GENERAL COMMENTS:
Wednesday's announcement of President Trump signing the USMCA had little effect on the day's market, much like the signing of the phase-one trade agreement where the market's enthusiasm had already been bolstered into the complex. The USMCA comes as a win for U.S. ag producers as DTN Ag Policy Editor Chris Clayton shared that, "Under NAFTA trade in north American has grown to about $1.3 trillion annually between the three countries. USMCA is projected to add about $68 billion in U.S. exports once fully implemented, which included $2.2 billion for U.S. agriculture."
Cash hog prices are higher again on the National Direct Afternoon Hog Report, up $0.56 with a weighted average of $55.36. March corn is down 2 1/4 cents per bushel and March soybean meal is down $1.50. The Dow Jones Industrial Average is up 12.24 points and NASDAQ is up 5.48 points.
LIVE CATTLE:
Live cattle contracts ranged $0.40 to $0.55 lower as they closed unable to find stability yet again. February live cattle closed $0.40 lower at $121.75, April live cattle closed $0.47 lower at $120.22 ad June live cattle closed $0.47 lower at $112.00. Though it wasn't enough trade to call the market trend for the week established, a handful of cattle did sell Wednesday afternoon in Kansas for $122, which is $2.00 lower than last week's weighted average.
Boxed beef prices closed mixed: choice up $0.67 ($213.52) and select down $0.23 ($211.93) with a movement of 127 loads (84.16 loads of choice, 12.86 loads of select, 9.85 loads of trim and 20.31 loads of ground beef). Wednesday's slaughter is estimated at 123,000 head, steady with a week ago and 11,000 head more than a year ago.
THURSDAY'S CASH CATTLE CALL: Lower. With packers testing the water at $122, it's going to make it hard for feeders to get prices much better than that unless they all stick together and hold trade out until late in the week.
FEEDER CATTLE:
Feeder cattle markets were left with no option but to trade lower. As cash cattle prices are anticipated to be lower, the live cattle board is weakening and demand for feeders in the sale barns in softening. March feeders are down $0.42 at $134.97, April feeders are down $0.70 at $137.07 and May feeders are down $0.85 at $139.20. On an estimated run of 5,517 head at OKC West Livestock Auction in El Reno, Oklahoma, and compared to last week, feeder steers traded fully steady, while feeder heifers sold $4.00 to $7.00 lower as demand for feeder cattle is starting to taper off. Steer and heifer calves traded sharply lower on a limited offering. The CME feeder cattle index 1/28/2020: down $0.17, $143.59.
LEAN HOGS:
The lean hog complex rendered the day plunging into lower prices again, suffering the most significant losses in the livestock complex. February lean hogs are down $1.92 at $64.30, April lean hogs are down $68.82 and May lean hogs are down 2.32 at $75.32. Pork cutouts totaled 373.47 loads with 323.57 loads of pork cuts and 49.91 loads of trim. Pork cutout values: down $4.49, $71.39. Wednesday's slaughter is estimated at 497,000 head, 4,000 head more than a week ago and 253,000 head more than a year ago. The CME lean hog index 1/27/2020: up $0.10, $61.74.
The sheer number of hogs being harvested right now has both bullish and potentially bearish effects on the market. On the bright side, while the board bleeds lower, the cash market has been able to capture positive movements throughout most of the week. But at some point, we have to fall back on the simple market principles of supply and demand and wonder where all of this processed pork is going to go.
THURSDAY'S CASH HOG CALL: Steady. With the market's weakness and the cash market's push to pull prices higher it wouldn't be surprising if at some point, sooner rather than later, the cash market exhausts its drive.
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