GENERAL COMMENTS:
Despite fundamental support being plentiful, livestock contracts are trading in a wide range, trying to absorb all market signals. Feeder cattle contracts continue to react adversely to corn's behavior, while nearby live cattle contracts trade mildly higher but deferred contracts scale lower thanks to burdensome resistance levels and worries about an overbought marketplace. March corn is down 3 3/4 cents per bushel and March soybean meal is down $1.80. The Dow Jones Industrial Average is up 246.31 points and NASDAQ is up 104.82 points.
LIVE CATTLE:
Feedlots continue to work their magic and its looking like securing $1.00, if not $2.00 higher will happen this week as the North has shared their asking prices of $182 to $185 -- significantly higher than $180! Nearby live cattle contracts are thankful for the morning's strong export report, but deferred contracts trade mildly lower with the boxed beef market starting to cool off. Then again, Thursday's technical behavior is likely to change with the cash market strengthening. February live cattle are up $0.57 at $116.05, April live cattle are up $0.87 at $0.87 at $123.30 and June live cattle are up $0.35 at $119.82. The morning's cash cattle trade hasn't really seen a lot of action as packers are fighting tooth and nail to get out of paying higher prices. But feedlots are sticking to their guns. Bids of $180 have surfaced in Nebraska, but otherwise the market is still mostly quiet.
The Special Fed Cattle Exchange Auction held Thursday (yes there were two FCE Auctions hosted this week), listed a total of 663 head, of which only 175 head actually sold; 488 head were listed as unsold, as they did not meet the reserve prices, which ranged from $114 to $115. Opening prices ranged from $111 to $112.50, high bids ranged from $111 to $113.75. The state-by-state breakdown looks like this: Texas 582 total head, with 175 head sold at $113.75, 407 head went unsold; Kansas 81 total head, all went unsold.
Beef net sales of 29,800 metric tons (mt) were reported for 2021, increases were primarily for South Korea (10,000 mt, including decreases of 300 mt), Japan (7,000 mt, including decreases of 700 mt) and China (7,000 mt, including decreases of 100 mt).
Boxed beef prices are lower: choice down $0.28 ($235.00) and select down $2.13 ($221.26) with a movement of 63 loads (36.75 loads of choice, 10.27 loads of select, 5.84 loads of trim and 9.93 loads of ground beef).
FEEDER CATTLE:
As nearby corn prices show modest regression, feeder cattle contracts jump higher, wanting to capture the day's opportunity. March feeders are up $0.85 at $139.37, April feeders are up $0.67 at $142.50 and May feeders are up $0.27 at $144.57. The strength surfacing in the cash cattle market is also helping the contracts feel at ease about trading. Feeder cattle sales this past week have been mixed with heavier feeders selling modestly lower. But the lighter weight calves that will make grass cattle next spring continue to sell with strong demand. After the large runs of feeders in January, a lot of feedlots are at or near their capacity and don't want to have to buy the feeders that need to go straight into the feedlot.
LEAN HOGS:
Thursday's strong export report, midday cutout values up $6.07 and cash prices up $2.63 could not convince traders Thursday morning that, even though the lean hog contracts wade through new, uncharted waters, the market is fully supported. Earlier in the day the lean hog contracts shot higher, relishing in the market's support. But as the noon hour neared, traders began to second guess their initial response to Thursday's developments and have since scaled lower. February lean hogs are down $0.97 at $71.40, April lean hogs are down $0.40 at $78.80 and June lean hogs are down $0.12 at $88.60.
Pork net sales of 46,300 mt were reported for 2021, increases primarily for China (17,900 mt, including decreases of 1,300 mt), Mexico (10,300 mt, including decreases of 500 mt) and Japan (4,000 mt, including decreases of 100 mt).
The projected lean hog index for 2/3/2021 is down $0.08 and the actual index for 2/2/2021 is up $0.28 at $69.17. Hog prices are higher again the National Direct Morning Hog Report, up $2.63 with a weighted average of $60.57, ranging from $51.00 to $67.00 on 5,127 head and a five-day rolling average of $57.91. Pork cutouts total 155.82 loads with 130.03 loads of pork cuts and 25.80 loads of trim. Pork cutout values: up $6.07, $86.30.
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