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DTN Midday Livestock Comments 04/06 11:16
Lean Hog Futures Lead Gains Monday
Strong gains developed across lean hog futures trade Monday morning as
traders returned from the long Easter weekend. Cattle futures remain mixed with
follow-through buyer support in live cattle trade, while feeder cattle futures
have eased during Monday morning trade.
Rick Kment
DTN Analyst
GENERAL COMMENTS:
Cattle futures remain mixed early Monday due to the aggressive market
support that flooded the market last week, creating some market positioning in
both live cattle and feeder cattle trade. April live cattle futures are the
only contract month posting strong support Monday due to limited trade volume
in this contract month, but narrow gains are holding across the live cattle
complex based on expected strong cash cattle and wholesale beef prices in the
coming days and weeks. Feeder cattle futures have eased during morning trade,
with nearby contracts seeing market positioning. Even with the recent market
pullback in prices, the fundamental support based on tighter supplies and
long-term demand growth still keeps the market outlook bullish. After spending
most of last week stuck in a narrow but generally softer market direction,
active buyer support quickly moved into most lean hog contracts, posting strong
triple-digit support in May through February 2027 contract months. This renewed
support is not surprising, but the ability to hold prices at current or higher
levels through the end of the session could spark additional technical buying
activity within the lean hog complex during early April. May corn is up 1 1/2
at $4.538 and May soybean meal is up $1.60 at $316.8. The Dow Jones Industrial
Average is up 96.22 at 46,600.89.
LIVE CATTLE
Live cattle futures continue to show moderate to strong gains Monday
morning, with spot April contracts leading the market higher with an additional
$1.80 per cwt rally following the weekend break. Pressure in nearby feeder
cattle trade has started to limit early-week buyer support in other live cattle
trade, with prices generally 10 to 30 cents per cwt higher during the remaining
2026 contract months. Despite the lack of aggressive market growth in live
cattle contracts, the sharp gains seen last week have continued to keep the
cattle market bullish, allowing for increased focus on additional tight
supplies, as well as the potential that even wholesale beef values near $400
per pound have not yet shown signs of beef demand slowing in domestic markets.
Pressure in the feeder cattle trade will continue to be monitored through
Monday and the remainder of the week, but traders are closely focusing on early
week movements in beef values. The announcement over the weekend that JBS
workers in the Greeley, Colorado, plant plan to return to work on Tuesday after
striking for the past three weeks. This will help to create stability in
processing schedules and increase overall beef flow through the entire domestic
system, although it may not create significant and abrupt price changes to the
market at this point. Cash cattle markets remain quiet Monday morning, with
both sides assessing last week's movement. Show list distribution and inventory
taking is likely to be the main order of business Monday, with any significant
activity likely to be pushed off until the last half of the week. Light trade
developed on Thursday last week, with a little cleanup on Friday. Southern live
deals had a range of $244 to $246, mostly $245 to $246, $8 to $9 higher than
the prior week's weighted averages. Northern dressed business had a full range
of $380 to $386, mostly $385, $13 higher than the previous week's weighted
averages. The Friday afternoon Daily Direct Slaughter Cattle report lists
week-to-date trade volume totals as: KS 5,135; NE 22,588; TX 2,425; IA 28,731;
and CO not available due to confidentiality. April live cattle are $1.75 higher
at $247.95, June live cattle are $0.53 higher at $246.85 and August live cattle
are $0.48 higher at $242.65. Boxed beef prices are Higher: choice up $1.18
($388.96) and select up $2.12 ($388.31) with a movement of 32.80 loads (20.32
loads of choice, 4.20 loads of select, 4.84 loads of trim and 3.44 loads of
ground beef).
FEEDER CATTLE:
Feeder cattle markets are showing signs of weakness Monday morning, with
firm triple-digit losses seen in spot April contracts through morning trade.
Light to moderate losses are seen through the rest of the complex midmorning
Monday, with traders slowly backing away from initial losses but still
unwilling to actively move back into the buying side of the market. The
aggressive market surge last week was impressive to say the least, as traders
continue to focus on cattle numbers and long-term beef supplies tightening in
the coming weeks and months. But the upward surge has caused traders to take a
breather over the holiday weekend, allowing for some market positioning and
profit-taking to develop in early week trade. Even with the current market
pullback, prices are still fundamentally and technically strong, which may make
it difficult to sustain a longer-term price pullback without additional market
news or outside market factors disrupting the bullish tone already established
within the cattle complex. April feeders are $0.70 lower at $372.2, May feeders
are $0.45 lower at $370.175 and August feeders are $0.05 higher at $369.55.
LEAN HOGS:
Lean hog prices are the bright spot as traders return from the Easter
weekend break. While lean hog futures remained subdued last week, cattle
futures posted an aggressive market rally, and buyers have quickly moved back
into the market, focusing on regaining market support and price firmness
through the entire lean hog complex. The morning rally in May through August
contracts has not pushed most of these contracts back to the 40-day moving
average, where prices have traded below this level for nearly a month.
Continued optimism surrounding pork demand growth over the coming weeks and
months, as well as spill-over support from the aggressive gains in beef values,
is helping to stimulate buyer activity in most nearby lean hog trade as traders
return from the holiday break and focus on the rest of the spring and summer
markets. With holiday packer scheduled subdued surrounding the weekend breaks,
packer runs are expected to still remain significantly lighter Monday than a
normal weekday run, but schedules should get back to normal pace Tuesday and
focus on regular pork movement over the upcoming weeks. April lean hogs are
$0.20 higher at $90.55, May lean hogs are $1.53 higher at $97.525 and June lean
hogs are $2.25 higher at $106.725. Hog Prices are lower on the Daily Direct
Morning Hog report, down $0.75 with a weighted average of $89.44, ranging from
$89.00 to $91.00 on 755 head with a five-day rolling average of $90.19. Pork
Cutouts totaled 161.87 loads with 145.59 loads of pork cuts and 16.28 loads of
trim. Pork cutout values are up $2.36 at $100.33.
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