GENERAL COMMENTS:
Technically speaking, the lean hog complex found some support Wednesday, but the cattle contracts continue to be faced with pressure. Until packers are able to run full shifts and processing speeds get back to normal -- a growly, gloomy tone will be likely in the markets. Hog prices closed lower on the National Direct Afternoon Hog Report, down $0.92 with a weighted average of $66.07 on 6,001 head. March corn is down 2 cents per bushel and March soybean meal is up $3.10. The Dow Jones Industrial Average is up 38.30 points and NASDAQ is up 34.94 points.
LIVE CATTLE:
It was another painful day for the live cattle complex. The cash cattle market should be trading higher amid excellent beef demand and tight supplies following the aggressive slaughter pace that championed the market in 2021. Instead cash cattle prices are trading lower and on very thin movement. Throughout the day, Northern dressed cattle sold for $218, which is $2.00 lower than a week ago. Southern live trade ranged from $134 to $137, mostly $136 to $137, which is steady to $2.00 lower than last week. The live cattle futures again felt pressured by the market's inability to process cattle at typical speeds (which is between 120,000 and 122,000 head per day. Wednesday's slaughter is estimated at 114,000 head -- 1,000 head more than a week ago and 4,000 head less than a year ago. Until processing speeds get back to a regular pace, the complex is likely to have a worrisome spirit because if this goes on long enough supplies will begin to back up and will eventually hinder the spring market's ability to rally. February live cattle closed $1.10 lower at $136.57, April live cattle closed $0.67 lower at $140.52 and June live cattle closed $0.60 lower at $136.25.
The Fed Cattle Exchange Auction listed a total of 3,056 head, of which 379 actually sold, 64 were scratched from the auction and 2,613 head were listed as unsold, as they did not meet the reserve prices, which ranged from $127 to $138. Opening prices ranged from $125 to $135, high bids ranged from $129 to $137. The state-by-state breakdown looks like this: Texas 1,471 total head, with 345 head sold at $137.00, and 1,126 head went unsold; Kansas 1,312 total head, of which none actually sold, 1,248 head went unsold and 64 were scratched from the auction; Oklahoma 197 total head, all of which went unsold. California 76 total head, with 34 head sold at $129.00, but 42 head went unsold.
Boxed beef prices closed higher: choice up $1.71 ($279.93) and select up $2.35 ($270.98) with a movement of 152 loads (94.37 loads of choice, 19.13 loads of select, 16.58 loads of trim and 22.05 loads of ground beef).
THURSDAY'S CASH CATTLE CALL: Steady with the week's trend. Seeing that cattle have now traded in both the North and the South, business is likely to trade steady throughout the rest of the week.
FEEDER CATTLE:
The feeder cattle complex didn't have much of a chance at trading higher amid the onset of a weakening cash cattle market; but that's not to say there isn't still a strong (incredibly strong) undertone in the feeder cattle market. January feeders closed $0.20 lower at $161.87, March feeders closed $1.32 lower at $165.02 and April feeders closed $1.35 lower at $168.77. As country feeders and feedlots look at the marketplace, they can't help but grow excited about the fall/winter 2022 feeder cattle contract prices. With those contracts trading easily around $180 -- the lightweight calves that can go on grass this upcoming summer are flat bringing the coin! At Winter Livestock Auction in La Junta, Colorado, compared to last week, steers under 450 pounds traded $8.00 to $10.00 higher, steers weighing 450 to 600 pounds traded $3.00 to $5.00 stronger with instances of even $8.00 higher, steers weighing 600 to 700 pounds traded $1.00 to $2.00 higher and those over 700 pounds traded steady to $1.00 higher. Heifers under 600 pounds sold $5.00 to $8.00 stronger, heifers weighing 600 to 700 pounds traded $1.00 to $3.00 higher, and those over 700 pounds traded steady. And just to show you another quote of incredible lightweight calf demand, at Bassett Livestock Auction in Bassett, Nebraska, on a run of 5,490 head compared to last week, lightweight steer calves weighing 500 to 550 pounds traded $21.00 to $22.00 higher and steers weighing 650 to 800 pounds traded steady to $9.00 higher. The CME Feeder Cattle Index 1/11/2022: down $0.03, $162.21.
LEAN HOGS:
With pork processing speeds actually weakening instead of strengthening, the cash market closed lower and we are consequently seeing pork prices (along with boxed beef prices) scaling higher. Even with a lukewarm WASDE report that wasn't too optimistic for the hog market, the lean hog contracts closed higher as the market found some technical support at $78.00. February lean hogs closed $1.00 higher at $78.85, April lean hogs closed $1.20 higher at $85.40 and June lean hogs closed $1.47 higher at $97.75. Pork cutouts total 309.34 loads with 280.36 loads of pork cuts and 28.98 loads of trim. Pork cutout values: up $2.84, $84.46. Wednesday's slaughter is estimated at 433,000 head -- 30,000 head less than a week ago and 61,000 head less than a year ago. Tuesday's hog slaughter was revised to 453,000 head -- 5,000 head less than what was originally stated. The CME Lean Hog Index 1/10/2022: up $0.43, $75.13.
THURSDAY'S CASH HOG CALL: Lower. Until processing speeds become more stable, it's unlikely packers show the cash market much interest.
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