GENERAL COMMENTS:
The lean hog complex will be worth watching Wednesday as Tuesday's market saw tremendous support from both the cash and cutout sectors. Along with watching the lean hog complex, seeing who wins in this week's quest for more leverage will be a dandy between packers and feedlots. Hog prices closed higher on the Daily Direct Afternoon Hog Report, up $5.59 with a weighted average of $107.68 on 10,410 head. May corn is down 3 1/4 cents per bushel and May soybean meal is down $4.50. The Dow Jones Industrial Average is up 254.47 points and NASDAQ is up 270.36 points.
LIVE CATTLE:
Tuesday largely amounted to another day of indecisive sideways trade throughout the futures complex as the war between packers and feedlots has yet to prove one side a winner and one side a loser this week. April live cattle closed $0.62 lower at $139.42, June live cattle closed $0.65 lower at $135.70 and August live cattle closed $0.35 lower at $136.92. The market's biggest elephant in the room continues to be the unanswered question of whether or not the market's cash cattle highs are already in for the season. It wasn't encouraging to see the spot April contract close below $140, but feedlots are clinging to the fact that showlists remain in their favor for the time being, and that consumers are showing steady interest. There wasn't any cash cattle trade Tuesday and it's likely trade waits to develop until Wednesday or even later.
Tuesday's slaughter is estimated at 123,000 head -- 2,000 head less than a week ago and 5,000 head more than a year ago.
Boxed beef prices closed mixed: choice up $1.47 ($259.97) and select down $0.61 ($251.89) with a movement of 125 loads (86.89 loads of choice, 18.11 loads of select, 5.66 loads of trim and 14.69 loads of ground beef).
WEDNESDAY'S CASH CATTLE CALL: $1.00 higher. If feedlots are willing to wait this week out like they did last week, I don't think seeing cattle trade $1.00 or $2.00 higher is insane. Feedlots know what their fate is going to be once May , so their eagerness to capture any leverage in today's market is heightened by the pressure of time.
FEEDER CATTLE:
As the day played on, the grain sector started to find some support and by the day's end the feeder cattle contracts had retreated to mostly lower ground. April feeders closed $0.62 lower at $160.57, May feeders closed $0.32 lower at $165.42 and August feeders closed $0.30 lower at $178.85. At Callaway Livestock Center in Kingdom City, Missouri, compared to last week on a run of 2,847 head, steers weighing 500 to 600 pounds traded steady to $5.00 higher, steers weighing 600 to 650 pounds traded steady to somewhat firmer, steers weighing 800 to 850 pounds traded steady but steers weighing 850 to 900 pounds traded $2.00 to $3.00 lower. Feeder heifers weighing 400 to 600 pounds traded mostly $5.00 to $8.00 lower, with even $10.00 lower on those weighing 450 to 500 pounds. Demand was moderate to good with the market's best demand found on steer calves weighing 400 to 700 pounds. The CME Feeder Cattle Index 3/21/2022: up $0.20, $155.13.
LEAN HOGS:
I guess it's just as simple as the old saying goes, "Ask and you shall receive." The lean hog complex received more fundamental support than it could have even imagined at the beginning of Tuesday's trade. With both pork cutouts and cash prices closing more than $5.00 stronger, the market now looks to traders and wonders if they'll move to take out the existing resistance come Wednesday. It was incredible to see cash hogs trade over $5.59 higher and move 10,410 head. Packers must have caught wind from retailers that consumers were pulling pork off the shelves, which garnished their aggressive buying in Tuesday's market and was supported by Tuesday's leap in pork cutout values. Ham prices saw another uptick to higher prices as by Tuesday's close ham cuts had jumped $12.82 to average $77.10. April lean hogs closed $0.37 lower at $100.25, June lean hogs closed $0.25 higher at $120.07 and July lean hogs closed $0.62 higher at $119.82. Tuesday's slaughter is estimated at 479,000 head -- steady with a week ago and 11,000 head more than a year ago. Monday's slaughter was revised to 468,000 head -- 10,000 head less than what was originally stated. Pork cutouts total 272.82 loads with 235.70 loads of pork cuts and 37.12 loads of trim. Pork cutout values: up $5.10, $106.71. The CME Lean Hog Index 3/18/2022: up $0.44, $101.80.
WEDNESDAY'S CASH HOG CALL: Steady. So much of Wednesday's cash market will depend on follow-through consumer support. But given that we are only halfway through the week and packers didn't aggressively buy hogs on Monday, I think it's safe to say they'll be eagerly seeking hogs again Wednesday.
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