Thomas Elwood: Early livestock commentary
Showlists are sharply mixed this week, but about unchanged overall. We note a large drop in formula/contract cattle in Texas; that may explain why packers were so aggressive about accumulating numbers in the cash market last week. Asking prices start the week at $104.00 live and $165 dressed.
The big question is whether packers will use the large numbers bought last week to try and leverage themarket lower this week. At the least, they may be able to hold the market steady.
The choice cutout was up $0.78 at $162.20 last night, with the select down $0.32 at $154.42. Volume was extremely light, even for a Monday. Buyers are clearly fighting the higher asking prices, but industry sources expect slaughter to be maintained near last week's levels. In fact, Monday's slaughter was 2,000 head larger than last week. We could see some kill cuts as the week wears on if beef does not perform as needed.
Cash hog bids are expected to be steady to mostly $0.50 lower this morning, with some bids in the East as much as $1.00 lower. Numbers continue plentiful and weights are heavy. Packers are nearly done buying for the week unless they add some Saturday hours. Additional Saturday hours are definitely needed if the industry is going to clear the backlog of hogs.
The pork cutout lost $0.11 last night. Middle weight hams were called "weak", with heavy hams steady to a penny lower. The market should be getting into an area that will attract some export demand, but the large production may keep buyers sitting on their hands to see just how cheap they can buy it. Bellies were 3 cents lower. Butts were steady to a penny lower, with loins unquoted. Most cuts are easily available as slaughter and pork production surge.