GENERAL COMMENTS:
Together we've survived a pandemic, cyberattacks, a packing plant fire, and now together we will watch this market react to the outbreak of war. It's ugly, it's painful and it's hurting our markets. Hog prices closed lower on the National Direct Afternoon Hog Report, down $3.85 with a weighted average of $94.40 on 4,530 head. May corn is up 22 3/4 cents per bushel and May soybean meal is up $5.40. The Dow Jones Industrial Average is down 96.69 points and NASDAQ is down 214.08 points.
LIVE CATTLE:
As much as I hate to even mutter the thought, we must ask ourselves given the drastic turn of events that have played out over the last ten days -- is the spring high in for cash cattle? The April contract has fallen flat on its face to prices not seen since November 2021, rounding the day out at $138.35 when just shy of a month ago the market was reaching for $150 when prices accomplished $147.82. I hope to God that isn't the case given the tremendous fundamental outlook the market obtains. Chain speeds are flat flying through cattle, showlists are current and even though the market sits with a plethora of cattle in feedlots, consumers are still hungry, and the 2022 calf crop will undoubtedly be smaller than years past. Sadly, the market seems to forget that fundamentals are supposed to play a role in the sector and until the Ukraine/Russia war simmers down, it's unlikely the market gets much friendlier. Thursday's slaughter is estimated at 124,000 head -- steady with a week ago and 1,000 head more than a year ago.
April live cattle closed $1.75 lower at $138.35, June live cattle closed $1.35 lower at $135.15 and August live cattle closed $1.05 lower at $135.65. Thursday's cash cattle trade didn't amount to much, and its looking like the week's trade is going to be thin again. So far this week, Southern live deals have been at mostly $140 -- $2 lower than last week's weighted averages. Northern dressed business has been at mostly $225 -- $2 lower than last week's weighted basis Nebraska.
Beef net export sales of 23,800 metric tons (mt) for 2022 were up 64% from the previous week and 23% from the prior 4-week average. The three biggest buyers were South Korea (9,800 mt), China (4,100 mt) and Japan (2,800 mt).
Thursday's actual slaughter data shared that for the week ended 2/19/2022 steer carcass grew by three pounds from the previous week, and heifer carcasses averaged 849 pounds, which is one pound more than a week ago.
Boxed beef prices closed lower: choice cuts closed $1.37 lower ($254.35) and select cuts averaged $3.55 lower ($247.79), with a choice/select spread of $6.56 and with a movement of 153 loads (89.53 loads of choice, 18.91 loads of select, 13.36 loads of trim and 30.77 loads of ground beef).
FRIDAY'S CASH CATTLE CALL: Steady with the week. Prices are likely to hold steady where they are; let's just hope some more cattle trade.
FEEDER CATTLE:
The grain contracts closed higher yet again, but thankfully the contracts didn't close as high as they threated to earlier in the day. March feeders closed $1.95 lower at $156.35, April feeders closed $2.47 lower at $160.52 and May feeders closed $2.50 lower at $165.50. Unfortunately, until the war in Ukraine subsides and the globe understands how the commodities of Ukraine will trade in the year ahead, the feeder cattle contracts will likely trade with immense pressure as this market dips and dives in fear of everything and no longer cares to represent the fundamentals. At La Junta Livestock Commission in La Junta, Colorado, compared to two weeks ago steers and heifers traded uneven. Steers under 650 pounds traded $3.00 to $5.00 higher, with instances of even $8.00 higher, and steers over 650 pounds traded $3.00 to $5.00 lower. Heifers under 550 pounds traded $5.00 to $8.00 higher, heifers weighing 550 to 600 pounds traded $2.00 higher, heifers weighing 600 to 700 pounds traded $3.00 to $5.00 lower and those over 700 pounds sold $2.00 to $3.00 lower. The CME Feeder Cattle Index 3/2/2022: down $1.47, $157.78.
LEAN HOGS:
The war in Ukraine continues to pressure the futures market, pork cutout values veered lower and cash prices waned as well -- talk about a tough Thursday! The lean hog contracts were attempting to pull off a rally ahead of the noon hour, but as the market's cutout values waned and the futures market ran into headwinds, the complex opted to jump ship and closed lower as traders weren't willing to take on a challenge given the market's uncertain state. April lean hogs closed $1.10 lower at $105.20, June lean hogs closed $0.05 higher at $116.50 and July lean hogs closed $0.17 lower at $115.42. The one surprising note of the day was seeing China active and aggressive in Thursday's export report. As China rebuilds their hog herd at aggressive speeds -- it's peculiar to see them as an active buyer in our market. Pork cutouts totaled 360.06 loads with 326.10 loads of pork cuts and 33.96 loads of trim. Pork cutout values: down $2.01, $106.41. Thursday's slaughter is estimated at 476,000 head -- steady with a week ago and 15,000 head less than a year ago. The CME Lean Hog Index 3/1/2022: up $0.18, $99.84.
Pork net sales of 42,200 mt for 2022 were up 59% from the previous week and 80% from the prior four-week average. The three largest buyers were Mexico (17,000 mt), China (16,600 mt) and Japan (3,000 mt).
Thursday's actual slaughter data shared that the week ended 2/19/2022 live carcasses fell by a pound from the previous week to average 293 pounds, and dressed carcasses fell by a pound too to average 218 pounds.
FRIDAY'S CASH HOG CALL: Lower. Given that Thursday's trade was lower, I think it's safe to assume that Friday's market will be pushed lower as packers bought their hogs on Tuesday and Wednesday.
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