GENERAL COMMENTS:
This week has most certainly come with challenges stemming largely from frigid weather conditions and frustrating power outages. When put to the test, we realize just how important day-to-day luxuries are, and are thankful these aren't our "normal" circumstances. The livestock contracts handled Tuesday's debut exceptionally well, which largely stems from the bullish close that rounded out the week last Friday. Hog prices closed sharply higher on the National Direct Afternoon Hog Report, up $2.47 with a weighted average of $69.56 on 4,955 head. March corn is up 13 1/2 cents per bushel and March soybean meal is up $1.20. The Dow Jones Industrial Average is up 64.35 points and NASDAQ is down 47.98 points.
LIVE CATTLE:
The live cattle contracts closed mostly higher through Tuesday's close with just some light opposition facing various contracts. February live cattle closed $1.05 lower at $116.15, April live cattle closed $0.62 higher at $125.80 and June live cattle closed $0.40 higher at $121.70. The cattle industry is faced with plenty of challenges this week: From trying to keep cattle warm enough via feed rations and shelters to keeping water tanks unfroze and praying that power comes on sooner rather than later. Meanwhile, the packing industry is feeling some of the same pressure as transporting cattle is difficult -- touch and go power has left some plants in Kansas and Texas completely down and worker absenteeism is always an issue in these frigid conditions. Tuesday's slaughter is estimated at 95,000 head, 20,000 head less than a week ago and 30,000 head less than a year ago. Monday's cattle slaughter was revised to 79,000 head.
Carcass weights will be a big talking point from this week forward as the industry will try to pinpoint just how much tonnage has been lost and how packers will make up for the lack of product. Tuesday's cash cattle business was extremely quiet without any bids surfacing. Asking prices in the South are marketed at $116 and Northern asking prices are still unknown.
Boxed beef prices closed higher: choice up $2.33 ($234.77) and select up $0.62 ($222.03) with a movement of 78 loads (45.90 loads of choice, 7.62 loads of select, 7.54 loads of trim and 16.83 loads of ground beef).
WEDNESDAY'S CASH CATTLE CALL: Higher. Yes, packers have cattle committed for this timeframe, but the fact that their shifts have been affected and that they've only dabbled in the cash market recently means that, moving forward, they will soon have to sharpen their pens and get ready to hike up their bids.
FEEDER CATTLE:
The nearby feeder cattle contracts weren't appreciative of the $0.13 rally in the nearby corn contracts, which ultimately led to their lower close. March feeders closed $0.07 lower at $140.77, April feeders closed $0.12 lower at $144.60 and May feeders closed $0.10 lower at $146.20. It's a tough, tough time to invested in the cattle feeding business as corn prices keep drifting higher and keeping cattle (regardless of the weight) healthy and surviving these brutal conditions is difficult. For the most part, this week's feeder cattle coverage via sale barn prices is going to be limited as sales are largely canceled due to the excruciating weather and power outages. At Miles City Livestock Commission in Miles City, Montana, compared to last week, the market's best test for steers was on those weighing 650 to 699 pounds, which sold generally steady. Heifers were too lightly tested to develop an accurate trend, but higher undertones were noted. Extremely cold temperatures continue across the nation and, with the midwestern states being affected, the demand for elite feeder calves has lessened from the corn belt states. Demand for slaughter cows was very good as packers were willing to pay whatever need be to get cattle secured. The CME Feeder Cattle Index for Feb. 15: down $0.02, $135.55.
LEAN HOGS:
The upward momentum in the lean hog contracts couldn't care less about the cold weather and, in all reality, the long weekend helped spur packers into serious market acquisition, which boosted the day's cash market. April lean hogs closed $0.97 higher at $86.17, June lean hogs are closed $0.97 higher at $92.87 and July lean hogs closed $0.60 higher at $92.45. The colder weather obviously has impacted the week's slaughter speeds but with hogs carrying lighter weights, the reduction in speed should help keep packers aggressive when the weather turns around, as they need to make up for the tonnage lost this past week. In other hog news, while packers are trying to make processing as efficient as possible, there was a setback in a plant in Northern Iowa as one person was killed from a fatal stabbing. Local authorities have a person in custody.
Pork cutouts totaled 318,000 head with 291.28 loads of pork cuts and 27.54 loads of trim. Pork cutout values: down $1.55, $89.71. Tuesday's slaughter is estimated at 419,000 head, 75,000 head less than a week ago and 72,000 head less than a year ago. Monday's hog slaughter was revised to 412,000 head. The CME Lean Hog Index for Feb. 12: up $1.39, $74.54.
WEDNESDAY'S CASH HOG CALL: Higher. With brutally cold temperatures affecting how efficiently plants can run their production schedules, packers will most likely have to jump into the cash market aggressively to keep enough hogs secured to make up for the tonnage lost.
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