Market News

Demand expectations fuel hog futures

Chicago Mercantile Exchange live cattle futures were sharply higher on commercial and technical buying, along with spillover from feeders. Contracts were oversold and due for a bounce after the recent losses, waiting to see what happens with the rest of the week’s direct business. Beef export sales were up sharply on the week, with South Korea and Japan the top weekly buyers. April was $1.77 higher at $127.55 and June was up $2.57 at $121.57.

Feeder cattle were sharply higher on oversold signals, along with commercial and technical buying. April was up $1.57 at $146.32 and May was $2.80 higher at $150.07.

Direct cash cattle business was generally at a standstill. Scattered trade was reported mainly at $124 live and $200 to $205 dressed, not enough to establish a trend. Asking prices were $127+ live and $208+ dressed, with bids of $124 live and $203 to $205 dressed. Wednesday’s trade was light to moderate mostly at $124 live and $205 dressed, both down $1 from the previous week’s respective weighted averages. Beef demand uncertainties are in the background, with high slaughter levels, up-and-down exports, and a slow start to widespread grilling season in many areas.

Boxed beef closed mixed on light to moderate demand and offerings. Choice was up $.60 at $226.74 and Select was down $.61 at $218.36. The estimated cattle slaughter of 121,000 head was up 4,000 on the week and 3,000 on the year.

At the Ogallala Livestock Auction feeder cattle sale in Nebraska, there was no comparison to the previous week, but receipts were up on the year. The USDA says demand was good to moderate for a nice selection. Steers made up 59% of the run and 76% of the offering weighed more than 600 pounds. Medium and Large 1 feeder steers weighing 700 to 800 pounds were reported at $148 to $168 and 800 to 900-pound steers sold at $142 to $154. Medium and Large 1 feeder heifers weighing 500 to 600 pounds brought $150 to $171 and 700 to 800-pound heifers ranged from $132.50 to $143.50.

Lean hog futures were sharply higher, supported by solid fundamentals during the session, along with the continued expectations for strong pork demand from China. Details from this week’s negotiations have been sketchy but talks appear to have been largely positive. That being said – the anticipated increase in demand from China hasn’t materialized yet. Pork exports were down sharply from both the week before and the four-week average. April was up $.50 at $79.57 and June was $3.00 higher at $97.85.

Cash hog business was higher with moderate to heavy closing negotiated numbers for the major direct markets. The industry continues to expect strong domestic and export demand for pork, especially from China because of the continued spread of African swine fever. Negotiations are ongoing, and reportedly going well, but China didn’t buy any U.S. pork last week. Allendale says a new case of ASF was uncovered this week in Yunnan province and that China’s Ag Ministry will require raw pork processors to test for the virus starting May 1st. ASF has also reportedly now spread to Cambodia, near the border with China. It looks like a potential shutdown of the border with Mexico, another big buyer of U.S. pork, has been averted for now.

Iowa/Southern Minnesota direct barrows and gilts closed $.95 higher at $70 to $78.50 with a weighted average of $77.25, the Western Cornbelt was $1.41 higher at $67 to $78.50 for an average of $76.77, and national direct business was $1.15 higher at $67 to $78.50 with an average of $76.37. Butcher hogs at the Midwest cash markets were $2 higher at $62. Illinois direct sows were $1 higher at $36 to $50 on good demand for light offerings. Barrows and gilts were firm at $46 to $56 with good demand for moderate offerings. Boars ranged from $10 to $28.

Pork closed $1.96 higher at $82.22. All primal cuts were sharply higher, including a $3.37 gain in picnics. The estimated hog slaughter of 477,000 head was down 2,000 on the week, but up 11,000 on the year.