GENERAL COMMENTS:
The livestock complex closed mixed Tuesday afternoon. The lean hog market continued to fight pressure while the feeder cattle contracts relished in the opportunity to close higher due to lower corn prices. Hog prices closed lower on the National Direct Afternoon Hog Report, down $1.04 with a weighted average of $54.26 on 9,088 head. March corn is down 5 1/2 cents per bushel and March soybean meal is down $12.70. The Dow Jones Industrial Average is up 116.26 points and NASDAQ is up 198.68 points.
LIVE CATTLE:
The live cattle contracts closed split Tuesday afternoon, as the nearby contracts closed higher but the deferred contracts suffered minor losses. February live cattle closed $0.55 higher at $113.32, April live cattle closed $1.15 higher at $119.35 and June live cattle closed $0.45 higher at $116.72. Cattlemen would obviously like to see the live cattle complex higher, but thankfully, with the nearby contracts closing higher and beef demand continuing to show stark demand, the market may be able to demand at least steady cash cattle prices this week. With last week's negotiated trade where 95,868 head sold (which is great) -- the issue is in the number of cattle that were committed for delivery in the following 15 to 30 days, which totaled 35,677 head. With packers continuing to add to their long-term inventory, you can guarantee that they intend to use those cattle to put a damper on the upcoming week's cash cattle market. Tuesday's cash cattle trade was at an utter standstill without any trade developing. New showlists appear to be mixed -- higher in Texas but lower in Kansas, Nebraska/Colorado. Tuesday's slaughter is estimated at 117,000 head, 2,000 head more than a week ago and 7,000 head more than a year ago. Monday's cattle slaughter was revised to 112,000 head.
Boxed beef prices closed higher: choice up $2.45 ($217.49) and select up $0.60 ($206.44) with a movement of 148 loads (102.55 loads of choice, 21.08 loads of select, 8.46 loads of trim and 15.82 loads of ground beef).
WEDNESDAY'S CASH CATTLE CALL: Steady. Feedlots are going to be anxious to price cattle higher again this week (which they should), but the pressure they're going to receive from packers is going to be tough again this week. It's not impossible to achieve steady to $1.00 higher this week, but it will take sincere marketing and for all feedlots to push until later in the week to market their showlists.
FEEDER CATTLE:
It was a good day for the feeder cattle contracts as the contracts were nearly able to close fully higher except for the spot January contract. As traders look at the number of days left in January, they're starting to move their positions from the January contract to the March and April boards. January feeders closed $0.17 lower at $134.40, March feeders closed $0.97 higher at $136.80 and April feeders closed $1.30 higher at$139.60. If corn prices continue to show weakness throughout the rest of the week, the feeder cattle contracts may be able to keep their upward momentum. At Oklahoma National Stockyards in Oklahoma City, Oklahoma, compared to a week ago, feeder steers and heifers sold steady to $4.00 lower with the steepest decline on the plainer types of cattle. Steer and heifer calves under 500 pounds sold $2.00 to $6.00 higher, calves weighing over 500 pounds sold steady to $2.00 lower. Demand was good throughout the sale but was especially strong for the four weight steer calves. Much of the state has dried up since the snowstorm over the holidays and temperatures are back to normal, however, cattle are still carrying a fair bit of mud. The CME feeder cattle index for Jan. 18: not available at this time.
LEAN HOGS:
While the cattle contracts enjoyed support throughout the early part of the week, the lean hog contracts were faced with resistance from both fundamental and technical pressures. February lean hogs closed $1.45 lower at $66.47, April lean hogs closed $1.22 lower at $71.42 and June lean hogs closed $1.37 lower at $83.00. Not only did the futures market see moderate losses, but the market also faced pressure from a weakening cash market and decreasing cutout value. Pork cutouts totaled 404.67 loads with 367.71 loads of pork cuts and 36.96 loads of trim. Pork cutout values: down $1.10, $77.42. Tuesday's slaughter is estimated at 498,000 head, steady with a week ago and 2,000 head more than a year ago. The CME lean hog index for Jan. 15: up $0.03, $65.56.
Wednesday's CASH HOG CALL: Lower. With the lean hog market enduring pressure from all sides of the market, it's likely that the Wednesday's cash hog trade is lower again.
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