GENERAL COMMENTS:
Wednesday's trade was a mixed bag. Feeders got to rally upon the grain market's regression, but the cash cattle market traded $2.00 lower and lean hogs cascaded lower too. Hog prices closed higher on the National Direct Afternoon Hog Report, up $3.72 with a weighted average of $98.25 on 8,705 head. May corn is down 3/4 cent per bushel and May soybean meal is down $6.30. The Dow Jones Industrial Average is up 596.40 points and NASDAQ is up 219.56 points.
LIVE CATTLE:
To be frank, it was a depressing day for the live cattle market. Nearby futures closed lower, cash cattle traded lower and the psychological realm of the market took a beating. It's one thing to have a back-and-forth trade war between packers and feeders; that's how their world goes 'round. But it's another to see the beloved April contract fall to lows not seen since January during the first week of March. The war in Ukraine has added pressure and blanketed the market with a leery and uncertain tone and until packers are forced to pay more for cattle, they'll keep playing this game. Buy a few cattle here, buy a few cattle there, commit these with time, ensuring that next week their necessity to support the spot cash cattle market is even less than this week. Feedlots aren't hung out to dry with no other options. But it will take a shift in their marketing strategy and morale to regain some leverage. Thankfully carcass weights aren't troubling, showlists favor feedlots' position and processing speeds are running at a quick pace. If feedlots didn't allow for packers to buy any cattle with time for the next two weeks, packers would have to get aggressive in the cash market and would end up paying more for cattle as their need would be significant. April live cattle closed $0.42 lower at $140.10, June live cattle closed $0.55 lower at $136.50 and August live cattle closed $0.37 lower at $136.70.
A light trade was reported in most areas with Southern live deals marked at $140, $2 lower than last week. Northern dressed trade was at $224 to $228, mostly $225, also $2 lower than last week's weighted average basis Nebraska (the high end if these dressed sales were to a Regional). Wednesday's slaughter is estimated at 123,000 head -- steady with a week ago and 2,000 head more than a year ago.
The Fed Cattle Exchange Auction on Wednesday listed a total of 1,950 head, of which 35 actually sold, none were scratched from the auction and 1,915 head were listed as unsold, as they did not meet the reserve prices, which ranged from $132 to $145. Opening prices ranged from $125 to $140, high bids ranged from $132 to $142. The state-by-state breakdown looks like this: Texas 1,608 total head, all of which went unsold; Kansas 192 total head, all of which went unsold; Iowa 115 total head, all of which went unsold; Colorado 35 total head, all of which sold at $132.
Boxed beef prices closed lower: choice down $0.96 ($255.72) and select down $0.18 ($251.34) with a movement of 145 loads (92.69 loads of choice, 18.35 loads of select, 7.42 loads of trim and 26.42 loads of ground beef).
THURSDAY'S CASH CATTLE CALL: Steady with the week. Given that cattle have traded in both regions, prices will likely hold steady with the week's trend.
FEEDER CATTLE:
Wednesday treated the feeder cattle complex much kinder than the live cattle contracts, but we aren't free and clear from pressure just yet. Until the war ceases in Ukraine, it's hard telling what will happen to their grain supplies and how that will affect our markets -- grain and feeder cattle. The market's downward spiral was fast and furious over the past week and both the March and April feeder cattle contracts sit at support planes not last touched since November 2021. So, when Wednesday's market shot $2.00 higher -- you're darn right we took it. March feeders closed $2.02 higher at $158.30, April feeders closed $3.20 higher at $163.00 and May feeders closed $2.75 higher at $168.00. At Kingsville Livestock Auction in Kingsville, Missouri, compared to last week on a run of 2,306 head steer calves under 600 pounds traded $5.00 to $10.00 higher, but those over 600 pounds traded steady. Heifer calves under 550 pounds traded firm to $5.00 higher and the higher weights sold steady to $3.00 lower. Slaughter cows sold $2.00 to $3.00 higher. The CME Feeder Cattle Index 3/1/2022: down $0.42, $159.25.
LEAN HOGS:
The spot April contract closed mildly higher, but the rest of the lean hog complex drifted lower through Wednesday's close despite the day accomplishing an impressive slaughter and pork cutout values claiming mild profits. Still, the futures market traded mostly lower as the market has seemed to run out of support after a nearly unbelievable rally. But as the futures market takes its turn trading red, it's hard to think that this weaker tone will be the attitude of the market for long when we know fundamentally supplies of hogs are thin and when it comes to protein options, pork is a cost-friendly option. April lean hogs closed $0.10 higher at $106.30, June lean hogs closed $0.32 lower at $116.45 and July lean hogs closed $0.42 lower at $115.60. Pork cutouts total 242.57 loads with 203.70 loads of pork cuts and 38.87 loads of trim. Pork cutout values: up $0.23, $108.42. Wednesday's slaughter is estimated at 481,000 head -- 8,000 head more than a week ago and 15,000 head less than a year ago. The CME Lean Hog Index 2/28/2022: up $0.57, $99.66.
THURSDAY'S CASH HOG CALL: Lower. Packers were aggressive in Wednesday's cash hog market, which means they've been aggressive in the market twice this week. On one hand, they could be aggressive again Thursday as they've ran aggressive processing speeds, But it's more likely they sit back and let the market drift into the weekend as they can't deplete the market as that would only drive up the cost of hogs for the weeks to come.
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