Tuesday Closing Livestock Market Update - Cattle Inventory Report Didn't Disappoint

GENERAL COMMENTS

The market's main focus throughout all of Tuesday's trading hours was the Cattle Inventory Report and it came out extremely bullish. Come Wednesday both the live cattle and feeder cattle contracts are expected to trade significantly higher. Hog prices closed higher on the Daily Direct Afternoon Hog Report, up $0.77 with a weighted average of $70.85 on 7,747 head. March corn is down 4 cents per bushel and March soybean meal is down $4.50. The Dow Jones Industrial Average is up 324.56 points.

LIVE CATTLE:

Tuesday's live cattle market may have closed mixed leading up to this afternoon's Cattle Inventory report, but I doubt that will be the case come Wednesday afternoon. Tuesday's cattle inventory report shared that currently, the US beef cowherd sits at 28.9 million head -- which is the fewest number of beef cows ever recorded. This information alone is enough to send the live cattle and feeder cattle markets rallying, let alone the fact that it's unlikely that liquidation has fully subsided. February live cattle closed $0.10 higher at $158.85, April live cattle closed $0.32 lower at $163.02 and June live cattle closed $0.32 lower at $159.15. The cash cattle market didn't see any trade and won't likely see any trade develop until Thursday or Friday. Asking prices in the South are noted at $158 plus but are still undeveloped in the North. February live cattle closed $0.10 higher at $158.85, April live cattle closed $0.32 lower at $163.02 and June live cattle closed $0.32 lower at $159.15. 

Tuesday's slaughter totaled 127,000 head, even with last week, but 4,000 greater than a year ago.

Boxed beef prices closed mixed: choice down $2.01 ($266.09) and select up $1.40 ($252.92) with a movement of 118 loads (82.68 loads of choice, 10.62 loads of select, 15.43 loads of trim and 9.58 loads of ground beef).

WEDNESDAY'S CATTLE CALL: Higher. Given that packers have only meekly supported the cash market over the last month, it's likely that they'll need to buy more cattle this week to avoid becoming short bought.

FEEDER CATTLE:

The feeder cattle market couldn't contain its excitement for the afternoon's Cattle Inventory Report and closed anywhere from $0.92 to $2.22 higher. Yes, corn prices are still high along with all other inputs, but the feeder cattle market leaned on the fact that today's Inventory Report was going to be strong, and it isn't left disappointed as the report showed that the U.S. has the smallest beef cowherd ever, and that the calf crop is down by 2% as well. Needless to say, Wednesday will likely see starkly higher prices for the feeder cattle market as traders finally get the opportunity to trade the report's findings. March feeders closed $2.22 higher at $186.15, April feeders closed $1.77 higher at $190.05 and May feeders closed $1.25 higher at $193.97. At Russell Livestock Auction in Russell, Iowa compared to last week steers weighing 550 to 600 pounds sold $3.00 higher, while steers weighing 600 to 700 pounds traded $3.00 to $4.00 lower. Heifers sold steady to somewhat higher. Feeder cattle supply over 600 pounds was 57%. The CME feeder cattle index 1/30/2023: up $0.54, $180.42.

LEAN HOGS:

It wasn't a great day for the lean hog complex as the market saw very little technical interest from traders and saw mixed signals from the market's fundamentals. February lean hogs closed $0.27 lower at $74.87, April lean hogs closed $0.10 lower at $86.42 and June lean hogs closed $0.10 lower at $103.05. The market did see mild support in the cash sector as packers bought 7,747 head at slightly higher prices. It's likely that packers could show Wednesday's more interest again. Pork cutouts totaled 319.83 loads with 282.54 loads of pork cuts and 37.28 loads of trim. Pork cutout values: down $0.03, $80.25. Tuesday's slaughter is estimated at 483,000 head - 1,000 head more than a week ago and 5,000 head more than a year ago. Monday's hog slaughter was revised to 475,000 head. The CME lean hog index 1/27/2023: up $0.05, $72.71.

WEDNESDAY'S HOG CALL: Higher. Given that packers have only shown the market limited interest, they could be active in the cash market again on Wednesday.