Hogs: Though futures had a quiet day on Wednesday, we will note the April pork trade figures caused some discussions. The new figures released in the morning showed pork exports at 397 million lbs. Compared with last year, that was down 12%. We call that an improvement from the March numbers that were 18% lower. In addition, these numbers were made even with terrible exports to China and Russia (-39% and -99%, respectively). The trade will assume a slightly better-than-expected pace in April will also mean a slightly better-than-expected pace right now.
In shorter-term issues, we still have not seen that transition point yet where packers note cash hog prices have pushed too far compared with cash pork. That point certainly may come, but is not here yet. In beef, supply is a clear negative. In pork, it is the exact opposite. One thing both sides do share though is their hopes/concerns regarding consumer demand. Friday’s report on employment may shed a little more light on that subject…Rich Nelson
Cattle: Packers took a hard stance Wednesday with $121 bids posted in the morning. Compared with last week’s $124 trading, that would appear as though $1 lower trade this week is an easy assumption. That may have disappointed those looking for steady prices. Cattle feeders are asking $125. As there is generally a $2 drop from initial cattle feeder asking prices and actual trade, that would mean they are also ready to accept lower prices.
Wednesday morning’s release of April U.S. beef trade numbers may have been the reason. April U.S. beef exports, at 180 million lbs. were 13% lower than last year. That was down from the March numbers that were 3% under last year. Keep in mind these numbers were made with zero exports to Russia.
On the import side, we brought in 232 million lbs. in April. That was 9% over last year (March was 3% under). Sending out smaller amounts of exports and taking in more imports means more beef left in the U.S. for consumers.
On the wholesale beef end, we must also point out week to date action is $2.25 lower for choice and $2.57 lower for select. We should expect continued declines in cash cattle prices, from the $128 spring high, for at least another two to 12 weeks. We continue to suggest cash will reach down to $113 for the summer low and for August futures to hit $115. The factor that bulls are hoping for here is Friday’s employment report. If it shows another month of good numbers, the trade will adjust its consumer demand expectations a little higher. That could also encourage us to bring our downside targets higher (if it is bullish)…Rich Nelson