GENERAL COMMENTS:
Livestock futures trading volume picked up through Tuesday afternoon as traders seemed to note that grains' volatile losses weren't just a flash in the pan. However, in the days to come, all these markets will still have to recognize that the Black Sea ports are still facing conflict, and scarce spring planting inputs mean global feed grains' high prices are no short-term problem. For now, though, Tuesday's gains have allowed nearby live cattle futures to regain $140 per cwt, and spring feeder cattle contracts displayed even more optimism with gains of $3 to $4 per cwt. As the week moves on, hog futures will also need to incorporate information from the upcoming Hogs and Pigs report Wednesday. On the National Direct Afternoon Hog Report, negotiated prices were down $1.96 to a weighted average price of $103.93 on 8,899 head, and the 5-day rolling average was $106.22 per cwt. May corn moved down 22 1/4 cents per bushel to $7.26 1/4 and May soybean meal was down $12.90 per ton to $466.00. The Dow Jones Industrial Average is up 315 points and the NASDAQ is up 237 points.
LIVE CATTLE:
Higher live cattle futures prices were a bright spot in Tuesday's risk-off commodities trade, but the nearby April contract is still about $8 per cwt below where it was sailing prior to Russia's war. The April contract closed $0.60 higher at $140.90, the June closed $1.70 higher at $138.475, and the August closed $1.225 higher at $138.525. Cash cattle trade this week has been stalled until Wednesday or later, as bids remain elusive in the countryside. In the South, a few showlist asking prices are reported around $140-plus, which would be $2 higher than last week's average, and in the North, no levels have been seen yet. Although Friday's Cattle on Feed report gave packers some confidence about the near-term supply of market-weight animals, the ongoing pace of demand may equal what's coming down the pipe.
Tuesday's slaughter was seen at a hefty 125,000 head, which is 2,000 head more than a week ago and 6,000 more than a year ago.
Boxed beef prices were mixed in the afternoon: choice up $0.63 ($264.50) and select down $1.48 ($254.84) with a movement of 87 loads (58.5 loads of choice, 17.2 loads of select, 0 loads of trim and 11.71 loads of ground beef).
WEDNESDAY'S CASH CATTLE CALL: Steady. With packers gearing up a rapid slaughter pace in anticipation of eventual spring and summer beef demand, the feedlot inventories may not feel quite so overabundant as the Cattle on Feed report suggested.
FEEDER CATTLE:
After peace talks between Russia and Ukraine made World War III seem slightly less likely Tuesday, global feed grain prices dropped by double digits, and cattle feeders were reminded that maybe they can afford to pay $160 or more for calves this spring, after all. March feeder cattle futures closed up $0.60 at $156.70. This contract will converge at the end of the month with the CME Feeder Cattle Index (up $0.29 to $155.11 on 3/25). Meanwhile, the April futures contract closed up $3.525 at $164.35 and the May contract closed up $4.325 at $169.40. Persistent drought in the West means there may not be great prospects for putting calves on grass this spring. But the spring calf crop dropping now will be aiming to sell against an October or November futures contract, with prices that rose above $185 per cwt during Tuesday's rally.
LEAN HOGS:
Even in the absence of wild outside market volatility, the lean hog futures market likely would have experienced a high volume of interest Tuesday in anticipation of the quarterly Hogs and Pigs report that USDA will release Wednesday. Average pre-report expectations suggest the All Hogs and Pigs number may be down 1%, year-over-year, and the uncertain size of the breeding herd may also carry long-term bullish implications about supply. The nearby April lean hog futures contract closed Tuesday down $1.525 at $106.05; the May closed down $0.525 at $118.775; and the June closed down $1.425 at $124.625. Traders should anticipate active spread trade Wednesday as the supplies of various weight classes and farrowing intentions become clear to the market. Tuesday's lower trade in hog futures matched the tone in many of the commodity markets that measure the global economic temperature, including crude oil, which traded below $100 per barrel at various points during the session, and soybean meal, which dropped $12.90 per ton to $466 per ton. Wholesale pork prices dropped Tuesday, led by bellies down $15. The afternoon pork cut-out report showed the overall carcass value down $3.47 to $103.94, with 305.76 total loads (277.18 loads of cuts and 28.58 loads of trim). The CME Lean Hog Index for 3/25: up $0.68, $102.93, and the projected index for 3/28 is up $0.63, $103.56.
WEDNESDAY'S CASH HOG CALL: Steady. Neither the volatile gyrations of the futures market nor the suspense of a USDA report may seriously weigh on the pragmatic needs of packers.
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