General Comments
The support that upheld both the live cattle and feeder cattle contracts is weakening in the live cattle contracts as some deferred contracts are battling modest resistance. Meanwhile if corn prices are going to continue to trade lower, the feeder cattle contracts see this as an opportunistic time to trade fully higher -- no questions asked. March corn is down 8 cents per bushel and March soybean meal is down $11.80. The Dow Jones Industrial Average is up 120.71 points and NASDAQ is up 135.67 points.
LIVE CATTLE
Tuesday has shown mixed support for the live cattle contracts as early in the day the contracts traded fully higher but as the noon hour approaches deferred contracts are met with some hesitation. February live cattle are up $0.67 at $113.45, April live cattle are up $1.20 at $119.37 and June live cattle are up $0.52 at $116.80. Last week's cash cattle trade was bigger than anticipated and it's a little concerning that packers were able to commit upwards of 35,677 head for 15 to 30 days out. The Northern Plains were able to sell a plethora of cattle which will help them in the weeks to come as they were able to clean up some of their showlists. The cash cattle front will continue to be a struggle even with stronger boxed beef prices until the calendar nears the second quarter -- but that's not to say that with strategic marketing that higher prices can't be achieved.
New showlists appear to be mixed, higher in Texas, but lower in Kansas, Nebraska/Colorado.
Last week's negotiated cash cattle trade ended up being greater than anticipated. Last week 95,868 head sold and of that 60,191 head are committed for delivery in the next two weeks while the remaining 35,677 head are for delivery in the following 15 to 30 days.
Boxed beef prices are higher: choice up $2.60 ($217.64) and select up $0.12 ($205.96) with a movement of 81 loads (51.81 loads of choice, 11.97 loads of select, 6.21 loads of trim and 10.71 loads of ground beef).
FEEDER CATTLE
The feeder cattle contracts are relieved to be seeing lower corn prices and are jumping at the day's opportunity to trade higher. January feeders are up $0.30 at $134.87, March feeders are up $1.85 at $137.67 and April feeders are up $2.07 at $140.37. The last two weeks have been hit and miss for the feeders sold throughout the countryside. Some sales were able to avoid the board's lower pressure and continue to sell cattle with excellent demand from buyers, but other sales were leery of the board's sharp losses and neglected to have adequate buyers. Heading into this week's trade, if the board can continue to push for higher prices and regain some of the positioning that the industry lost since the first of 2021, feeders may stand a chance to sell for more money.
LEAN HOGS
The cattle contracts may be enjoying modest support, but the lean hog contracts are trading modestly lower unable to capture the attention of traders Tuesday morning. February lean hogs are down $0.97 at $66.95, April lean hogs are down $0.62 at $72.02 and June lean hogs are down $0.70 at $83.67. Last week's mixed trade throughout the pork cutout values helped cast some supportive energy toward the entire complex, if the market can keep consumer demand and continue to see somewhat steady to higher pork cutout prices the board could stand to see some support.
The projected lean hog index for 1/18/2021 is up $0.12 at $65.65 and the actual lean hog index for 1/14/2021 is down $0.34 at $65.53. Hog prices are lower on the National Direct Morning Hog Report, down $0.56 with a weighted average of $54.97, ranging from $46.00 to $55.86 on 4,880 head and a five-day rolling average of $54.19. Pork cutouts total 225.22 loads with 202.62 loads of pork cuts and 22.60 loads of trim. Pork cutout values: up $0.07, $78.59.
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