GENERAL COMMENTS:
As the market looks to Thursday's trade, cash cattle trade still has time to push prices higher. With only a small sampling of cattle being traded at this point, the market still needs to move more ahead of the weekend. Hog prices closed higher on the National Direct Afternoon Hog Report, up $2.00 with a weighted average of $84.51 on 9,791 head. March corn is up 14 1/2 cents per bushel and March soybean meal is up $7.80. The Dow Jones Industrial Average is up 305.28 points and NASDAQ is up 295.91 points.
LIVE CATTLE:
Live cattle futures closed fully higher as both the North and South traded a small sampling of cattle Wednesday. But but it wasn't enough to tip the scales fully in the packers' favor to where feedlots have no chance at still demanding higher prices later in the week. February live cattle closed $0.92 higher at $142.90, April live cattle closed $1.65 higher at $147.82 and June live cattle closed $1.22 higher at $142.47. Processing speeds continue to turn and burn and are flying through front-end supplies, which bodes well for feedlots as it will help clean up their showlists. The market hopes to see strong demand in Thursday's export report and hopes to see stronger bids from packers as well. There was a light movement of cattle in the South for $138 to $140, and even fewer cattle traded in the North for $222 to $225. More trade will need to happen before the week's end. Wednesday's slaughter is estimated at 122,000 head -- 1,000 head more than a week ago and 6,000 head more than a year ago.
Wednesday's WASDE report helped the complex push its contracts higher as the report shared that steer prices could average $139 in the first quarter, $136 in the second quarter, $135 in the third quarter (up $1.00 from January's report) and $140 in the fourth quarter (up $2.00 from January's report). If chain speeds continue to run as aggressively as they are now, it wouldn't surprise me if prices got even stronger in the last two quarters of 2022 as there will simply be fewer cattle to market and amid demand this strong -- prices should rally.
Boxed beef prices closed lower: choice down $1.67 ($275.79) and select down $1.79 ($272.05) with a movement of 132 loads (97.17 loads of choice, 14.72 loads of select, 10.90 loads of trim and 9.68 loads of ground beef).
THURSDAY'S CASH CATTLE CALL: $1.00 higher. Packers obviously don't want to see the market trade any better than steady, but feedlots are ready to regain leverage and they've pulled the short stick for far too long. Given that only a handful of cattle have traded this week, it's not farfetched to think feedlots could still pull off higher trade.
FEEDER CATTLE:
Feeder cattle futures didn't seem to care much that the corn and soybean market had a strong day as the complex clung to the fundamental fact that fewer cattle will be marketed in the second half of the year and prices should grow stronger. March feeders closed $1.40 higher at $168.27, April feeders closed $0.80 higher at $172.57 and May feeders closed $0.82 higher at $176.72. Feedlots are having to pay close attention to their breakeven point as cost of gains continue to fluctuate with the price of feeders rallying and feed prices rallying as well. At OKC West in El Reno, Oklahoma, compared to last week on a run of 6,047 head, feeder steers traded $6.00 to $10.00 higher, and feeder heifers traded $5.00 to $8.00 stronger. Steer and heifer calves sold $6.00 to $8.00 higher. Demand was exceptionally strong give that the grain markets rallied aggressively throughout Wednesday's market. The CME Feeder Cattle Index 2/8/2022: up $0.61, $162.04.
LEAN HOGS:
The lean hog complex loved seeing Wednesday's WASDE report, even though pork production fell (as processing speeds continue to lag normal levels). The report also shared higher barrow and gilt prices for all four quarters of the year. The second quarter jumping $5.00 from last month's projection, the third quarter jumping $7.00, and the fourth quarter jumping up $5.00 as well -- all of which comes as joyous news to hog producers who are elated to see demand so strong. April lean hogs closed $0.97 higher at $104.77, June lean hogs closed $1.75 higher at $114.50 and July lean hogs closed $1.70 higher at $113.17. The market was anticipating higher pork cutout values, but the $7.55 jump even surprised some bull-spreaders. Heading into Thursday's market, the complex is hopeful for strong export demand but also knows exports won't be as favorable as they have been in the past with China not buying as much U.S. pork and other countries grabbing some more of the export market. Pork cutouts totaled 286.32 loads with 248.84 loads of pork cuts and 37.48 loads of trim. Pork cutout values: up $7.55, $104.84. Wednesday's slaughter is estimated at 472,000 head -- 40,000 head more than a week ago and 17,000 head less than a year ago. The CME Lean Hog Index 2/7/2022: up $0.75, $86.62.
THURSDAY'S CASH HOG CALL: Steady to somewhat lower. Given that packers bought 9,791 head in Wednesday's cash market, it's likely they will lay low in Thursday's cash market as they have most of the nearby needs met.
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