GENERAL COMMENTS
It was a mixed arena for the livestock complex Wednesday as the live cattle and feeder cattle contracts were able close mostly higher as the corn market regressed mildly, but the lean hog market lacked trader interest. Come Thursday, the cash cattle market is expected to see more support and could even see the bulk of the week's movement traded. Hog prices closed lower on the Daily Direct Afternoon Hog Report, down $0.18 with a weighted average of $71.21 on 9,834 head. March corn is down 4 cents per bushel and March soybean meal is down $3.10. The Dow Jones Industrial Average is down 613.89 points.
LIVE CATTLE:
The live cattle complex was able to close mostly higher with just a few of its nearby contracts closing below steady. As traders pace back and forth, trying to determine if this week's cash cattle market will trade steady or somewhat lower, the live cattle market is a less than eventful place to hang out. From a technical standpoint, the live cattle contracts have found some support around the market's 40-day moving average, but if traders are to keep the market above that price point, they'll need to see a little support from the market's fundamentals. February live cattle closed $0.20 lower at $156.80, April live cattle closed $0.12 higher at $160.22 and June live cattle closed $0.07 higher at $156.87. The cash cattle market didn't see much interest throughout Wednesday's trading hours. There was a bid offered in Nebraska at $248, but mostly feedlots let it sit idle, and packers weren't too worried about procuring cattle this early in the week as they were able to get cattle bought with time last week. Asking prices in the South remain at $158 plus, and in the North at $250 to $254.
Wednesday's slaughter is estimated at 120,000 head, 7,000 head less than a week ago and 4,000 head more than a year ago.
The Fed Cattle Exchange Auction held Wednesday reported 6 lots (4 lots in Texas and 2 lots in Colorado), totaling 979 head of cattle, none of which sold. Opening prices in Texas were at $155, high bids had a range of $155 to $155.50, but none of these bids met reserve prices of $156 to $158. Opening prices in Colorado were at $144, there were no bids, reserve prices were at $146.
Boxed beef prices closed lower: choice down $2.58 ($274.08) and select down $0.67 ($253.86) with a movement of 123 loads (79.77 loads of choice, 19.21 loads of select, 10.94 loads of trim and 13.35 loads of ground beef). The choice/select spread currently sits at $20.22.
THURSDAY'S CATTLE CALL: Steady to $1.00 lower. Given that packers were able to buy cattle with time last week, it's likely that they'll fight tooth and nail to let the market trade no better than steady.
FEEDER CATTLE:
With the corn complex closing $0.03 to $0.04 lower in its nearby contracts, and with the live cattle contracts posting a mild rally through Wednesday's end, the feeder cattle market closed higher with the deferred contracts seeing the most support. January feeders closed $0.15 lower at $179.50, March feeders closed $0.42 higher at $181.72 and April feeders closed $0.42 higher at $186.30. The nearby contracts have gained some technical support after plummeting well below both the 40-day and 100-day moving averages. Meanwhile, it was interesting to watch the deferred contracts gain over 100 pounds and continue to trade well above $200.00. It will be vital for the feeder cattle market's success that corn prices don't continue to trade higher and that the live cattle market regains its momentum. Demand throughout the countryside has been mixed as buyers are especially wanting feeders that will make grass cattle early this spring. At Winter's Livestock Auction in La Junta, Colorado, compared to last week, steers traded uneven, with steers under 550 pounds selling steady to $2.00 higher, but those weighing 550 to 700 pounds trading $3.00 to $5.00 lower and steers over 700 pounds traded steady to $2.00 higher. Heifers weighing 300 to 400 pounds traded $5.00 lower, heifers weighing 400 to 600 pounds sold steady to $3.00 higher and heifers over 600 pounds sold steady to $3.00 lower. Slaughter cows traded steady to $2.00 higher and slaughter bulls sold steady. Feeder cattle supply over 600 pounds was 52%. The CME Feeder Cattle Index for Jan. 17: down $1.96, $179.09.
LEAN HOGS:
The lean hog complex may not have been able to keep its momentum in a technical sense, as all of its contracts fell between 112 and 200 points, but on the fundamental side of the market, there were some minor victories conquered before the day's end. Not only did the lean hog market see another big volume of pork sold, but pork cutout values actually closed higher too. The carcass value was able to close $0.45 higher as the rib jumped $3.69 higher, the ham closed $2.58 higher, bellies gained $1.93 and the loin gained $1.39, leaving just the butt and picnic with losses. The cash market closes lower but packers did buy nearly 10,000 head which shows modest improvement in the cash market too. February lean hogs closed $1.12 lower at $77.32, April lean hogs closed $1.92 lower at $86.20 and June lean hogs closed $1.97 lower at $103.40. Pork cutouts totaled 388.14 loads with 346.94 loads of pork cuts and 41.20 loads of trim. Pork cutout values: up $0.45, $77.89. Wednesday's slaughter is estimated at 487,000 head, 3,000 head less than a week ago and 26,000 head more than a year ago. The CME Lean Hog Index for Jan. 16: down $0.16, $74.18.
THURSDAY'S HOG CALL: Steady. It's a coin toss as to what way the cash hog market will land come Thursday as the market could easily trade steady to somewhat higher, or just as easily trade lower. It really depends on how packers are sitting with supplies and how they feel about demand in the near term.
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