Wednesday Closing Livestock Market Update - Cash Cattle Gain $2 From Last Week

GENERAL COMMENTS:

The cattle complex will be anxious to see how Thursday's export report treats the market, but the lean hog complex knows the likelihood of it getting a robust export report is slim. Wednesday was a good day for the livestock contracts as both the live cattle and lean hog contracts closed higher on strong market fundamentals, but the feeder cattle complex grew weary amid a strong grain market. Hog prices closed higher on the National Direct Afternoon Hog Report, up $2.06 with a weighted average of $91.47 on 9,178 head. March corn is up 9 cents per bushel and March soybean meal is up $10.60. The Dow Jones Industrial Average is down 54.57 points and NASDAQ is down 15.66 points.

LIVE CATTLE:

Job well done feedlots! Following last week's tremendous volume of cash cattle traded (104,000 head), numerous analysts were worried the cash market was going to struggle this week as packers bought aggressively last week and were even able to get some cattle committed with time. Thankfully, throughout Wednesday we saw cattle in both the North and South trade for roughly $2.00 stronger amid the futures market's modest sideways chop. Once again, so much of next week's fate (and even the weeks after) depends on exactly how many cattle were committed with time today. As packers size up the likelihood of the cash cattle market rallying this spring, they are preparing their position (negate the cash market's ability to rally) by buying cattle with time and lessening their needs in the future. There were some brave hearts still holding out for $143-plus in the South and $227 to $228 in the North. If trade could have been delayed by another day, perhaps the entire market could have gotten those prices. Throughout the day trade in the South was marked at $142 and dressed deals in the North went for $226 -- both $2.00 higher than a week ago. Of the cattle that sold in the North, most of them were sold with time for the week of Feb. 28. Wednesday's slaughter is estimated at 122,000 head -- steady with last week and 22,000 head more than a year ago.

Boxed beef prices closed lower: choice down $0.75 ($269.62) and select down $1.74 ($266.08) with a movement of 111 loads (76.60 loads of choice, 13.89 loads of select, 9.37 loads of trim and 11.42 loads of ground beef).

THURSDAY'S CASH CATTLE CALL: Steady with the week's trend. Given that cattle have sold in the North and South, prices will likely trade steady now for the remainder of the week.

FEEDER CATTLE:

The corn complex closed higher and the soybean market jumped over the moon (again, and again, and again) which drove feeders lower by Wednesday's close. March feeders closed $1.27 lower at $167.45, April feeders closed $0.37 lower at $172.17 and May feeders closed $0.37 lower at $176.55. With pressure from the grain complex more that the feeder futures could bear, buyers drew back in some sale barns as well as they need to intensely monitor their cost of gains. At Bassett Livestock Auction in Bassett, Nebraska, compared to the sale two weeks ago, on a run of 3,135 head, feeder steers weighing 750 pounds traded $7.00 lower, heifers weighing 550 pounds, and those weighing 650 to 700 pounds traded steady, but the six weight heifers traded $4.00 higher. The CME Feeder Cattle Index 2/15/2022: down $0.12, $162.59.

LEAN HOGS:

It was an exhilarating day for the lean hog complex as the market saw tremendous support from all sides. The futures market tested resistance and closed modestly higher in some contracts and fully steady with the resistance point in others. Either way, the tremendous support technically was aided by the cash hog market and aggressive throughput. You probably noticed pork cutout values closed lower; but seeing a modest regression of $0.20 comes as breath of fresh air as the market has gotten used to seeing $6.00 to $12.00 swings daily. Pork cutouts total 231.31 loads with 196.62 loads of pork cuts and 34.68 loads of trim. Pork cutout values: down $0.20, $106.52. Wednesday's slaughter is estimated at 478,000 head -- 6,000 head more than a week ago and 5,000 head more than a year ago. The CME Lean Hog Index 2/14/2022: up $1.33, $91.84.

THURSDAY'S CASH HOG CALL: Slightly lower. Given that the market has had two days now where cash hogs were fully supported, I tend to bet cash prices will be slightly lower come Thursday. As packers sit comfortably with their needs mostly met, their aggression in the cash market will likely be considerably less.