Written Commentary
CATTLE:
June cattle closed higher on the session yesterday and the buying pushed the market up to the highest level since April 1. Even after the three day rally, June cattle are still trading at a discount to the cash market. The rally in the beef market over the past few weeks is impressive in a period of increasing beef production. The beef rally suggests that packer margins are improving again, and this should lead to higher cash cattle trade over the near term. The USDA boxed beef cutout was down 1 cent at mid-session yesterday and closed $1.11 lower at $272.36. This was up from $271.04 the previous week.
HOGS:
The firm tone to pork cut-out values this week is a positive development and could support a further recovery bounce. Bird Flu issues could be providing some psychological support as egg prices surge. The loss of poultry exports is an offset. June hogs closed moderately lower on the session yesterday with an inside trading day. Ideas that the premium of futures over the cash market is a bit rich, plus talk that the rally Tuesday was too far, too fast helped to pressure. News that China imports of meat are down sharply from last year for the first quarter helped to pressure. China imported 594,000 tons of meat in March, down 42% from a year ago. Imports for the first three months of the year are down 37%. In addition, weekly average weights for Iowa/Minnesota came in at 288.9 pounds, from 289.2 pounds last week but up from 287.4 pounds last year. Last year weights were high and well above the five-year average for this time of the year. This suggests some hogs could still be backed up in the country.
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