GENERAL COMMENTS:
Heading into Monday's trade, the live cattle market will be tested to see if its rally this past week was all fluff or if traders are truly willing to rebuild the market's charts. Hog prices closed lower on the Daily Direct Hog Report, down $3.12 with a weighted average of $103.70 on 4,024 head. May corn is down 12 3/4 cents per bushel and May soybean meal is up $2.90. The Dow Jones Industrial Average is up 274.17 points and NASDAQ is up 279.06 points.
From Friday-to-Friday livestock futures scored the following changes: April live cattle up $3.20, June live cattle up $4.13; March feeder cattle up $3.72, April feeder cattle up $4.35; April lean hogs down $3.32, June lean hogs down $2.10.
LIVE CATTLE:
There's always so much more to the market than what meets the initial gaze. Upon seeing Friday's close, one may be tempted to hoot and holler and say job well done! And while it's completely commendable that feedlots marketed their cattle to the best of their ability and walked away with steady to slightly higher prices, the fact that Friday's slaughter only amounted to 100,000 head is repulsive. I guess if you don't want to pay the piper you might as well just back up supplies. Feedlots and packers alike know that feedlot managers have a very thin window until the first of May to push the cash cattle market higher. At which point supplies of market-ready cattle will grow and cash prices will likely trend lower as supplies flood the market. Until then, feedlots' goal is to build up the market ahead of the summer lows as much as they can. Consequently, the packers' goal is just the opposite: hold the market as close to steady. Nevertheless, the tug-of-war between the two parties will be intense until supplies of cattle increase.
From a technical standpoint, it was commendable to see the April live cattle contract grow back to $140.50, and it was commendable to see the June live cattle contract flirt with taking on the market's 100-day moving average. Heading into next week's trade, the market will have to decide if this week's strength is sustainable, or if prices will wither away again. April live cattle closed $1.02 higher at $140.50, June live cattle closed $1.15 higher at $137.07 and August live cattle closed $0.95 higher at $137.60.
Friday's slaughter is estimated at 100,000 head -- 11,000 head less than a week ago and 7,000 head less than a year ago. Saturday's slaughter is projected to be around 44,000 head -- 10,000 head more than week ago and 23,000 head less than a year ago.
Boxed beef prices closed mixed: choice up $1.11 ($258.16) and select down $0.03 ($250.65) with a movement of 95 loads (60.25 loads of choice, 18.10 loads of select, 7.05 loads of trim and 9.64 loads of ground beef). Throughout the week, choice cuts averaged $257.34 (up $3.64 from last week) and select cuts averaged $250.08 (up $2.79 from last week) which led the choice/select spread to average $7.26 and made for a total movement of cuts, grinds, and trim of 584 loads.
MONDAY'S CASH CATTLE CALL: Steady. It will be interesting to see exactly how many cattle traded this week in Monday's official report. It's evident that not many traded and that packers are fighting tooth and nail to avoid paying higher cash cattle prices.
FEEDER CATTLE:
With the grain contracts not adding any pressure throughout Friday's trade, the feeder cattle contracts pushed through Friday's close to round out the week fully higher. March feeders closed $0.45 higher at $157.00, April feeders closed $1.22 higher at $162.32 and May feeders closed $1.57 higher at $167.45. With the market still trending well below the 100- and 40-day moving averages, there's room for the market to continue its upward quest next week if input pressures remain manageable. Along with monitoring what's happening in Ukraine, the market will continue to watch weather forecasts as spring is in the air and moisture is desperately needed. At Lexington Livestock Market in Lexington, Nebraska, compared to two weeks ago on 2,414 head steers weighing 600 to 750 pounds traded steady to $2.00 higher and heifers weighing 550 to 800 pounds traded steady to $2.00 higher expect those weighing 600 to 700 pounds which sold $7.00 lower. The CME Feeder Cattle Index 3/17/2022: unavailable at this time.
LEAN HOGS:
The lean hog contracts continued to drift lower all through Friday's trade as the market was unable to muster any technical support ahead of the week's close. April lean hogs closed $0.95 lower at $99.40, June lean hogs closed $0.90 lower at $107.10 and July lean hogs closed $0.90 lower at $115.47. The market knows supplies of market-ready hogs are thin and will likely remain that way well into the latter half of 2022. But what the market doesn't know is how consumer demand in the short-term is going to hold. Pork cutout values closed lower Friday afternoon with the ham taking the brunt of Friday's losses as it closed $7.67 lower to average $71.62.
Pork cutouts total 177.65 loads with 156.09 loads of pork cuts and 21.55 loads of trim. Pork cutout values: down $0.25, $104.95. Friday's slaughter is estimated at 475,000 head -- 1,000 head less than a week ago and 8,000 head less than a year ago. Saturday's kill is projected to be around 58,000 head -- 39,000 head less than a week ago and 18,000 head less than a year ago. The CME Lean Hog Index 3/16/2022: up $0.36, $100.77.
MONDAY'S CASH HOG CALL: Steady. Regardless of how daily hog prices fair, the fact still remains that packers need hogs and will have to procure them regularly with supplies as thin as they are.
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