GENERAL COMMENTS:
It's a tough marketplace to start out the week for the livestock contracts as live cattle, feeder cattle and hog futures feel immense pressure. As Monday kickstarts trade for a new week, one of the biggest factors we need to be watching is processing speeds. March corn is down 7 1/2 cents per bushel and March soybean meal is down $9.20. The Dow Jones Industrial Average is down 468.77 points and NASDAQ is down 336.38 points.
LIVE CATTLE:
With the day's slaughter estimated at 114,000 head (with analyst's projections ranging from 112,000 to 115,000 head) the live cattle market isn't singing a cheerful song. Part of what made the 2021 market so strong was that chain speeds ran aggressively throughout most of the year and supplies of market-ready cattle were never heinously backed up. But if the market doesn't find a way to process more than 114,000 head of cattle a day, we are in trouble. February live cattle are down $0.82 at $136.50, April live cattle are down $1.10 at $140.97 and June live cattle are down $0.95 at $136.75. It's evident in last week's negotiated cash cattle trade that even packers don't know what's ahead. With seeing less than 50,000 head trade last week in the cash market, I'm skeptical that speeds are indeed going to get back to normal sooner rather than later. New showlists appear to be mixed, higher in Kansas, Nebraska/Colorado, but lower in Texas.
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 are higher: choice up $3.39 ($275.21) and select up $2.87 ($263.97) with a movement of 56 loads (21.97 loads of choice, 8.18 loads of select, 12.58 loads of trim and 13.03 loads of ground beef).
FEEDER CATTLE:
Feeder cattle futures are drifting lower as the market is worried about processing amid lower chain speeds. But the market, thankfully, isn't pressured from inputs as corn futures are currently trading 3 to 7 cents lower in their nearby contracts. January feeders are down $0.87 at $161.22, March feeders are down $0.87 at $165.77 and April feeders are down $1.07 at $169.80. Watching how sale barns perform this upcoming week will be insightful as the market still looks to the live cattle complex and sees opportunity given that supplies should favor producers in the near future. But if processing speeds don't reach some sort of normalcy here soon, supplies could get backed up and amid $6.00 corn feeders can't take too much of a gamble.
LEAN HOGS:
Lean hog futures are starting off the week with bearish news as African swine fever continues to spread. There was a case of ASF found in a wild boar in the Piedmont area, and the Experimental Institute for Veterinary Prophylaxis of Piemonte, Liguria and Valle have identified two more cases that the institute is reviewing, reported pigs333.com. While the news could mean the U.S. has even more opportunities to export pork than initially thought, the news also comes with the gut-turning worry that heaven forbid the disease ever breaks through our borders. February lean hogs are down $1.27 at $78.35, April lean hogs are down $2.70 at $84.60 and June lean hogs are down $2.37 at $96.42.
The projected CME Lean Hog Index for 1/6/2022 is up $0.16 at $73.73 and the actual index for 1/5/2021 is down $0.30 at $73.57. There are no comparisons to be made to Friday's market as too few head traded last Friday. But on the National Direct Morning Hog Report we can see 4,240 head have traded for a weighted average of $65.85, ranging from $60.00 to $69.00 and the five-day rolling average moved to $66.33. Pork cutouts total 239.56 loads with 203.45 loads of pork cuts and 36.11 loads of trim. Pork cutout values: up $4.00, $89.90.
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