GENERAL COMMENTS:
Thursday has come as a tough pill to swallow for the cattle complex, but lean hogs are making a modest rally without getting too greedy. The cattle contracts will likely close lower as the market lacks support technically. May corn is up 35 cents per bushel and May soybean meal is up $9.40. The Dow Jones Industrial Average is down 102.04 points and NASDAQ is down 180.30 points.
LIVE CATTLE:
If you're looking for something positive Thursday, this is your warning -- LOOK ELSEWHERE. The live cattle contracts are running lower, the cash cattle market isn't seeing much action and with tensions in Ukraine only worsening, the market will likely continue to panic in this way until something gives with Russia/Ukraine. (I told you, this isn't the place to look for good news today.) April live cattle are down $1.55 at $138.55, June live cattle are down $1.37 at $135.12 and August live cattle are down $0.90 at $135.80. The one good thing that has stemmed from Thursday's market was the day's export report -- it was refreshing to see international demand strong. The market should see some more cash cattle trade develop before the week's end, but it will likely be another day of dismal trade as packers have cattle committed with time and aren't hard pressed to support this week's market.
Beef net export sales of 23,800 metric tons (mt) for 2022 were up 64% from the previous week and 23% from the prior four-week average. The three biggest buyers were South Korea (9,800 mt), China (4,100 mt) and Japan (2,800 mt).
The Special Fed Cattle Exchange Auction held Thursday listed a total of 1,732 head, of which none actually sold, 125 were scratched from the auction and 1,607 head were listed as unsold, as they did not meet the reserve prices, which ranged from $139 to $143. Opening prices ranged from $138.50 to $139, high bids ranged from $138.50 to $139.75. The state-by-state breakdown looks like this: Texas 1,310 total head, of which none sold; Iowa 230 total head, none of which sold; Kansas 192 total head, of which 67 head went unsold and 125 were scratched from the auction.
Boxed beef prices are lower: choice down $0.98 ($254.74) and select down $1.90 ($249.44) with a movement of 73 loads (38.12 loads of choice, 10.94 loads of select, zero loads of trim and 24.24 loads of ground beef).
FEEDER CATTLE:
There's one thing we need to get clear about the markets right now: These prices reflect war and fear and are not a reflection of the fundamentals of the feeder cattle market. As corn prices shoot to new highs, the feeder cattle complex is left with no other option but to shoot lower. As if the war in Ukraine isn't enough, we can't overlook the drought conditions here in the U.S. Being a bull in the feeder cattle market's short term is a nearly impossible job. But being a bull in the feeder cattle market's long-term trajectory isn't impossible as beef cows continue to be slaughtered at record speeds. At some point, rain will fall and the tensions with Russia/Ukraine will subside. March feeders are down $1.90 at $156.40, April feeders are down $2.60 at $160.40 and May feeders are down $2.62 at $165.37.
LEAN HOGS:
And just like that, the lean hog market is back to trading higher, which could be credited to Wednesday's slightly higher cutout value, or the surprise in seeing China as a buyer in Thursday's export report. Nevertheless, the contracts are all rallying Thursday and the market is climbing back (slowly, but surely) to where it topped last week. At this point, I tend to think the uncertainty that's blanketed the market thanks to Russia will keep the complex from soaring too much higher. But then again, supplies of hogs are thin and beef is expensive, so pork continues to remain a good option at the meat counter. Grab a bag of popcorn and enjoy the market's show because it's anything but boring right now. April lean hogs are up $0.10 at $106.47, June lean hogs are up $1.00 at $117.45 and July lean hogs are up $0.90 at $116.50.
The projected CME Lean Hog Index for 3/2/2022 is down $0.14 at $99.70 and the actual index for 3/1/2022 is up $0.18 at $99.84. Hog prices are higher on the National Direct Morning Hog Report, up $4.75 with a weighted average of $94.48, ranging from $89.00 to $105.00 on 4,380 head and a five-day rolling average of $89.96. Pork cutouts total 174.67 loads with 152.15 loads of pork cuts and 22.52 loads of trim. Pork cutout values: up $6.76, $115.18.
Pork net export 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).
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