GENERAL COMMENTS
Around the noon hour Tuesday, it looked like the livestock complex was in for a lower day, but as the corn market corrected and closed mostly steady, the cattle contracts were able to front a mostly higher position ahead of the day's end. Hog prices closed lower on the Daily Direct Afternoon Hog Report, down $0.57 with a weighted average of $73.31 on 10,138 head. March corn is up 2 1/4 cents per bushel and March soybean meal is down $1.40. The Dow Jones Industrial Average is up 186.45 points.
LIVE CATTLE:
The live cattle market may have closed a mere 5 to 42 points higher ahead of Tuesday's end but given that the complex was trading mostly lower at noon, a higher end is a win! The market was worried about the pressure seeping into its complex from the onset of higher corn prices, but as time progressed, corn prices corrected and closed mostly steady. February live cattle closed steady at $157.75, April live cattle closed $0.12 higher at $161.65 and June live cattle closed $0.05 higher at $157.50. The cash cattle market didn't see any trade develop and the market won't likely see any interest from packers until Thursday or Friday. Asking prices in the South are noted at $158 to $159 and are still unestablished in the North. Boxed beef prices did close lower which could weigh negatively on the market if this trend continues.
Tuesday's slaughter is estimated at 127,000 head, 1,000 head more than a week ago and 13,000 head more than a year ago.
Boxed beef prices closed lower: choice down $1.61 ($284.53) and select down $1.27 ($258.33) with a movement of 128 loads (68.20 loads of choice, 17.77 loads of select, 6.13 loads of trim and 35.42 loads of ground beef). The choice/select spread sits at $26.20.
WEDNESDAY'S CATTLE CALL: Higher. It's unlikely that business begins to develop on Wednesday as feedlots are determined to move the cash cattle market higher again this week, but when trade does develop, $1.00 to $2.00 higher isn't out of the market's ability.
FEEDER CATTLE:
It was a "duke it out" kind of day for the feeder cattle and corn market as the contracts went rounds Tuesday. Early in the day, the corn complex was trading as much as $0.08 to $0.10 higher, which cratered the feeder cattle market's morale. But as time passed by, the corn complex cooled off and ultimately closed steady to $0.02 higher in its nearby contracts, which wasn't enough pressure to keep the feeder cattle contracts at bay. January feeders closed $0.67 higher at $184.30, March feeders closed $0.20 higher at $186.50 and April feeders closed $0.10 lower at $190.52. Demand was still incredibly strong throughout the countryside as buyers are keenly aware that profitable breakevens in this market environment is tough, but if they want to feed cattle, they have to get them bought as there simply isn't as many feeders to be had as in years past. At Joplin Regional Stockyards in Carthage, Missouri, compared to last week, feeder steers traded $2.00 to $6.00 higher and feeder heifers traded steady to $3.00 higher. There was a stick out sale of 43 head of steers weighing 423 pounds, which traded at $248.00. Feeder cattle supply over 600 pounds was 50%. The CME Feeder Cattle Index for Jan. 9: up $0.64, $181.01.
LEAN HOGS:
Unfortunately, the lean hog complex wasn't able to bounce back like the feeder cattle and live cattle markets did before closing. The market received little support from the cash market and pork cutout values, which ultimately left merely no other option but to let the contracts close lower. Demand continues to be a top concern for the lean hog market and hopefully Thursday's WASDE report helps clarify if and when the market should expect demand to increase. Until that point in time, the lean hog market could be in for a rough season. February lean hogs closed $1.00 lower at $79.80, April lean hogs closed $1.27 lower at $89.52 and June lean hogs closed $1.15 lower at $105.30. Pork cutouts totaled 435.95 loads with 398.63 loads of pork cuts and 37.32 loads of trim. Pork cutout values: down $0.62, $81.73. Tuesday's slaughter is estimated at 467,000 head, 34,000 head more than a week ago and 14,000 head more than a year ago. Monday's hog slaughter was revised to 485,000 head. The CME Lean Hog Index for Jan. 6: down $0.70, $76.79.
WEDNESDAY'S HOG CALL: Lower. Packers did buy upwards of 10,138 head in Tuesday's cash market, and I'm led to believe that they'll procure another sizeable movement of hogs come Wednesday, but with the market environment being what it is, I don't believe they need the hogs to the point that they'll move the cash market higher.
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