GENERAL COMMENTS:
It was a gloomy day throughout the livestock complex as the futures market had a cold demeanor about it and the livestock contracts couldn't help but trade lower. The biggest fundamental hindrance for both the cattle and hog markets is the slow chain speeds in which packing plants are running, because of the spike in COVID-19 cases. Hog prices closed lower on the National Direct Afternoon Hog Report, down $1.06 with a weighted average of $65.89 on 4,295 head. March corn is down 7 cents per bushel and March soybean meal is down $8.70. The Dow Jones Industrial Average is down 162.79 points and NASDAQ is up 6.93 points..
LIVE CATTLE:
The live cattle complex is kicking the ground and mumbling underneath its breath as the market would love to rally amid excellent beef demand, but packers are having a tough time running full shifts due to workers being sick. The market waned from fear and pressure. The futures complex went lower from the concern of a backlog forming if processing speeds don't increase soon; technically speaking, the entire marketplace tremored in fear as COVID-19 cases surge. Unfortunately, this type of news doesn't bode well for the cash cattle market as packers won't likely be aggressive in the cash market. Monday's cash cattle market didn't see much interest as packers hope this market pushes prices even lower. No asking prices were reported and new showlists appear to be mixed, higher in Kansas, Nebraska/Colorado, but lower in Texas. Monday's slaughter is estimated at 113,000 head -- 9,000 head more than a week ago and 3,000 head less than a year ago.
Last week's negotiated cash cattle trade totaled a measly 47,962 head. Of that, 88% (42,137 head) were committed for the nearby delivery, while the remaining 12% (5,825 head) were committed for deferred delivery.
Boxed beef prices closed higher: choice was up $4.22 ($276.04) and select up $5.40 ($266.50), with a movement of 107 loads (51.21 loads of choice, 20.85 loads of select, 15.30 loads of trim and 19.97 loads of ground beef).
TUESDAY'S CASH CATTLE CALL: $1 to $2 lower. Until packing plants are running close to processing 120,000 head per day, the cash market is going to feel pressured.
FEEDER CATTLE:
Even though the corn market closed lower, the wet blanket that coated the markets Monday morning was too much for the feeder cattle complex to shake. January feeders closed $1.17 lower, at $160.92, March feeders closed $1.32 lower, at $165.35, and April feeders closed $1.42 lower at $169.45. With there being uncertainty in the futures complex and in the fundamental side of the market with the onset of slower processing speeds, the feeder cattle contracts didn't have much of a chance to trade higher. But remembering that the market is in constant battle with both a short-term reality and a long-term perspective that is so important. From a short-term sense, the onset of higher corn prices and slower processing speeds doesn't bode well for the market. But from a long-term perspective, the decrease in processing speeds will only become problematic if they won't speed up soon; we must also remember that numbers of market-ready cattle are waning and will likely get fewer through 2022 as the market adjust to a smaller cowherd. At Joplin Regional Stockyards in Carthage, Missouri compared to last week, feeder steers under 525 pounds are trading $5 to $7 higher and the heavier weights are trading steady to $2.00 higher. Feeder heifers aren't seeing as strong of demand and are trading mostly steady. The CME feeder cattle index for Jan. 7: up $0.19, $161.98.
LEAN HOGS:
The lean hog market suffered from the demise of the weakened futures complex as well as from the slower chain speeds and news of African swine fever continuing to spread in Europe -- no wonder the market did a nose-dive! February lean hogs closed $1.27 lower, at $78.37, April lean hogs closed $2.65 lower, at $84.70, and June lean hogs closed $2.30 lower at $96.50. The cash market didn't see much interest throughout Monday's trade as packers are in the dark about what to do about the spike in COVID-19 cases. Pork cutouts totaled 414.93 loads with 362.43 loads of pork cuts and 52.50 loads of trim. Pork cutout values: up $0.52, $86.42. Monday's slaughter is estimated at 457,000 head -- 1,000 head less than a week ago and 41,000 head less than a year ago. The CME lean hog index for June 6: up $0.16, $73.73.
TUESDAY'S CASH HOG CALL: Steady. With packing plants still running slow chain speeds, packers don't need to chase after the cash market
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