GENERAL COMMENTS:
Bullish momentum in the livestock markets has carried futures contracts higher for a fifth straight day, although the gains are generally less than a dollar and may be vulnerable to profit-taking before the session is over. Cash cattle traders have taken advantage of the mood to receive prices $3 to $4 higher than last week. March corn is down 8 1/2 cents per bushel and March soybean meal is down $2.10 per ton. The Dow Jones Industrial Average is down 339 points and NASDAQ is down 483 points.
LIVE CATTLE:
It's unusual and difficult for a commodity market to move consistently upward for five days in a row, but cattle contracts are making it happen so far Thursday, with another round of fresh contract highs, like $147.275 on the April chart. Generally, the gains are less than a dollar: the February contract is up $0.75 at $141.875, and the June contract is up $0.075 at $141.70. This bullish momentum, along with evidence of packers' eagerness to keep chain speeds rolling on pace (Thursday's slaughter is projected at 119,000) has given the cash market confidence to push triumphantly higher this week. Light trade is seen in the South at $140, or $3 to $4 higher than last week's weighted averages. More trade is still expected in the North after Wednesday's dressed deals at $222 in Nebraska.
The special Fed Cattle Exchange Auction held Thursday listed a total of 1,759 head (Texas 1,007 head; Kansas 596 head; Oklahoma 121 head; California 35 head), of which 465 actually sold at $140.00 (all in Texas), none were scratched from the auction and 1,294 head were listed as unsold, as they did not meet the reserve prices, that ranged from $139 to $140.50. Opening prices were all at $137, high bids ranged from $137 to $140.
Meanwhile, the beef market shows signs of stalling. Choice prices are down $1.09 Thursday morning ($282.06) and select down $2.43 ($277.14) with a movement of 76 total loads (55.21 loads of choice, 10.32 loads of select, 0 loads of trim, and 10.43 loads of ground beef).
FEEDER CATTLE:
Although outside markets are skittish Thursday morning, traders in the feeder cattle futures market have so far been able to ignore any risk-off inclinations and instead focus on another day cheaper corn, with most corn contracts falling and dipping below $6.20. In reaction, the March feeder cattle contract is up $0.525 at $167.40; the April feeder cattle contract is up $0.675 at $172.525; and the May feeder cattle contract is up $0.30 at $176.05. Producers in the countryside are experiencing the cold weather typical for the early February timeframe, but most feeder cattle movement in the West is presently uninterrupted by the kind of weather that's causing problems for other livestock industries in the East.
LEAN HOGS:
On Thursday, all the lean hog futures contracts between April and October 2022 are trading above $100 per cwt, with triple-digit gains that confirm the unbounded bullish optimism permeating this market. The February contract is $0.15 lower at $87.20, likely with an eye on the lackluster CME Lean Hog Index ($83.33 on 2/2) with which it will eventually have to converge. But the rest of the contracts are on a roll: April is up $1.75 at $100.875, and May is up $1.45 at $104.50. Trading volume hasn't been heavy so far but may pick up during the second half of the trading session. The logistical problems faced on icy truck routes from Indiana to North Carolina may have an influence on today's actual hog values, but they can't outweigh the long-term bullishness of traders who note another dip in the U.S. Dollar Index supporting export price tags.
The CME Lean Hog Index from 2/1 was 83.29 (up $0.15) and the projected index for 2/2 is $83.33 (up $0.04). Pork cutouts Wednesday morning total 146.22 loads with 138.13 loads of pork cuts and 8.08 loads of trim. Pork cutout values: down $1.04, $95.40. Thursday's hog slaughter is projected at a storm-challenged 428,000 head.
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