GENERAL COMMENTS:
Tuesday's problem in the lean hog complex was that the market's fundamentals neglected to support the board, but low and behold, the lean hog market was met with ample support and close fully higher Wednesday. Meanwhile, the cattle contracts closed mixed with feeder cattle still enjoying their opportunity to retake some positioning, while the live cattle contracts were pressured to scale lower. Hog prices closed higher on the National Direct Afternoon Hog Report, up $0.82 with a weighted average of $55.08 on 14,768 head. March corn is down 4 cents per bushel and March soybean meal is down $8.10. The Dow Jones Industrial Average is up 257.86 points and NASDAQ is up 260.07 points.
LIVE CATTLE:
While the feeder cattle contracts got to slide through Wednesday's trade and enjoy another day of profit taking, the live cattle contracts veered lower in all but the spot February contract. February live cattle closed $0.02 higher at $113.35, April live cattle closed $0.47 lower at $118.87 and June live cattle closed $0.57 lower at $116.15. As the market corrects from being slightly overzealous in the deferred contracts, a cattleman looks at the board and just hopes that these prices are regained once strong fundamental support is found later in the year. If the cash cattle market could demand higher prices alongside the rallying boxed beef market, the board would be thoroughly supported in its aspirations to trade higher. There was a considerable movement in the South Wednesday afternoon with most live cattle trading for $110, which is steady to slightly lower than a week ago. Northern cattle traded live at $109, which is fully steady with last week's prices. Wednesday's slaughter is estimated at 120,000 head, 2,000 head more than a week ago and 2,000 head less than a year ago.
Boxed beef prices closed higher: choice up $1.42 ($218.91) and select up $0.84 ($207.28) with a movement of 136 loads (83.44 loads of choice, 17.23 loads of select, 20.46 loads of trim and 15.16 loads of ground beef).
THURSDAY'S CASH CATTLE CALL: Steady. Seeing that packers have been able to secure cattle in both the North and the South, and on a sizeable scale, means that the likelihood of seeing the cash market get any stronger is slim.
FEEDER CATTLE:
The corn market's recent dip in price levels has really taken some pressure off the feeder cattle contracts and allowed for the contracts to regain some positioning. January feeders closed $0.90 higher at $135.30, March feeders closed $0.72 higher at $137.52 and April feeders closed $1.02 higher at $140.62. Thankfully the upside potential in the feeder cattle contracts is not limited in the short term and, as the days pass by and the calendar gets closer to the second quarter, more upside potential should be attained in both the live cattle and feeder cattle markets. At Philip Livestock Auction in Philip, South Dakota, compared to a week ago, feeder steers weighing 450 to 600 pounds sold steady to $2.00 lower, steers weighing 600 to 650 pounds sold steady to $2.00 higher and steers weighing 650 to 750 sold steady. Feeder heifers weighing 400 to 450 pounds sold $2.00 lower, heifers weighing 450 to 550 sold $2.00 higher and heifers weighing 600 to 700 pounds sold $2.00 to $4.00 lower. The day's sale offered a terrific line up of long weaned, fully vaccinated calves and buyer interest was steady throughout the sale. The CME feeder cattle index for Jan. 19: down $0.09, $132.81.
LEAN HOGS:
The lean hog contracts had a great day, seeing stark advancements on the board, a strong cash market and a higher pork cutout close. February lean hogs closed $1.95 higher at $68.42, April lean hogs closed $1.65 higher at $73.07 and June lean hogs closed $1.50 higher at $84.50. The lean hog market's biggest outlying factor through Wednesday's trade was the fact that packers jumped into the cash hog market and bought 14,768 head. A combination of being short bought and wanting to keep elevated slaughter speeds seems most likely for their aggressive buying. Pork cutouts total 359.84 loads with 318.56 loads of pork cuts and 41.28 loads of trim. Pork cutout values: up $1.60, $79.02. Wednesday's slaughter is estimated at 498,000 head, steady with a week ago and 5,000 head more than a year ago. The CME lean hog index for Jan. 18: up $0.36, $65.92.
THURSDAY'S CASH HOG CALL: Steady to slightly lower. Seeing that Wednesday's cash hog trade was so aggressive and knowing that packers don't like sacrificing any margin leaves one to believe that Thursday's trade will be steady at best.
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