GENERAL COMMENTS:
The almost straight upward path of lean hog prices since December got another big boost Tuesday, with the nearby contracts gaining more than $2 per cwt, and the June and July contracts breaking above $1 per pound. Despite day-to-day wobbles, strong pork prices and hog prices continue to support the bullishness in lean hog futures. Hog prices closed lower on the National Direct Afternoon Hog Report, down $0.98 with a weighted average of $86.42 on 5,264 head. Cattle trade stayed quiet, with asking prices around $116 to $117 in the South and business waiting until later in the week. May corn closed up 4 3/4 cents per bushel at $5.54 1/4 and May soybean meal closed down $1.30 per ton at $406.10. The Dow Jones Industrial Average is down 127.51 points and NASDAQ is up 69.74 points.
LIVE CATTLE:
Relatively low volumes of trading interest flowed into the cattle futures markets Tuesday while everyone was distracted by the surging lean hog prices. On the front-month chart, losses eventually pulled the April live cattle contract lower than it's been since January, closing the session down $0.925 at $118.20. The June contract dropped $0.325 to $121.45, but deferred contracts went upward, with the August contract up $0.175 at $121.00. Countryside cash cattle trade remains quiet Tuesday afternoon, with just a few scattered bids on the table. Asking prices are starting out around $116 to $117 in the South ($3 higher than last week) but are not established as of yet in the North. Significant trade volume will likely be delayed for at least another day or two. Tuesday's slaughter was seen at 121,000 head, even with a week ago. Monday's cattle slaughter was revised to 107,000 head.
Boxed beef prices were higher Tuesday afternoon: choice up $2.16 ($226.93) and select up $0.72 ($218.77) with a movement of 132 loads (68.73 loads of choice, 23.30 loads of select, 9.51 loads of trim and 30.53 loads of ground beef).
WEDNESDAY'S CASH CATTLE CALL: Steady to $1 higher. If feedlots can push trade out to the latter half of the week, they stand a better chance at moving the market higher, and beef prices and packer profitability metrics should be supportive to making that happen.
FEEDER CATTLE:
Feeder cattle futures stayed mixed through Tuesday's session and didn't explore fresh price ranges. The nearby March contract closed down $0.45 at $136.575, April was down $0.60 at $143.325, May was unchanged, and other contracts closed higher. For calves being born today headed for the autumn market, October and November futures prices remain above $158 per cwt. Lofty feed prices continue to present a challenge (the DTN National Corn Index, an average of cash bids across the country, is at $5.42 Tuesday), but these have already been penciled in for some time and haven't seriously dampened demand for calves in the countryside. The CME Feeder Index for March 15: down $0.07 at $133.86.
LEAN HOGS:
Just when you think hog traders couldn't possibly find another burst of strength to break through chart resistance, or that they wouldn't possibly consider trading above $100.00, then a big day like Tuesday happens to remind you the party is far from over! The April contract closed up $2.35 at $92.90, the May contract closed up $2.10 at $95.125, and apparently once we get into summer, anything is possible: the June contract closed up $2.05 at $100.975 and the July contract closed at $101 per cwt -- higher than summer hog futures have been since this time in 2019. A technical pullback should be expected at some point, but the overall momentum is clear, and it's supported by the bullish jump in pork prices at the start of this week, of which a little was given back Tuesday. Pork cutouts total 349.81 with 327.80 loads of pork cuts and 22.01 loads of trim. Pork cutout values: down $1.54, $100.90. Tuesday's slaughter is estimated at 493,000, 9,000 head more than a week ago but 9,000 head fewer than a year ago. Monday's hog slaughter was revised to 482,000 head. The CME Lean Hog Index for March 12: up $0.95, $89.35, and the projected lean hog index for March 15: up $0.56, $89.91.
WEDNESDAY's CASH HOG CALL: Steady to $1 higher. While pork cutouts continue to explore values, packers could continue to be aggressive in the cash hog market.
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