GENERAL COMMENTS:
It was a great day for both the lean hog and feeder cattle contracts, but the live cattle market has too many floating variables right now to close confidently higher. Even with corn prices scaling $0.08 to $0.09 higher, the feeder cattle contracts felt enough countryside-demand to close higher and saw significant gains on the CME Index. Hog prices closed higher on the National Direct Afternoon Hog Report, up $1.30 with a weighted average of $70.52 on 7,072 head. March corn is up 8 1/4 cents per bushel and March soybean meal is down $1.20. The Dow Jones Industrial Average is up 27.37 points and NASDAQ is down 341.41 points.
LIVE CATTLE:
The live cattle contracts closed mixed with the nearby contracts suffering from modest losses while the deferred contracts closed mildly higher. There's a lot for the live cattle market to juggle this week -- from monitoring slaughter speeds, to watching the war between feedlots and packers on cash cattle prices, to evaluating carcass weights after last week's stressful storm; getting the market back to a state of normalcy can't be achieved by a singular perspective. April live cattle closed $0.62 lower at $123.05, June live cattle closed $0.27 lower t $120.25 ad August live cattle closed $0.02 lower at $118.40. The cash cattle market didn't do much of anything through Monday's trade as bids and asking prices are still unknown. New showlists appear to be slightly higher in Texas, and lower in Kansas and Nebraska/Colorado. Monday's slaughter is estimated at 119,000 head, 40,000 head more than a week ago and 2,000 head more than a year ago.
Last week's negotiated cash cattle movement totaled 74,306 head. Of that, 50,447 head (68%) are committed for delivery in the next two weeks while the remaining 23,859 head (32%) are scheduled for delivery in the following 15 to 30 days. Last week's movement, even though it was below 100,000 head, was greater than what we assumed initially given the temporary plant shutdowns in the South.
Boxed beef prices closed higher: choice up $0.75 ($239.98) and select up $2.08 ($229.98) with a movement of 89 loads (56.76 loads of choice, 8.92 loads of select, 8.97 loads of trim and 13.87 loads of ground beef).
TUESDAY'S CASH CATTLE CALL: Higher. Packers have a lot of cattle already committed for this time frame, so their eagerness to dive into the cash market is going to be modest. With that being said, it is vital that they amp up production speeds this week to get product back into the hands of consumers which could mean that they give the market $1.00 to $2.00 more this week.
FEEDER CATTLE:
The corn market rallied only modestly Monday morning but ended up closing the day with gains of $0.08 to $0.09 higher throughout the complex. The corn market's rally didn't interfere with the feeder cattle contracts' desire to trade higher into the new week, as the contracts are far from any resistance pressure and are seeing phenomenal demand from buyers. March feeders closed $0.20 higher at $139.32, April feeders closed $0.60 higher at $143.27 and May feeders closed $0.35 higher at $146.07. If the countryside can be graced with moisture, grass cattle could be met with strong demand in the upcoming months. At Oklahoma National Stockyards in Oklahoma City, Oklahoma, compared to two weeks ago, feeder steers and heifers traded steady to $2.00 higher. Demand was moderate to good on feeder cattle following last week where there were no sales due to weather inflected issues. Steers and heifer calves were only tested on light comparison but traded fully steady. The CME Feeder Cattle Index for Feb. 19: up $3.01, $141.12.
LEAN HOGS:
The lean hog contracts are having one monumental rally, and despite how high the contracts go, the industry continues to yearn for higher prices in the the futures markets and pork cutout values. April lean hogs closed $0.62 higher at $85.12, June lean hogs closed $0.77 higher at $93.10 and July lean hogs closed $0.82 higher at $93.15. While the board successfully rounded out the day with higher closes, both the cash hog market and pork cutout values complimented the market's higher climb. Tuesday afternoon the market will receive another cold storge report. January's report shared that pork cold storage supplies were the lowest they have been in the last 10 years. Pork cutouts totaled 267.63 loads with 238.21 loads of pork cuts and 29.42 loads of trim. Pork cutout values: up $0.62, $92.11. Monday's slaughter is estimated at 497,000 head, 85,000 head more than a week ago and 2,000 head more than a year ago. Saturday's hog slaughter was revised to 167,000 head which moves last week's grand total to 2,432,000 head. The CME Lean Hog Index for Feb. 18: up $0.23, $77.43.
TUESDAY'S CASH HOG CALL: Steady. Packers are on the hunt for hogs as they love the market's rally and love the sheer demand that pork products are being met with. Given that hog prices jumped significantly higher last week, and that packers dove into Monday's market with such aggression, at some point in the near future the market is going to see some reluctance from packers, as they've secured enough supply.
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