GENERAL COMMENTS
The livestock complex closed mixed with both the live cattle and feeder cattle contracts closing higher, while the lean hog market drifted lower through the day's end. With the sharp decline in corn prices, the cattle sector rallied on the news, especially the feeder cattle contracts. Hog prices are unavailable on the Daily Direct Afternoon Hog Report due to packer submission issues. March corn is down 16 3/4 cents per bushel and March soybean meal is down $2.40. The Dow Jones Industrial Average is up 133.40 points.
LIVE CATTLE:
The live cattle complex was able to close higher as the market found support in Tuesday's softer close. The momentum that led the feeder cattle contracts higher seeped over into the live cattle market and helped pull its contracts slightly higher. The cash cattle market didn't see any trade develop throughout the day, which is what traders are really waiting for. Feedlots are expected to wait until late Thursday or even potentially Friday again this week as they want to trade cattle for more money. Asking prices in the South are noted at $158 to $159 but are still unestablished in the South. February live cattle closed $0.42 higher at $157.27, April live cattle closed $0.55 higher at $161.42 and June live cattle closed $0.52 higher at $157.35.
Wednesday's slaughter is estimated at 125,000 head, 3,000 head less than a week ago and 11,000 head more than a year ago.
Boxed beef prices closed mixed: choice down $4.05 ($282.89) and select up $1.77 ($256.40) with a movement of 138 loads (87.34 loads of choice, 22.26 loads of select, 11.51 loads of trim and 16.43 loads of ground beef). The choice/select spread sits at $26.49.
THURSDAY'S CATTLE CALL: Higher. Cash cattle will likely trade $1.00 to $2.00 higher again this week as packers want to ensure that they have enough cattle committed to be able to sell as much boxed beef as possible at these prices.
FEEDER CATTLE:
The spot March feeder cattle contract led the rest of the market higher as it broke out of the sideways trading range that the market has consistency been trading in and shot to levels not last tested since late August. The feeder cattle contracts were able to run higher as the corn complex floundered $0.12 to $0.16 lower as U.S. corn demand is in question with both Brazil and Ukraine offering their corn at a significant discount. Nevertheless, the sharp drop in corn prices was just the breath of fresh air that the feeder cattle market needed as configuring a profitable breakeven on feeder cattle continues to be incredibly challenging with cost of gains as lofty as they are. But as potential feeder cattle buyers see the cash cattle market gaining momentum week in and week out, and note the regression in corn prices, they could show up even more aggressively in sales later this week. January feeders closed $2.52 higher at $185.22, March feeders closed $3.45 higher at $188.22 and April feeders closed $2.92 higher at $191.70. At OKC West Livestock Auction in El Reno, Oklahoma, compared to their last sale in mid-December, feeder steers and heifers sold steady to $2.00 higher. Steer and heifer calves traded $12.00 to $15.00 higher. Feeder cattle supply over 600 pounds was 55%. The CME Feeder Cattle Index for Jan. 3: down $0.29, $180.73.
LEAN HOGS:
The lean hog complex didn't walk out of Wednesday's market with much to gloat about, as pork cutout values closed lower and the futures market continued to print red ink as traders are concerned about the lack of fundamental support. The one positive take away out of Wednesday's market was that, even though pork cutout values closed lower, packers were able to move a considerable amount of product, as they successfully noted 411.46 loads on the Wednesday afternoon report. Higher pork prices would help improve the market's morale, but getting product moved when prices are low can be equally as powerful. February lean hogs closed $1.00 lower at $84.07, April lean hogs closed $0.90 lower at $92.90 and June lean hogs closed $0.95 lower at $107.20. Pork cutouts totaled 411.46 loads with 351.58 loads of pork cuts and 59.88 loads of trim. Pork cutout values: down $0.17, $85.83. Wednesday's slaughter is estimated at 475,000 head, 9,000 head less than a week ago but 13,000 head more than a year ago. Tuesday's hog slaughter was revised to 433,000 head. The CME Lean Hog Index for Jan. 2: down $0.74, $79.45.
THURSDAY'S HOG CALL: Lower. Unfortunately, the cash hog market isn't seeing much interest and given that production speeds have been questionable this week, seeing a bump in cash prices isn't likely.
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