DTN Midday Livestock Comments 04/03 11:29

DTN Midday Livestock Comments 04/03 11:29 Lean Hogs Extend Highest Prices in a Year; Cattle Prices Remain Under Pressure Lean hog prices were starting higher early Wednesday, another show of strong demand, while cattle and feeder cattle futures traded lower, still disrupted by bird flu concerns. Todd Hultman DTN Livestock Analyst GENERAL COMMENTS: Livestock prices were split early Wednesday with lean hog futures higher and cattle futures lower as traders wait to hear more findings from health officials regarding HPAI. LIVE CATTLE: With traders still nervous about the presence of highly pathogenic avian influenza (HPAI) in dairy cattle and one dairy worker, June live cattle futures are trading down $2.07 at $174.30, staying below the 100-day average near $176.00. Wednesday's low volume suggests a lack of support in the market, more than the presence of heaving selling. No significant cash trade has been reported yet this week, but modestly lower prices seem likely after Monday's $4.92 drop in the June futures coincided with news that a person in Texas contracted HPAI after working near infected dairy cattle. For more information see "Ohio Dairy Tests Positive for HPAI" by DTN Environment Editor Todd Neeley here: https://www.dtnpf.com/agriculture/web/ag/news/business-inputs/article/2024/04/03 /ohio-dairy-tests-positive-hpai-third. After Tuesday, cattle slaughter is running 14,000 less than last week at this time. Dow Jones estimates Wednesday's slaughter at 121,000, down from 124,000 a week ago. Along with the recent HPAI news, retail demand has turned cautious for beef, but the market does not seem to be panicking. Negotiated choice boxed beef prices were quoted $302.51 early Wednesday and were down $4.21 since Friday. Selects were at $297.94, down $5.49 since Friday and had a total load count for both of 92. Comprehensive boxed beef prices were $6.59 higher than negotiated prices in last Friday's weekly report. While snow is falling over Iowa, Wisconsin and northern Illinois on Wednesday, warmer temperatures are moving into the western Plains, offering mild conditions through the weekend. There will be some chances for beneficial precipitation in the western Plains this weekend into next week. FEEDER CATTLE: May feeder cattle are trading down $3.60 at $241.20, keeping a bearish tone after Monday's $6.02 drop. According to last Friday's CFTC report, speculative accounts were net long 1,674 contracts of feeder cattle as of March 26, a smaller exposure than specs have in live cattle. That may eventually work in favor of cash feeder prices at some point, but so far, futures prices remain a bearish influence. It also seems fair to say cattle producers don't seem as nervous about the HPAI situation as specs are. The CME Feeder Index was priced at $248.27 as of Monday, down $3.33 from a week ago. Even so, this is a challenging time for both, cattle and feeder prices until we learn more facts about HPAI and what is actually at risk. It is worth repeating that milk and beef supplies are safe, while vets and health officials gather more information. Technically speaking, May feeder cattle have broken below their one-month low and are wrestling with the 100-day average near $244.00. A weekly close below $244.00, if it happened would indicate a weak market with more bearish potential. LEAN HOGS: June lean hogs are trading up $1.05 at $104.77, a third day higher after Friday's hog inventory report looked bearish, citing a 1% increase in the number of hogs and pigs on March 1 from a year ago. Monday's bullish reversal plus higher prices since then suggest the current level of demand for hogs is stronger than USDA's report was bearish and we are also seeing that reflected in higher cash prices. It is fair to wonder if pork demand is getting a boost from the news of HPAI infections in dairy cattle, but we have to note that demand for cash hogs has been improving since the calendar turned to 2024. The national average of negotiated hog prices were quoted by USDA at $85.59 Wednesday morning, up from the low $40s in late December. The swine formula price was quoted at $85.28 Wednesday morning, near its highest price since September. The CME Lean Hog Index showed $84.92 as of Monday, up $1.23 from a week ago. In the first two days of this week, hog slaughter is down 120,000 from the previous week, possibly related to the conclusion of Easter. Year-to-date slaughter in 2024 is up 0.1% from a year ago. Dow Jones estimates Wednesday's hog slaughter at 487,000, down from 489,000 a week ago. Wednesday morning's report of pork cutout values were down $1.51 at $95.62 on 170.23 loads, maintaining a healthy margin above cash hog prices. Ribs were down $4.06 and loins were down $3.61. Technically speaking, June hog prices are trading at their highest prices in over a year and it will be interesting to see if prices eventually challenge the 2023 high for June prices at $109.12. Todd Hultman can be reached at Todd.Hultman@dtn.com Follow him on X, formerly Twitter, @ToddHultman1 (c) Copyright 2024 DTN, LLC. All rights reserved.