GENERAL COMMENTS:
Despite Russia's pledge to reduce hostilities near Kyiv in Ukraine, it turns out they're still shelling the country, and the global feed grains market is still in trouble without Black Sea exports to rely on. The classic corn-up/feeder-cattle-down trading pattern is therefore reversing some of the livestock sector's optimism from Tuesday. Nearby lean hog contracts are lower Wednesday morning in anticipation of Wednesday afternoon's quarterly Hogs and Pigs report, which may show a larger year-over-year pig crop coming to the market. May corn is up 16 1/2 cents per bushel and May soybean meal is up $9.90 per ton. The Dow Jones Industrial Average is down 62 points and NASDAQ is down 94 points.
LIVE CATTLE:
Live cattle futures trade has spent Wednesday morning consistently lower, with a relatively high volume of trading activity before the afternoon even arrives. The April futures contract is down $0.725 at $140.175, the June contract is down $0.475 at $138.00, and the August contract is unchanged at $138.525. Longer-term, however, the trends on these charts continue to point upward, although days like today push the April chart, for instance, farther away from its February high of $148.70. Wednesday's cattle slaughter is projected at 124,000 head, which is 1,000 fewer than week-ago numbers but 6,000 more than year-ago numbers. At midday, the cash cattle market saw a light live trade in parts of the South at $138, fully steady with the bulk of last week's business. So far, the North remains quiet. Some asking prices remain firm around $140 to $142 in the South and $223 to $224 in the North.
The Fed Cattle Exchange Auction today listed a total of 2,526 head (Texas 1,401 head; Nebraska 720 head; Iowa 150 head; California 135 head; Kansas 120 head), of which none actually sold as they did not meet the reserve prices, that ranged from $139 to $144. Opening prices ranged from $137 to $138, high bids ranged from $137 to $138.50.
Boxed beef prices are higher: choice up $2.80 Wednesday morning ($267.30) and select up $2.09 ($256.93) with a movement of 47 total loads (35.96 loads of choice, 4.27 loads of select, 0 loads of trim, and 6.97 loads of ground beef).
FEEDER CATTLE:
Geopolitics giveth and geopolitics taketh away this week, with the outside markets sending feeder cattle futures up $4 one day and back down $1 the next. The March feeder cattle contract is down $0.60 at $156.10, the April is down $0.875 at $163.475, and the May is down $0.825 at $168.575. Sometimes, we might wonder why there's an independent futures contract for feeder cattle at all, if it's only ever going to do the opposite of whatever corn is doing on any given day. However, feeder cattle have held on to their Tuesday gains better than corn has persisted with its drop. Nearby corn futures have, at certain points during the trading session, totally recovered all of Tuesday's losses and are once again above $7.40 per bushel. But the April and May feeder cattle contracts have only given back about half of Tuesday's volatile gains and could even be said to showing upward trends on their charts.
LEAN HOGS:
Spread trading in lean hog futures contracts Wednesday morning may be an indication of traders' expectations for the quarterly Hogs and Pigs report, which will be released by the USDA this afternoon. Nearby contracts are lower in anticipation of seeing a larger Dec-Feb pig crop, while deferred contracts may be higher in anticipation seeing reduced farrowing intentions and smaller breeding herd size. The April lean hog futures contract is down $1.15 at $104.90, the May is down $0.425 at $118.35, and the June is up $0.55 at $125.175. Ultimately, once the inventory numbers are digested by the market, attention may turn once again to the spring and summer global demand outlook, and another push toward fresh contract highs could be in store as the week presses on. Wednesday's hog slaughter is projected at 478,000 head, which is right in line with week-ago numbers but down 17,000 from a year ago.
The CME Lean Hog Index from 3/28 was 103.56 (up $0.63) and the projected index for 3/29 is 103.66 (up $0.10). Pork cutouts Wednesday morning total 150.86 loads with 133.15 loads of pork cuts and 17.7 loads of trim. Pork cutout values: down $0.96, to $102.98.
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