Hogs And Pigs Report Considered Bullish
The market continues to have the short-term cash fundamental news to see more upside action over the near term. Consumer demand looks very strong as the economy reopens, consumer spendable income took of boost from the relief checks, exports remain strong and imports slow. June cattle closed higher on the session yesterday and the market challenged the March 18 high which was also the contract high. Demand factors remain solid and a continued advance in beef prices should support a strong rally in the cash markets in the weeks just ahead. The USDA boxed beef cutout was up $1.32 at mid-session yesterday and closed $1.61 higher at $236.45. This was up from $228.61 the previous week and was the highest the cutout had been since March 1. Cash live cattle prices continue to firm. The 5-area weighted average on Thursday was 115.84 up from 114.21 last week. In Kansas, 1,290 head traded at 115-116 with an average of 115.87 up from 113.96 last week. In Nebraska 8,770 head traded at 115-1156 with an average price of 115.96, up from 114.17 last week.
Average dressed steer weights for the week ending March 13 came in at 904 pounds, up from 900 the previous week and 901 a year ago. The 5-year average weekly weight for that week is 882.2. The USDA estimated cattle slaughter came in at 121,000 head yesterday. This brings the total for the week so far to 475,000 head, up from 453,000 last week but down from 492,000 a year ago. US beef export sales for the week ending March 18 came in at 18,872 tonnes, down from 25,936 the previous week and the lowest since February 18. The average of the previous four weeks is 19,474. Cumulative sales for 2021 have reached 422,485 tonnes, up from 337,281 last year at this time and the highest on record. The five-year average is 275,823. The largest buyer this week was Japan at 5,828 tonnes, followed by South Korea at 4,440 and China at 3,569. South Korea has the most commitments so far for 2021 at 118,517 tonnes, followed by Japan at 93,983, China at 58,720, and Hong Kong at 47,879.
The USDA March 1st Hogs and Pigs report was considered bullish. All Hogs and Pigs on March 1 came in at 98.2% of last year as compared with trade expectations for 100.1% of last year (99–101.3 range). Kept for Breeding supply came in at 97.5% of last year which was also below trade expectations for 98.7% of last year (97.4–100.4 range). For Market animal supply, the USDA came in at just 98.2% of last year as compared with trade expectations for 100.2% of last year (99.2–101.6 range). The December–February pig crop (July–September slaughter), came in at 98.6% of last year which was well below expectations for 100.7% of last year with a range of 98.9% to 102.4%. With market animals coming in below the low end of the trade expectations, the report was a bullish surprise and the market should open strong today. There are indications that some farmers euthanized hogs or performed abortions on pregnant sows after Covid outbreaks temporarily closed slaughter houses last spring. April hogs closed sharply higher on the session yesterday and has posted a contract high for the third session in a row and for 7 out of the last 8 trading days. In addition, there are three gaps left since March 16 and this leaves the market extremely overbought technically and vulnerable to a setback.
The short-term fundamentals remain positive for the market and until exports begin to slow up, buyers could remain active. The USDA pork cutout, released after the close yesterday, came in at $108.03, down from $109.30 on Wednesday but up from $105.82 the previous week. US pork export sales for the week ending March 18 came in at 38,701 tonnes, down from 39,717 the previous week and below the 4-week average at 39,333. Cumulative sales have reached 779,498 tonnes, up from 775,705 last year and the highest on record. The five-year average is 524,845 tonnes. The largest buyer this week was Mexico at 17,325 tonnes, followed by China at 10,453. Mexico has the most commitments at 226,226, tonnes, followed by China at 213,123. The next closest is Japan at 74,556. China’s national average spot pig price as of March 26 was down 1.3% from the previous day. For the week prices are down 3.5%, down 5.2% for the month and down 26% year to date.
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