GENERAL COMMENTS:
The livestock contracts rallied throughout Tuesday, looking to regain some ground. It's important to make up for lost time and rally when given the chance; but the market knows it isn't free and clear of war pressures. Hog prices closed higher on the Daily Direct Afternoon Hog Report, up $3.60 with a weighted average of $103.96 on 8,092 head. May corn is up 2 1/4 cents per bushel and May soybean meal is up $14.60. The Dow Jones Industrial Average is down 184.74 points and NASDAQ is down 35.41 points.
LIVE CATTLE:
We knew it was coming, but that doesn't mean it was any easier to stomach. Packers managed to get cattle bought in Texas, Nebraska and Kansas for $138, which is $2.00 lower than last week's market and $4.00 lower than two weeks ago. Packers love buying cattle cheaper as it gives them more margin to absorb, but when corn prices are trading as high as they are, feedlots can't afford to give cattle away for pennies. Even though the board traded higher throughout Tuesday's market, the cold wet blanket that's lingering over the marketplace thanks to Russia is keeping the markets lower and at bay. April live cattle closed $1.15 higher at $139.05, June live cattle closed $1.52 higher at $135.45 and August live cattle closed $1.17 higher at $136.47. Though feedlots have plenty to worry over, they are thankful that chain speeds are running as aggressively as they are. There will be a wall of cattle to market come the end of May/end of June, and the market needs to be as current as possible heading into those months.
Tuesday's slaughter is estimated at 125,000 head -- 1,000 head more than a week ago and 4,000 head more than a year ago.
Boxed beef prices closed lower: choice down $2.27 ($252.44) and select down $5.28 ($244.94) with a choice/select spread of $7.50 and movement of 194 loads (89.39 loads of choice, 38.48 loads of select, 25.91 loads of trim and 39.83 loads of ground beef).
WEDNESDAY'S CASH CATTLE CALL: Steady. Once the cash cattle market begins to trade, there usually isn't price variation throughout the rest of the week. Seeing prices trend $2.00 lower than last week is likely.
FEEDER CATTLE:
The feeder cattle complex set out early Tuesday to regain some of what was recently lost. The contracts weren't as confident in the nearby months, but the deferred months had no problem of adding $1.00 or more to their prices. The corn market closed higher, but it wasn't a significant enough rally (2 to 5 cents higher in the nearby contracts) to derail the feeder cattle market's momentum. Thankfully the complex seems to have found some support; but the countryside is struggling to find confident buyers. With everything rising from inflation, buyers are looking at this market and know there's opportunity to be had (lingering in the future due to a smaller cowherd). But with the turmoil of Russia and Ukraine and cost of gains becoming harder to pencil, most are letting cattle trade and want to see more certainty before they buy again. At Oklahoma National Stockyards in Oklahoma City, Oklahoma, compared to last week on a run of 10,627 head, feeder steers traded $4.00 to $6.00 softer and feeder heifers traded $5.00 to $10.00 lower. Steer calves sold $4.00 to $6.00 lower and heifer calves traded $6.00 to $9.00 lower. Along with the spike in grain prices, the rising cost of fuel is also affecting producers' bottom line as delivery costs become more burdensome. The CME Feeder Cattle Index 3/8/2022: down $1.26.
LEAN HOGS:
Even the seemingly untouchable rally of the lean hog complex came to a screeching halt when war flashed its face. But as the market appraises this week's environment, traders leaped into Tuesday ready to hit the ground running. April lean hogs closed $2.65 higher at $102.92, June lean hogs closed $3.67 higher at $114.67 and July lean hogs closed $3.97 higher at $113.82. With packers aggressively chasing the cash hog market, the futures complex found enough fundamental support and didn't deem the futures market too dangerous -- so prices jumped. Pork cutout values closed lower with minor losses in all cuts except the rib, which closed $5.92 higher. Pork cutouts total 297.87 loads with 272.92 loads of pork cuts and 24.95 loads of select. Pork cutout values: down $1.25, $105.40. Tuesday's slaughter is estimated at 480,000 head -- 2,000 head less than a week ago and 6,000 head less than a year ago. Monday's hog slaughter was revised to 467,000 head -- 12,000 head less than what was originally stated. The CME Lean Hog Index 3/4/2022: down $0.29, $99.28.
WEDNESDAY'S CASH HOG CALL: Steady. It's a tough market to call, given that supplies of market-ready hogs are incredibly thin. But pork cutout value did close lower, so you can see how packers could sway either way in Wednesday's market. Wednesday's WASDE report should give more insight into how the world sits with needing pork, which will likely influence the market's nearby trajectory.
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