GENERAL COMMENTS:
Steep double-digit losses in the feed markets have translated into higher futures prices for feeder cattle and live cattle during Tuesday's trading session, but the lean hog market is behaving more like the rest of the commodity sector with risk-off losses after peace talks between Russia and Ukraine seemed productive. May corn is down 25 cents per bushel and May soybean meal is down $10.50 per ton. The Dow Jones Industrial Average is up 155 points and NASDAQ is up 138 points.
LIVE CATTLE:
Some live cattle futures contracts are showing triple-digit gains midway through the Tuesday trading session, although relatively quiet trade volumes belie the idea that there has been a widespread change in outlook for this market specifically and not just for global ag trade more generally. The April futures contract is up $0.675 at $140.975, the June contract is up $1.55 at $138.325, and the August contract is up $1.125 at $138.425. Cash cattle bids and asking prices have yet to be established for the week, but will follow last week's numbers at mostly $138 (live) in the South and $221 (dressed) in the North. The near-term bearish supply implications from Friday's Cattle on Feed report may counterbalance the bullish mood from the futures trade so far this week. Tuesday's cattle slaughter is projected at 124,000 head, right in line with week-ago numbers and 6,000 more than year-ago numbers.
Boxed beef prices are mixed: choice up $0.87 Tuesday morning ($264.74) and select down $1.42 ($254.90) with a movement of only 47 total loads (30.57 loads of choice, 11.13 loads of select, 0 loads of trim, and 5.39 loads of ground beef).
FEEDER CATTLE:
On the list of people who benefit when there's hope for a more peaceful Ukraine, add American cow-calf operators, who may get more for their calves if feed prices aren't so dramatically high. The March feeder cattle contract is up $0.625 at $156.725, the April is up $3.125 at $163.95, and the May is up $4.175 at $169.25. Although global grain shipments out of the Black Sea region are still far from risk-free, the wheat, corn, and soybean markets are all pulling back Tuesday while traders anticipate slightly less chance of a nuclear World War III. Nearby corn futures, down more than 25 cents per bushel, are still well above $7.00. Cheaper feed costs would leave more money in cattle feeders' pockets to spend on the tight supply of fall calves reaching the market in the next few months, so today's classic corn-down/feeder-cattle-up trading pattern is justified.
LEAN HOGS:
After peace talks between Russia and Ukraine Tuesday, there seems to be slightly less threat of years of disrupted global commodity trade and many markets are shedding some of their recently gained risk premium. The April lean hog futures contract is down $1.60 at $105.975, the May is down $0.325 at $118.975, and the June is down $1.45 at $124.60. This demonstrates the hog market's status as a signal of global trade and economic health, alongside crude oil's $3 losses (now down to "only" $100 per barrel) and the stock market's eager recovery. However, one trading session influenced by outside markets will not seriously alter the bullish trends in lean hogs and pork, especially as packers eventually look toward summer demand. There are 478,000 head projected to be slaughtered Tuesday, which is right in line with week-ago numbers but down 10,000 from a year ago.
The CME Lean Hog Index from 3/24 was 102.25 (up $0.75) and the projected index for 3/25 is 102.93 (up $0.68). Pork cutouts Tuesday morning total 168.79 loads with 152.25 loads of pork cuts and 16.54 loads of trim. Pork cutout values: up $2.19, to $109.60.
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