GENERAL COMMENTS
Both the live cattle and feeder cattle markets were able to round out Monday's trade fully higher, but the lean hog complex wasn't as fortunate as the market's support grew weary as the day traded on. Hog prices closed lower on the Daily Direct Afternoon Hog Report, down $0.28 with a weighted average of $70.62 on 7,464 head. March corn is down 10 cents per bushel and March soybean meal is down $1.80. The Dow Jones Industrial Average is up 217.75 points.
LIVE CATTLE:
The live cattle contracts traded higher throughout Monday's market as the complex rallied on thanks to cheaper corn prices and thanks to Friday's neutral to somewhat bullish Cattle on Feed report. April live cattle closed $0.62 higher at $160.55, June live cattle closed $0.72 higher at $157.30 and August live cattle closed $0.85 higher at $157.60. The spot April contract was able to close above its 40-day moving average, which may lend support to Tuesday's market and allow traders to feel confident in trading its market higher. The market is far from any resistance pressure and should have no problem trading higher, so long as fundamental support develops. Packers are expected to run aggressive processing speeds again this week, which will likely mean that they need to buy more cattle in the cash market. Trade won't likely develop until Thursday or Friday again this week. New showlists appear to be lower in all major feeding states. Monday's slaughter is estimated at 124,000 head, 1,000 head less than a week ago and 6,000 head less than a year ago.
Most of last week's cash cattle trade developed on Thursday and Friday. Northern cattle traded for $243 to $252, but mostly at $248 which is $3.00 lower than the previous week's weighted average. Southern live cattle traded for $154.50 to $156, but mostly at $155, which is $1.00 lower than the previous week's weighted average. Last week's negotiated cash cattle trade totaled 63,454 head. Of that, 83% (52,835 head) were committed for the nearby delivery, while the remaining 17% (10,619 head) were committee for the deferred delivery.
TUESDAY'S CATTLE CALL: Higher. Packers have successfully kept cash cattle prices at bay over the last two weeks but, moving forward, they'll need to secure more inventory if they're going to continue to run aggressive chain speeds. It's very likely that prices trade steady to $1.00 higher this week.
FEEDER CATTLE:
The feeder cattle complex closed fully higher as the market waded through Friday's Cattle on Feed report and is thankful to see fewer numbers of cattle on feed and lighter placements. In addition to rallying on Friday's COF report, the market was also supported by the day's weaker corn complex, which ended the day $0.08 to $0.10 softer. March feeders closed $2.30 higher at $183.27, April feeders closed $2.15 higher at $187.92 and May feeders closed $1.90 higher at $192.25. At Oklahoma National Stockyards in Oklahoma City, Oklahoma, compared to last week, and at their midsession point, feeder steers and heifers were trading steady to $4.00 lower. Steer calves were trading steady to $4.00 lower, but heifer calves were trading $12.00 to $14.00 lower, with instances of a much as $19.00 to $22.00 lower. Demand was light for calves. Rain and snow are expected in the area early this week, which could be part of the reason why calf prices were so much lower given that receiving feedlots don't want to run the risk of buying calves and then having them get risk with winter weather blowing in. The CME Feeder Cattle Index for Jan. 20: up $0.66, $177.69.
LEAN HOGS:
Even though the lean hog contracts ran out of support by the day's end and closed fully lower, the market surprisingly had some victories fundamentally. First, it was impressive that the market moved 7,463 head of cash hogs on a Monday. The cash hog market hasn't seen much action over the last few weeks, so seeing nearly 7,500 head trade on Monday must mean that packers are needing to restock their inventory. Second, pork cutout values closed higher. Steady gains were seen in all the cuts, expect the belly, which fell $3.98, but the cut with the biggest gain was the picnic, which added $4.99 to its price. February lean hogs closed $0.25 lower at $77.57, April lean hogs closed $0.27 lower at $85.45 and June lean hogs closed $0.17 lower at $102.35. Pork cutouts totaled 303.03 loads with 266.92 loads of pork cuts and 36.11 loads of trim. Pork cutout values: up $0.93, $80.92. Monday's slaughter is estimated at 489,000 head, 65,000 head more than a week ago and 37,000 head more than a year ago. The CME Lean Hog Index for Jan. 19: down $0.63, $72.65.
TUESDAY'S HOG CALL: Higher. Given that Monday's market saw a strong movement of cash hogs, it wouldn't be surprising to see Tuesday's and/or Wednesday's market trade slightly higher.
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