GENERAL COMMENTS:
It was a good day for most of the livestock sector as both the live cattle and lean hog contracts saw excellent movement and their contracts were able to close higher as well. Meanwhile, with the corn market's re-found support, feeders tumbled lower worried again about input costs. Hog prices closed higher on the National Direct Afternoon Hog Report, up $0.87 with a weighted average of $56.17 on 5,490 head. March corn is up 20 3/4 cents per bushel and March soybean meal is up $6.90. The Dow Jones Industrial Average is down 22.96 points and NASDAQ is down 9.93 points.
LIVE CATTLE:
If you haven't been paying attention to the market's boxed beef prices, movement and overall trend -- now would be a good time to start. With day after day being able to add another $1.00 here and there in both the choice and select cutout levels, the live cattle contracts are relishing in the support and the cash market is beaming over the fact that feedlots finally have the opportunity to move the cash market higher. February live cattle closed $0.47 higher at $117.00, April live cattle closed $0.15 higher at $123.10 and June live cattle closed $0.65 higher at $119.47. The snowfall in the Midwest has helped the cash market's timing as trade will get delayed into the later part of the week. Consolidated Beef Producers Cash Pool was able to sell 1,187 head at $112.55. As of now there have yet to be any other bids hit the marketplace and asking prices in the South have been posted at $114 to $115. Feedlots will hear packers grumble about their cattle packing mud, but they need to stay strong and push this week's cash market higher as the timing is ripe to recover some leverage.
Tuesday's slaughter is estimated at 117,000 head, steady with a week ago and 1,000 head less than a year ago. Monday's cattle slaughter was revised to 115,000 head.
Boxed beef prices closed higher: choice up $2.33 ($229.06) and select up $1.12 ($217.33) with a movement of 131 loads (75.68 loads of choice, 20.73 loads of select, 13.45 loads of trim and 21.21 loads of ground beef).
WEDNESDAY'S CASH CATTLE CALL: Higher. Feedlots know that they sit on an opportunity to move the cash market higher. Packers will use their committed inventory to the best of the ability so that they don't have to jump too deep into this week's market, but even they know that higher cash prices are coming.
FEEDER CATTLE:
It was a less than desirable day for the feeder cattle contracts. Upon the corn market's surge to regain lost ground, the feeder cattle contracts tremored in fear of what feed costs could amount to and closed mostly $1.00 to $2.00 lower. Nearby corn contracts were able to secure gains upward of $0.17 to $0.20 higher. March feeders closed $2.37 lower at $141.47, April feeders closed $1.97 lower at $144.27 and May feeders closed $1.70 lower at $145.95. With live cattle contracts steaming higher -- and confidence that cash cattle prices will trade higher thanks to a roaring boxed beef market -- the feeder cattle contracts only hurdle are input costs. At Oklahoma National Stockyards in Oklahoma City, Oklahoma, compared to a week ago, feeder steers sold steady while feeder heifers sold steady to $2.00 higher. Steer and heifer calves traded steady to $4.00 lower. With the moisture that's lined the countryside, buyers are leery of taking any calves that would be sickness prone and are especially looking for calves with a full vaccination history. Not only will the stress of being hauled to and from the sale barn affect the calves, but with more moisture on its way the calves will need to bounce back after multiple storms. The CME feeder cattle index for Jan. 25: $0.48, $134.96.
LEAN HOGS:
The lean hog contracts took ahold of Tuesday's support and rallied throughout the day, managing to close with a plethora of new contract highs. February lean hogs closed $0.17 lower at $70.45, April lean hogs closed $0.32 higher at $76.95 and June lean hogs closed $0.42 higher at $87.92. Pork cutouts had impressive movement Tuesday afternoon, moving upward of 438 loads, but prices unfortunately fell with the large movement. The cash market was supportive of the market's willingness to trade higher and cash prices actually closed higher as well, even though it was on a small movement of only 5,490 head for the day. Pork cutouts total 438.05 loads with 410.74 loads of pork cuts and 27.30 loads of trim. Pork cutout values: down $1.20, $80.93. Tuesday's slaughter is estimated at 455,000 head, 43,000 head less than a week ago and 38,000 head less than a year ago. The CME lean hog index for Jan. 22: up $0.33, $65.88.
WENDESDAY'S CASH HOG CALL: Lower. With snow making some trucking difficult, packers may be leery of diving into the cash market until weather permits better travel conditions, and with last week's aggressive buying, packers don't necessarily need to jump in headfirst into the cash market.
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