As the noon hour approaches, the lean hog contracts are seeing a little more resistance building in their nearby contracts while the deferred contracts still rally modestly. June lean hogs are down $0.12 at $104.57, July lean hogs are up $0.37 at $103.37 and August lean hogs are up $0.60 at $99.92. Initially looking at the weekly export report, a marketing year low wasn’t all that surprising as we expected exports to be lower amid such high pork prices. But seeing China back to buy again and seeing the data correction note that there was some data not properly reported in 2020, the report hasn’t bearishly undermined the market and strong fundamental undertones still remain.
Pork net sales reductions of 22,100 mt reported for 2021 — a marketing year low — were down noticeably from both the previous week and prior 4-week average. The three largest buyers were China (13,100 mt), Japan (2,700 mt) and South Korea (1,500 mt). Data correction note, “Due to an error in exporter(s) reporting, exports of 54,476 mt of pork were not reported properly in marketing year 2020. To correct marketing year 2021 figures a cancelation of 54,476 mt has been reported this week to remove the portion that should have been reported in 2020.”
The projected CME Lean Hog Index for 4/21/2021 is up $0.87 at $105.99 and the actual index for 4/20/2021 is up $0.70 at $105.12. Hog prices are higher on the National Direct Morning Hog Report, up $0.75 with a weighted average of $105.72 ranging from $104.00 to $113.00 on 3,987 head and a five-day rolling average of $104.39. Pork cutouts total 207.51 loads with 180.86 loads of pork cuts and 26.65 loads of trim. Pork cutout values: up $0.56, $114.20.