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A setback in hogs overnight, a jump in deliveries and lingering concerns that consumer demand for beef this year will not be much lower than normal helped spark the weakness overnight. However, the large discount of June cattle to the cash market along with a significant decline in all meat production as compared with last year should help provide support on a minor set-back. News of 25 new tenders and 1 re-tender for delivery against the April contract helped to pressure the market overnight. Breaks look like buying opportunities. June cattle closed near unchanged yesterday after the early break to near Tuesday’s lows failed to generate new selling interest. The discount of June to the cash market and a recovery in the stock market helped support the rally off of the early lows. While beef prices have surged to a 3-month high, traders are taking a more wait and see attitude about believing that consumer demand will be strong enough to support a normal seasonal rally in beef. Boxed beef cutout values were up $1.57 at mid-session yesterday and closed $1.41 higher at $154.37. This was up from $146.51 a week ago and up from near $135.00 early this month. The estimated cattle slaughter came in at 125,000 head yesterday which is near the high end of estimates and considered a sign that packer demand is good. This brings the total for the week so far to 377,000 head, up from 361,000 last week at this time but down from 383,000 a year ago. Broiler producers in the US placed 167 million chicks for meat production for the week ending April 18th which is down 6% from last year. Cumulative placements for the year are also down 6% from last year and this indicates poultry production should run near this level for the next few months.
TODAY’S GUIDANCE: Beef prices continue in a solid uptrend and this has helped pull packer margins into the black and has boosted packer demand to push cattle through the pipeline at a quicker pace.
