GENERAL COMMENTS:
It was a good Monday for the livestock contracts as traders supported the futures all the way through closing. As the week trades on, the market will continue to intensely watch the cash cattle market and how the lean hog market trades. Hog prices closed higher on the National Direct Afternoon Hog Report, up $3.54 with a weighted average of $84.58 on 7,980 head. May corn is up 1 1/2 cents per bushel and May soybean meal is down $1.90. The Dow Jones Industrial Average is up 306.14 points and NASDAQ is down 310.99 points.
LIVE CATTLE:
Live cattle futures closed modestly higher Monday's market rallied off the strength built into the marketplace from Friday's stronger close. April live cattle closed $0.32 higher at $119.35, June live cattle closed $1.15 higher at $119.15 and August live cattle closed $0.77 higher at $117.85. The market's strength is warmly welcomed as the live cattle contracts have been under pressure in the last 10 days to scale lower. But moving to Tuesday and the rest of the week, the market is most concerned with how this week's cash cattle trade will fare. Feedlots are beyond ready to see the spring rally kick up the heels of the cash cattle market, but as always packers will be a tough force to reckon with. Monday's slaughter is estimated at 121,000 head -- 1,000 head more than a week ago and 2,000 head less than a year ago. New showlists appear to be mixed, somewhat larger in Kansas, larger in Texas, but lower in Nebraska and Colorado.
Last week's negotiated cash cattle trade totaled 79,593 head. Of which 69% (54,894 head) are committed for delivery in the next two weeks, while the remaining 31% (24,699 head) are committed for the following 15 to 30 days.
Boxed beef prices closed mixed: choice down $0.25 ($231.08) and select up $2.28 ($223.13) with a movement of 70 loads (36.72 loads of choice, 12.45 loads of select, 13.08 loads of trim and 7.55 loads of ground beef).
TUESDAY'S CASH CATTLE CALL: Steady to $1.00 higher. This week's trade will really come down to whether or not feedlots market their cattle as one collective. If feedlots can unite forces and hold out until late in the week to trade, $1.00 higher isn't out of the question. But if trade develops on Wednesday (like it did last week) then chances of getting a higher market are slim to none.
FEEDER CATTLE:
The corn market traded lower throughout the first half of Monday but grew strength through the afternoon and ultimately led corn contracts to a mildly higher close. The modest support that pushed the corn contracts higher didn't interfere with the feeder cattle market rally as the market felt confident in trading higher alongside its counterpart, the live cattle contracts. March feeders closed $0.75 higher at $135.35, April feeders closed $0.65 higher at $139.67 and May feeders closed $0.07 higher at $145.07. At West Point Livestock in West Point, Nebraska, compared to their last sale two weeks ago, 700-pound steers sold steady to $6.00 higher while 800-pound steers sold steady to $4.00 lower and lightweight heifers sold mostly $1.00 to $5.00 lower. The sale had a lot of load lots available and trade was active throughout the entire sale. The CME Feeder Cattle Index 3/5/2021: down $0.93, $133.92.
LEAN HOGS:
In my midday comments I warned hog enthusiasts about putting too much clout into the morning's prices and to wait to see how the day closed before jumping to conclusions about where the market is headed -- and boy I'm glad I did! As the day traded, the hog market simply grew stronger and stronger and leads us into Tuesday's with optimism as cash hog prices closed higher, Monday's slaughter was aggressive and pork cutouts only closed mildly weaker. April lean hogs closed $0.12 higher at $87.30, June lean hogs closed $0.55 higher at $95.97 and July lean hogs closed $0.50 higher at $96.42. Pork cutouts totaled 265.29 loads with 245.79 loads of pork cuts and 19.50 loads of trim. Pork cutout values: down $0.21, $94.93. Monday's slaughter is estimated at 494,000 head -- 1,000 head more than a week ago and 4,000 head more than a year ago. The CME Lean Hog Index 3/4/2021: up $0.51, $84.57.
TUESDAY'S CASH HOG CALL: Steady. If pork cutout values wouldn't have closed slightly lower, I think one could have safely called Tuesday's market steady to somewhat higher, as cash prices and slaughter speeds are still strong. But with the slight hesitation in the market's pork cutout values, steady is the safer bet.
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