GENERAL COMMENTS:
Coming in like a breath of fresh spring air, Wednesday's WASDE report helped the market realize fundamentals are still critical market components and war isn't the only thing the complex should trade off. Wednesday's WASDE report shared higher quarterly price projections for both beef and hogs, which is especially helpful to feedlots' morale as packers would like them to think there's no chance prices could get stronger. May corn is down 10 3/4 cents per bushel and May soybean meal is up $10.20. The Dow Jones Industrial Average is up 698.22 points and NASDAQ is up 391.10 points.
LIVE CATTLE:
The live cattle contracts have stalled out Wednesday as traders need something supportive to help move the market higher, But with the cash sector continuing to veer lower, traders are coming up empty handed. April live cattle are down $0.85 at $138.20, June live cattle are down $1.27 at $134.17 and August live cattle are down $0.97 at $135.47. There are a few scattered bids being offered in Nebraska at $220 dressed, which would be steady with the week's trend. And a handful of cattle have sold in Kansas at $138, which is steady with the week's $2.00 decline. Asking prices for cattle left on showlists remain at $140 live in the South and $222-plus for cattle in the North.
If you're needing a shot of encouragement, look at Wednesday's WASDE report. While the markets continue to trade doggishly because of a war-fear-based mindset, Wednesday's WASDE report focused on the market's fundamentals and shared some positive light. Beef production increased by 195 million pounds from last month's WASDE report as slaughter speeds run more aggressively and demand continues to hold strong. Where the WASDE report really surprised me was in the quarterly steer price projections. From last month, the quarterly price projections changed by the following: first quarter steer prices gained $1.00 to average $140.00; second quarter steer prices gained $3.00 to average $139.00; third quarter steer prices gained $1.00 to average $136.00; and fourth quarter steer prices gained $2.00 to average $142.00. Determining whether or not these prices truly reflect what the market will do is challenging. If war wasn't a token of volatility swaying the market, then I'd say by all means these prices are completely attainable. And there's the potential the market even rallies beyond those price points. But with war being a component of the market, the futures complex is likely to stay incredibly volatile, which never bodes positively for the cash cattle market. Nevertheless, the fact that supplies of cattle are going to become incredibly thin in the third quarter and throughout the rest of the year bodes well for producers and should help push prices higher amid strong consumer demand. Beef imports increased by 50 million pounds and beef exports increased by 30 million pounds.
The Fed Cattle Exchange Auction listed a total of 1,830 head (Texas 1,175 head; California 277 head; Iowa 230 head; Nebraska 148 head), all of which were listed as unsold, as they did not meet the reserve prices, that ranged from $139 to $141. Opening prices were at $137, high bids ranged from $137 to $140.25.
Boxed beef prices are mixed: choice up $0.35 ($252.79) and select down $0.46 ($244.48) with a choice/select spread of $8.31 and a movement of 104 loads (56.03 loads of choice, 16.68 loads of select, zero loads of trim and 31.00 loads of ground beef).
FEEDER CATTLE:
The nearby feeder cattle contracts of March and April are trading higher, but the market doesn't feel confident stepping out and trading too much higher as the corn market is lower for the time being, but we know how quickly that can change. March feeder cattle are up $0.10 at $154.12, April feeder cattle are up $0.22 at $160.55 and May feeders are down $0.15 at $166.15. This time of cautious, two-steps-forward/one-step-back type of trade is likely to continue until the war's volatility is completely gone from the market. The fundamental side of the market hasn't been very supportive this week for feeders either as both feeder cattle and calves sell cheaper this week in sale barns. Buyers look at the market's hesitant tone and can't justify signing up for too much more risk when inflation is pinching them from every angle and interest rates are expected to rise.
LEAN HOGS:
Wednesday's lean hog complex is stalling out as the market longs for trader interest but comes up short. April lean hogs are down $1.67 at $101.25, June lean hogs are down $1.25 at $106.97 and July lean hogs are down $1.02 at $112.80. The cash hog market is showing incredible interest as cash prices were reported $8.06 higher and based off what Wednesday's WASDE report had to share, prices are expected to be the strongest in the second quarter. If pork cutout values can hold steady, that will bode better for the market than if prices continue to sway lower.
Wednesday's WASDE report shared that pork production fell by 65 million pounds from last month as processing speeds lag behind normal standards, and carcass weights have also gotten lighter. 2022 quarterly price projections shot higher from a month ago as supplies of hogs continues to remain thin. The first quarter barrows and gilt price projection gained $3.00 to average $66.00, the second quarter gained $8.00 to average $78.00, the third quarter gained $8.00 to average $75.00 and the fourth quarter gained $5.00 to average $65.00. Pork imports grew by 75 million pounds and exports fell by 80 million pounds as foreign pork prices offer buyers a more affordable option.
The projected CME Lean Hog Index for 3/8/2022 is up $0.26 at $99.26, and the actual index for 3/7/2022 is down $0.28 at $99.00. Hog prices are higher on the Daily Direct Morning Hog Report, up $8.06 with a weighted average of $101.98, ranging from $94.00 to $112.00 on 4,265 head and a five-day rolling average of $96.49. Pork cutouts total 129.84 loads with 117.17 loads of pork cuts and 12.67 loads of trim. Pork cutout values: up $0.79, $106.19.
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