GENERAL COMMENTS:
It was a mixed day for the livestock complex as the cattle contracts saw little interest, but the lean hog market was able to close mostly higher. With the onset of Prop 12, we weren't sure how things were going to fare in the hog market come Monday. Hog prices closed higher on the National Direct Afternoon Hog Report, up $0.22 with a weighted average of $61.72, ranging from $60.00 to $66.50 on 10,891 head and a five-day rolling average of $61.59. March corn is down 4 cents per bushel and March soybean meal is up $12.20. The Dow Jones Industrial Average is up 246.76 points and NASDAQ is up 187.83 points.
LIVE CATTLE:
The market went back to a typical Monday as the cash cattle trade saw no interest and futures closed lower. What was odd about Monday was the sharply lower kill of 112,000 head. More likely than not the regression in slaughter likely stems from worker absenteeism after the New Year holiday. February live cattle closed $0.77 lower at $138.92, April live cattle closed $0.62 lower at $144.20 and June live cattle closed $0.45 lower at $138.75. Helping feedlots' case for higher cash prices is the recent rally boxed beef prices have been posting. If packers are getting more money out of the product on the backside, then they will likely grumble less when paying a little more for cattle in the cash market. New showlists appear to be somewhat higher in Kansas and higher in Texas, Nebraska andColorado. Monday's slaughter is estimated at 112,000 head -- 4,000 head less than a week ago and steady with a year ago.
Last week's negotiated cash cattle trade totaled 93,132 head. Of that 71% (66,160 head) were committed for nearby delivery, while the remaining 29% (26,972 head) were committed for deferred delivery.
Boxed beef prices closed higher: choice up $0.77 ($266.03) and select up $0.67 ($258.90) with a movement of 129 loads (81.01 loads of choice, 19.46 loads of select, 14.21 loads of trim and 14.38 loads of ground beef).
TUESDAY'S CASH CATTLE CALL: Higher. It's likely this week's cash cattle market will be delayed until at least after Wednesday as feedlots are going to be eager to move the market higher again this week. Moving the market higher shouldn't be that tough of a battle, but the trouble feedlots will have in the weeks ahead is getting cattle sold only to the nearby delivery instead of the deferred delivery. If packers can push more and more of their purchases to the deferred delivery, they save themselves from paying sharply higher prices in the weeks to come.
FEEDER CATTLE:
The feeder cattle contracts ended up closing fully lower as the cattle complex lagged technically. From a fundamental sense the market was met with terrific demand and buyers were aggressive in most of Monday's sales. If the cash cattle market does indeed trade higher this week, both live cattle and feeder cattle contracts stand a better chance at rallying. January feeders closed $0.62 lower at $166.25, March feeders closed $0.42 lower at $169.52 and April feeders closed $0.27 lower at $172.47. At West Point Livestock Auction in West Point, Nebraska, compared to the last sale before Christmas, steers under 750 pounds sold $2.00 to $6.00 higher, and those over 750 pounds traded $4.00 to $9.00 higher. Heifers sold $3.00 to $9.00 higher, and demand was strong throughout the day. Buyers ranged from small farmer feeders, to order buyers, to middle-sized feedlots; buyers of all sorts and sizes were anxious to get cattle bought. The CME Feeder Cattle Index 12/31/2021: up $0.14, $165.35.
LEAN HOGS:
The lean hog market saw a dip in pork cutout values, but largely the market held relatively strong throughout Monday's trade given all the uncertainty that came with the new week's dawning. February lean hogs closed $0.35 lower at $81.12, April lean hogs closed $0.07 lower at $86.65 and June lean hogs closed $0.32 higher at $97.87. You may be anxious to see how pork prices are performing in California with the onset of Prop 12, but those prices aren't released daily and will be reported on USDA's weekly specialty pork report (LM_PK650) -- so once again we are left to wait patiently. It was impressive to see Monday's pork volume total 381.31 loads, which makes one wonder why such an aggressive volume? Are retailers eager to restock their coolers? Are retailers expecting better demand in January than what historically has been the case? Or was this just a flush of product given the irregular schedule of the holidays? Time will tell.
Pork cutouts totaled 381.31 loads with 340.39 loads of pork cuts and 40.92 loads of trim. Pork cutout values: down $5.33, $86.02. Monday's slaughter is estimated at 471,000 head -- 2,000 head less than a week ago and 15,000 head less than year ago. The CME Lean Hog Index: unavailable at this time.
TUESDAY'S CASH HOG CALL: Steady. Until packers know what to expect out of demand and Prop 12, I don't think they will chase the cash market too aggressively.
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