GENERAL COMMENTS:
Welcoming the first full week of trade of 2020 with a bang, cattle contracts jumped higher, captured opportunity and now look toward a new day. Lean hog contracts were mostly quiet as the attention grew toward the cattle contracts. But as next week is the signing of phase one of a trade agreement with China, lean hog contracts will have time to trade in no time. Hog prices are lower on the National Direct Afternoon Hog Report, down $0.18 with a weighted average of $50.33. March corn is down 1 3/4 cents per bushel, and March soybean meal is up $1.70. The Dow Jones Industrial Average is up 68.50 points, and the NASDAQ is up 50.69 points.
LIVE CATTLE:
Live cattle contracts filled in right behind the feeder cattle markets' lead and prices jumped higher as cumulative interest grew. February live cattle closed $2.55 higher at $127.27, April live cattle closed $2.42 higher at $128.10 and June live cattle closed $1.77 higher at $119.45. Comparing the start of 2020 to the two previous years, at this time, the 2019 live cattle contracts were at $123.20, and 2018 opened the new year at $119.25. It's intriguing that both years (2018 and 2019) came to the $130 resistance plane and ultimately sold off. Back in 2017, the market traded wildly higher -- for a handful of days -- than the $130 threshold, but markets quickly subsided to lower trading ranges as spring turned into summer. There's no arguing that, historically, fat cattle usually capture their highest prices in the first quarter of the year. Seeing that this year's market is entering into the new year stronger than the past two leaves one hopeful about the momentum carrying the market and that it will trickle into cash prices.
Closing boxed beef prices are higher: choice up $1.16 ($209.65) and select up $1.41 ($206.80) with a movement of 165 loads (110.63 loads of choice, 17.62 loads of select, 21.58 loads of trim and 14.99 loads of ground beef). Monday's slaughter is estimated at 121,000 head -- 2,000 head more than a year ago.
TUESDAY'S CASH CATTLE CALL: $1.00 higher. I can't think of a much better way to welcome the new year than with strong boxed beef prices, aggressive slaughter and the anticipation for higher cash cattle prices. It's too early in the week for asking prices and bids to surface, and knowing that the last couple of weeks have paid feeders one-hundred-fold to push trade late into Friday, it wouldn't be expected any other way than that this week will follow the same suit. Regardless, when fat cattle do decide to trade, it is anticipated to be for higher prices again this week.
FEEDER CATTLE:
Feeder cattle contracts took the day, soared higher and kept the lavish gains through closing bell. January feeder cattle closed $4.07 higher at $147.42, March feeders closed $3.67 higher at $146.35 and April feeders closed $3.20 higher at $148.72. The market is trading close to where it was back in the start of 2018 ($146.62) and 2019 ($147.62). The CME feeder cattle index 1/03/20: up $1.66, $146.53.
LEAN HOGS:
Monday was a day for cattle contracts to shine, but lean hogs were at least able to close higher in most contracts. February lean hogs closed $0.07 higher at $68.62, April lean hogs closed $0.20 lower at $74.95 and May lean hogs closed $0.05 lower at $81.45. To compare the market's start to the new year in years past, in 2018, the market was trading around $72.97, and in 2019, the market was trading near $61.95.
Pork cutouts totaled 337.44 loads with 299.41 loads of pork cuts and 38.03 loads of trim. Pork cutout values: up $0.54 at $74.76. Monday's slaughter is estimated at 497,000 head -- 20,000 head more than a year ago. The CME lean hog index 1/2/2020: up $0.89, $58.62.
TUESDAY'S CASH HOG CALL: Slightly higher. Tuesdays seem to be the lean hog complex's day to shine, and so it wouldn't be surprising to see cash prices bump up a little while cash cattle trade still sits idle.
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