GENERAL COMMENTS:
It was another strong day for the lean hog contracts, but the cattle contracts couldn't interest traders whatsoever. As the cattle market looks for fundamental support, both the live cattle and feeder cattle contracts are left to trade lower in the meantime. Hog prices closed higher on the National Direct Afternoon Hog Report, up $0.13 with a weighted average of $78.65 on 5,951 head. March corn is down 8 cents per bushel and March soybean meal is down $3.00. The Dow Jones Industrial Average is up 603.14 points and NASDAQ is up 396.49 points.
LIVE CATTLE:
The live cattle contracts closed mostly lower, still disappointed in last week's cash cattle trade and continuing to be pressured as traders are unwilling to invest until fundamental support is clear. Adding to this week's pressure is most likely going to be a correction in the boxed beef market that could last through the next couple of weeks. Historically, February has been one of the hardest months to sell beef products, but this past month has been met with exceptional demand and, with packing plants in the South shutdown to weather complications, beef demand has been unpresented for February. But over the next couple of weeks, the boxed beef market is expected to seasonally correct, which could add some additional pressure to the futures complex. April live cattle closed $1.02 lower at $118.97, June live cattle closed $0.92 lower at $117.50 and August live cattle closed $0.57 lower at $116.47. Monday's slaughter is estimated at 120,000 head, 1,000 head more than a week ago and 3,000 head less than a year ago. Monday's cash cattle trade was at an utter standstill as bids and asking prices are still unknown.
Looking at Monday's official reports, last week's cash cattle trade totaled 84,242 head. Of that 91% (77,087 head) are committed for delivery in the next two weeks while the remaining 9% (7,155 head) are scheduled for delivery in the following 15 to 30 days.
Boxed beef prices closed lower: choice down $1.50 ($239.03) and select down $2.09 ($227.64) with a movement of 85 loads (46.61 loads of choice, 20.04 loads of select, 6.63 loads of trim and 11.80 loads of ground beef).
TUESDAY'S CASH CATTLE CALL: Steady to $1.00 higher. When cattle sell this week, it could be steady to $1.00 higher. If feedlots can achieve $1.00 higher, it will feel like they scored a $5.00 jump! Favoring their positions is last week's massive kill of 666,000 head. As packers pushed cattle through the line as quick as possible last week, that also means that they clipped through a healthy portion of their supplies and could need to dip into the cash cattle market.
FEEDER CATTLE:
The corn market closed modestly lower, but the feeder cattle market is held hostage as the live cattle market can't seem to gain any momentum. March feeders closed $1.47 lower at $137.20, April feeders closed $1.45 lower at $141.12 and May feeders closed $1.17 lower at $143.90. Until there's upward progression in the cash cattle market -- with cost of gains as extravagant as they are -- feedlots can't afford to dive into the feeder cattle market wildly and be in a buy high sell lower scenario. At Oklahoma National Stockyards in Oklahoma City, Oklahoma, at midsession compared to a week ago, feeder steers are selling $3.00 to $4.00 lower while feeder heifers are selling $1.00 to $3.00 lower. Stock steers and steer calves are selling $2.00 to $4.00 higher, and stock heifers and heifer calves are selling upward of $5.00 to $10.00 higher. There's strong demand for good cattle that will easily suit summer grass operations. The CME Feeder Cattle Index for March 1: unavailable at this time.
LEAN HOGS:
Last week may have rained on the lean hog contracts, but come Monday the contracts were fully supported again as the market was met with traders willing to invest and met with mixed fundamental support. April lean hogs closed $0.57 higher at $87.72, June lean hogs closed $0.77 higher at $94.95 and July lean hogs closed $0.57 higher at $95.12. The futures market closed higher, and the cash hog closed higher, but pork cutout values failed to keep up with the rest of the day's pace. The weakness in the cutout values seen last week and again this week leads one to believe that the upward rally is soon to see a correction. Pork cutouts totaled 313.30 loads with 269.65 loads of pork cuts and 43.64 loads of trim. Pork cutout values: down $1.47, $92.37. Monday's slaughter is estimated at 499,000 head, 10,000 head more than a week ago and 9,000 head more than a year ago. The CME Lean Hog Index for Feb. 25: up $0.75, $80.70.
TUESDAY'S CASH HOG CALL: Steady. The market sits largely supported, but there's some wavering support from the pork cutout value. It wouldn't be surprising to see the market trade mixed throughout the week as traders try to determine how much gas is left in the market.
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