Monday Closing Livestock Market Update - Cattle Look to Regain Some Ground

GENERAL COMMENTS:

Surprisingly enough, Monday treated the cattle futures kindly as both live and feeder cattle contracts closed higher. The lean hog market wasn't as optimistic and looks to see how the pork cutout will perform throughout the week. Hog prices closed higher on the Daily Direct Hog Report, up $2.95 with a weighted average of $100.36 on 6,342 head. May corn is down 3 1/2 cents per bushel and May soybean meal is down $1.70. The Dow Jones Industrial Average is down 797.42 points and NASDAQ is down 482.48 points.

LIVE CATTLE:

After scaling to lows not seen since last November on Friday, Monday's market decided a day of higher trade may not be too much of a risk. April live cattle closed $2.12 higher at $137.90, June live cattle closed $1.40 higher at $133.92 and August live cattle closed $1.15 higher at $135.30. While you may want to feel excited for the market's tone this week given that Monday traded higher, I caution you. The market-straining ramifications of war are long lasting and the market not only has technical and fundamental cues to trade off, but also psychological -- which we will likely see played out this week in the cash cattle market. It's unlikely the cash cattle market trades higher this week as packers will use this as an opportunity to knock the wind out of the spring cash cattle rally. Steady trade is looking like the market's best scenario this week. New showlists appear to be mixed -- higher in Texas, but lower in Kansas and Nebraska/Colorado. Monday's slaughter is estimated at 125,000 head -- 3,000 head more than a week ago and 5,000 head more than a year ago. Saturday's kill was revised to 38,000 head, which is 4,000 head less than what was originally anticipated.

Last week's negotiated cash cattle trade totaled 75,674 head. Of that 70% (53,306 head) are committed for nearby delivery, while the remaining 30% (22,368 head) are committed for deferred delivery.

Boxed beef prices closed higher: choice up $0.38 ($254.71) and select up $1.81 ($250.22) with a movement of 102 loads (59.59 loads of choice, 15.40 loads of select, 5.17 loads of trim and 21.71 loads of ground beef).

TUESDAY'S CASH CATTLE CALL: $2.00 lower. Packers have cattle committed for this time and it's likely they use this development of war as an opportunity to drive cash cattle prices lower.

FEEDER CATTLE:

The feeder cattle complex attempted to recover some lost ground through the futures complex, but the damage continued to spread throughout the countryside as sales see large numbers of cattle that need marketed, and buyers are extremely cautious. March feeders closed $1.47 higher at $154.60, April feeders closed $2.42 higher at $159.67 and May feeders closed $2.55 higher at $164.90. All in all, buyers look at this market and see far too much uncertainty to continue to chase after calves/feeders aggressively. It's hard telling when the market ramifications of the war between Russia/Ukraine will subside and until then some level of volatility will remain throughout the cattle complex. Joplin Regional Stockyards in Carthage, Missouri, reported at their midsession point that compared to last week, and on a run of 10,000 head, that feeder steers under 550 pounds were trading $10.00 to $13.00 lower and the feeders with a little more flesh were trading $3.00 to $8.00 lower. Feeder heifers were trading steady at $4.00 to $10.00 less. The CME Feeder Cattle Index 3/4/2022: down $0.82, $155.37.

LEAN HOGS:

While the cattle contracts were able to regain some lost positioning throughout Monday's trade, the lean hog complex continued to veer lower as pressure kept the market from trading higher. April lean hogs closed $0.17 lower at $100.27, June lean hogs closed $0.75 lower at $111.00 and July lean hogs closed $0.85 lower at $109.85. While the war obviously adds uncertainty to the market, the lean hog complex needs to understand its trajectory amid the world's chaos. Are pork cutout prices going to trend sideways through Lent or are consumers feeling pinched and wanting to see cheaper pork? Is the futures market going to let its rally go with the world's new development of war? Or are short supplies of hogs going to keep traders well attuned to the market? Needless to say, the lean hog complex is searching for answers throughout its own market. It was interesting to see over 6,000 head of hogs trade in Monday's cash market (and at higher prices) as packers have been sitting pack until Tuesday or Wednesday in weeks past before buying hogs. Pork cutouts totaled 310.84 loads with 275.99 loads of pork cuts and 34.85 loads of trim. Pork cutout values: up $2.66, $106.65. Monday's slaughter is estimated at 479,000 head -- 28,000 head more than a week ago and 12,000 head less than a year ago. Friday's hog slaughter was revised to 470,000 -- 8,000 head less than what was originally stated. The CME Lean Hog Index 3/3/2022: down $0.13, $99.57.

TUESDAY'S CASH HOG CALL: Steady. Seeing packers jump out and be aggressive in Monday's cash market is unusual compared to the past few weeks. Packers could be needing hogs more desperately than what they have needed in recent weeks, but given how fickle this market is, it's a tough call especially during Lent.