GENERAL COMMENTS:
Wednesday has come as a celebrating day for the lean hog complex as the market charges higher and makes new contract highs in many of the 2022 months. But for the cattle complex, the pressure continues to mount. The cash cattle market has seen some cattle trade now both in the North and South and largely for steady prices with last week. May corn is up 6 1/2 cents per bushel and May soybean meal is up $9.00. The Dow Jones Industrial Average is down 285.17 points and NASDAQ is down 4.16 points.
LIVE CATTLE:
Packers are playing hard ball this week and, without any support from the futures market, feedlots are feeling the pressure. There's been a light to moderate movement of cattle in the South at $138, which is steady with last week's business; in the North some deals for $221 to $223, which is steady to weak compared to last week's averages. Most of the cattle that are trading in the North are being purchased with a delivery date for the week of April 4. Feedlots know a plethora of market-ready supplies linger in the not-too-far-off distance and are caught between a rock and hard spot. They want to hold out and get higher prices for their cattle, but with how open of a winter it's been, here soon packers will be able to pull on calf-fed fats as they're ahead of schedule. April live cattle are down $0.30 at $139.12, June live cattle are up $0.05 at $135.75 and August live cattle are down $0.02 at $136.90.
The Fed Cattle Exchange Auction listed a total of 3,634 head (Iowa 1,325 head, Texas 1,215, Nebraska 480 head, Kansas 344 head, California 270 head), of which none actually sold; 1,060 were scratched from the auction; and 2,574 head were listed as unsold, as they did not meet the reserve prices, that ranged from $138 to $144. Opening prices were $137; high bids ranged from $137 to $138.
Boxed beef prices are higher: choice up $1.39 ($261.36) and select up $1.20 ($253.09) with a movement of 58 loads (42.71 loads of choice, 8.96 loads of select, zero loads of trim and 6.08 loads of ground beef).
FEEDER CATTLE:
The back-and-forth saga between feeder cattle and corn continues and, thus far into Wednesday's trade, corn is leading with the upper hand. As corn and soybean prices edge higher, the feeder cattle contracts are pressured to trade lower as the live cattle complex lends no support. April feeders are up $0.10 at $160.67, May feeders are down $0.25 at $165.25 and August feeders are down $0.37 at $178.47. Demand in sales will likely hinge on buyers' resources of feed. If they have feed already bought and committed for the cattle they're buying now, then opportunity lingers. But amid uncertain grain markets and a summer that could be plagued with drought again, there's a lot of unknowns about cattle buyers' bottom lines.
LEAN HOGS:
Traders were looking for fundamental support and boy did they get it! Tuesday's close was supportive enough with both pork cutouts and cash prices closing over $5.00 higher, but then fast forward to Wednesday's early trade and cash prices are higher again and on a hefty volume of 8,200 head. Helping to add fuel to the fire is that pork cutouts are higher at midday and, while midday prices can be fickle, the stronger tone is giving traders even more confidence. But now that the contracts have taken out old highs and pressed onward into new and foreign trading ground, the questions change. How high is high enough amid short supplies and robust demand? Even if demand is good, how will inflation treat pork cuts long term? How will the complex fare over time? There's a lot to still be answered about the market, but the tone is extremely bullish for the time being and it's likely next week's Quarterly Hogs and Pigs report adds more gusto to the bullish momentum.
The projected CME Lean Hog Index for 3/22/2022 is down $0.56 at $101.21 and the actual index for 3/21/2022 is down $0.03 at $101.77. Hog prices are higher on the Daily Direct Morning Hog Report, up $5.72 with a weighted average of $106.17, ranging from $98.00 to $112.00 on 8,200 head and a five-day rolling average of $103.43. Pork cutouts total 191.88 loads with 165.84 loads of pork cuts and 26.04 loads of trim. Pork cutout values: up $3.96. $110.67.
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