Monday Closing Livestock Market Update - Higher Closes Seen in Contracts

GENERAL COMMENTS:

The livestock complex closed mostly higher Monday. Heading into Tuesday's trade, the market could see follow-through interest as the market's fundamentals should hold strong but given the fact that tensions have grown more strained with Russia and the Ukraine, the markets could be volatile as well. Hog prices closed higher on the National Direct Afternoon Hog Report, up $4.15 with a weighted average of $86.51 on 5,559 head. March corn is up 4 3/4 cents per bushel, and March soybean meal is down $8.20. The Dow Jones Industrial Average is down 171.89 points, and the NASDAQ is down 0.23 points.

LIVE CATTLE:

The live cattle market closed higher, as the market felt confident given last week's strong performance -- a robust week for slaughter and steady to $2 higher cash cattle trade. This week has its work cut out for feedlots, as packers will likely try to keep the cash cattle market steady, but feedlots want more of the market's dollar. Given that packers have been running vigorous processing speeds, feedlots are sitting comfortably with their front-end supplies. Showlists are mixed, lower in Kansas, and somewhat higher in Texas and Nebraska/Colorado, and it's likely that no real business develops until Wednesday or later. Monday's cash cattle trade was a typical "Monday" with no bids or asking prices being noted. February live cattle closed $0.55 higher at $142.42, April live cattle closed $0.17 higher at $146.35, and June live cattle closed $0.32 higher at $141.45. Monday's slaughter is estimated at 121,000 head -- steady with a week ago and 44,000 head more than a year ago.

Last week's negotiated cash cattle trade totaled 104,457 head. Of that, 80% (83,348 head) were committed for nearby delivery, while the remaining 20% (21,109 head) were committed for deferred delivery.

Boxed beef prices closed mixed: choice down $0.56 ($273.96) and select up $0.92 ($268.75) with a movement of 76 loads (48.86 loads of choice, 11.68 loads of select, 9.19 loads of trim and 6.05 loads of ground beef).

TUESDAY'S CASH CATTLE CALL: Steady. I don't foresee much interest energizing the market throughout Tuesday's trade, but come Wednesday or later, the market could easily see steady trade. If the futures complex wanes lower, then feedlots are mostly likely going to have to scrap to keep the market steady. But if the futures market is supportive throughout the week, then $1 higher isn't out of the picture if trade holds out for it.

FEEDER CATTLE:

Even though the corn complex closed slightly higher, the feeder cattle contracts rounded out the day fully higher, and buyers sat in sales with aggression for lightweight calves again. March feeders closed $0.65 higher at $166.87, April feeders closed $0.80 higher at $171.50, and May feeders closed $0.80 higher at $175.55. Whether buyers are wanting to turn these lightweight calves into long yearlings or feed them out until fats, the market bodes well for them with plenty of opportunities to chase so long as one can manage their cost of gain. At Joplin Regional Stockyards in Carthage, Missouri, at their midpoint session when compared to last week's trade, feeder steers under 550 pounds were trading $5 to $10 higher, and three-weighing steers were trading $20 higher. Steers over 550 pounds were trading steady and feeder heifers traded $2 to $4 higher. The CME feeder cattle index 2/11/2022: up $0.52, $163.16.

LEAN HOGS:

The lean hog complex rounded out Monday's trade vaguely higher with just the contracts of June, July and August 2022 closing modestly lower. With the February contract expiring Monday, April officially sits front and center stage with all eyes and ears on its behavior. Throughout Monday's trade, the April contract wasn't willing to do much more than chop sideways, as the market needs better signaling in order to comfortably trade higher. With cash prices closing higher but cutouts closing lower, traders just let the market trade mostly steady and hope to find more discernment in Tuesday's market. April lean hogs closed $0.10 higher at $102.32, June lean hogs closed $0.35 lower at $111.85 and July lean hogs closed $0.35 lower at $111.25. Pork cutouts total 280.42 loads with 241.71 loads of pork cuts and 38.71 loads of trim. Pork cutout values: down $1.98, $107.98. Monday's slaughter is estimated at 470,000 head -- 11,000 head less than a week ago and 65,000 head less than a year ago. The CME lean hog index 2/10/2022: up $1.18, $88.92.

TUESDAY'S CASH HOG CALL: Steady. Given that pork cutout prices waned lower, I tend to think that packers will buy their needs in the cash market but not run after hogs aggressively.