GENERAL COMMENTS
The cattle complex faced minor pushback from traders as they desire to see better support from the cash market and boxed beef prices, and hope that the corn complex isn't going to keep with its recent rally. The lean hog complex was elated to see over 400 loads moved Tuesday afternoon and was thankful that traders finally found some technical support to help drive the contracts higher. Hog prices closed higher on the Daily Direct Afternoon Hog Report, up $0.22 with a weighted average of $71.39 on 4,535 head. March corn is up 10 1/4 cents per bushel and March soybean meal is up $4.90. The Dow Jones Industrial Average is down 391.76 points.
LIVE CATTLE:
The live cattle complex drifted lower throughout Tuesday's market as traders long for fundamental support. The combination of weaker boxed beef prices, cash cattle selling steady to somewhat lower last week and packers being able to buy 22,972 head for the deferred delivery doesn't leave traders at ease. If the complex is to break out of the trading range, which has developed over the last week and half, traders are going to need to see strong support fundamentally. February live cattle closed $0.72 lower at $157.00, April live cattle closed $0.80 lower at $160.10 and June live cattle closed $0.27 lower at $156.80. The cash cattle market didn't see any business develop and it won't likely until Thursday or Friday of this week. Asking prices in the South are noted at $158 and are still unestablished in the North.
Tuesday's slaughter is estimated at 128,000 head, 1,000 head more than a week ago and 10,000 head more than a year ago.
Last week's negotiated cash cattle trade took place on Thursday and Friday of last week. Northern dressed sales were marked at $248 to $254, but mostly $250 to $252, which is steady to $2.00 lower than the previous week's weighted average. Southern live cattle trade ranged from $155 to $157 but was mostly marked at $156, which is $1.00 lower than the previous week's weighted average.
Last week's negotiated cash cattle trade totaled 78,199 head. Of that, 71% (55,227 head) were committed for the nearby delivery, while the remaining 29% (22,972 head) were committed for the deferred delivery.
Boxed beef prices closed lower: choice down $0.77 ($276.66) and select down $2.02 ($254.53) with a movement of 133 loads (71.26 loads of choice, 16.03 loads of select, 11.25 loads of trim and 33.98 loads of ground beef). The choice/select spread sits at $22.13.
WEDNESDAY'S CATTLE CALL: Steady. Given that packers have more cattle committed to their deferred delivery option, it's going to be hard for feedlots to push the market higher.
FEEDER CATTLE:
With the nearby corn contracts closing $0.05 to $0.10 higher and the live cattle complex lending no support, it comes a little surprise to see that the feeder cattle market closed lower by Tuesday's end. The jump in corn prices largely comes as farmers expect to see a winter storm pass through Western Nebraska and across much of the Midwest Tuesday afternoon through Thursday. With farmers needing the moisture just like ranchers, any form of precipitation is warmly welcomed and enough of a driving force to send corn prices higher. Unfortunately, while ranchers too want moisture, they can't stomach the onset of higher feed prices and expect to be profitable, which is why the feeder cattle contracts closed lower. The combination of higher corn amid lower live cattle prices isn't a winning equation for feeders but, nonetheless, it's what the day presented. January feeders closed $1.60 lower at $179.65, March feeders closed $1.57 lower at $181.30 and April feeders closed $1.17 lower at $185.87. At Ogallala Livestock Auction in Ogallala, Nebraska, compared to last week, and on a run of 4,760 head, grass type steers sold $7.00 to $12.00 higher. Most lots of heifers under 600 pounds traded $2.00 to $8.00 higher, with heifers over 600 pounds selling steady to somewhat weaker. Feeder cattle supply over 600 pounds was 34%. The CME Feeder Cattle Index for Jan. 16: down $0.63, $181.05.
LEAN HOGS:
Tuesday's market came with a sign of relief for the lean hog market as not only did the market see slightly higher cash prices, but it also moved a huge volume of pork cutouts. Yes, pork cutout values did close $3.15 lower, but given that the market saw 419.92 loads moved, it helps make the onset of lower prices more palatable when big volumes of product are sold. February lean hogs closed $0.20 lower at $78.45, April lean hogs closed $0.85 higher at $88.12 and June lean hogs closed $1.50 higher at $105.37. It will be especially interesting to see what cash prices do on Wednesday as packers have been extremely absent buyers in the cash market, but if product can continue to move as aggressively as it did Tuesday afternoon, packers may have to show a little bit more interest in the cash complex. Pork cutouts totaled 419.92 loads with 385.88 loads of pork cuts and 34.04 loads of trim. Pork cutout values: down $3.15, $77.44. Tuesday's slaughter is estimated at 487,000 head, 29,000 head more than a week ago and 19,000 head more than a year ago. The CME Lean Hog Index for Jan. 13: down $0.49, $74.34.
WEDNESDAY'S HOG CALL: Higher. With the promise of a stronger outlook throughout the futures complex, and the big movement of product sold Tuesday afternoon, the cash market could be slightly higher on Wednesday.
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