Monday Closing Livestock Market Update - Cattle Charge Higher

GENERAL COMMENTS

Both the live cattle and feeder cattle markets flourished throughout Monday's complex as the belief that 2023's cattle market is going to be incredibly strong has taken off after last week's bullish Cattle Inventory report. It will be especially interesting to see what the week's cash cattle market does as packers are short bought and feedlots are determined to move the market higher. Hog prices closed lower on the Daily Direct Afternoon Hog Report, down $0.31 with a weighted average of $72.34 on 4,585 head. March corn is up 1 1/2 cents per bushel and March soybean meal is down $7.50. The Dow Jones Industrial Average is down 40.14 points.

LIVE CATTLE:

Once again, the live cattle complex ran to a new contract high in its spot April contract as the market's strong bullish undertone has really come alive over the last week. February live cattle closed $0.55 higher at $160.82, April live cattle closed $0.35 higher at $164.47 and June live cattle closed $0.42 higher at $160.70. It's somewhat odd to see boxed beef prices higher at this point in the year as February is usually a tough month for boxed beef prices. And while the market will likely see some seasonal down pressure, the fact that supplies are limited, and that demand is strong, could keep prices elevated higher than in years when supply is abundant. When the cash cattle market trades this week, it will likely be for substantially higher prices as packers are short bought and will need to restock their inventory for upcoming kills. Monday's slaughter is estimated at 120,000 head, 1,000 head less than a week ago and 3,000 head less than a year ago. New showlists appear to be mixed, higher in Texas and Nebraska/Colorado, but slightly lower in Kansas.

Last week's negotiated cash cattle market waited to trade until Friday of last week, and at which point very few cattle sold. Northern cattle sold for mostly $248 to $251, mostly at $250 though which is $2.00 higher than the previous week's weighted average. Of the sparse cash cattle trade that was reported in the South, cattle were trading at $159 which is $3.00 higher than the previous week's weighted average.

Last week's negotiated cash cattle trade totaled 64,468 head. Of that, 92% (59,129 head) were committed for the nearby delivery, while the remaining 8% (5,339 head) were committed for the deferred delivery.

Boxed beef prices closed higher: choice up $1.83 ($266.57) and select up $2.11 ($253.72) with a movement of 104 loads (63.11 loads of choice, 10.30 loads of select, 11.23 loads of trim and 19.63 loads of ground beef). The choice/select spread sits at $12.85.

TUESDAY'S CATTLE CALL: Higher. When cash cattle trade this week, it will likely be for substantially higher prices as packers are short bought and feedlots plan to capitalize on their vulnerability.

FEEDER CATTLE:

The $0.01 to $0.02 rally in the corn complex wasn't enough pressure to put a damper on the feeder cattle market's rally Monday. Right from the get-go the market gapped higher and sought out higher prices. March feeders closed $1.60 higher at $187.70, April feeders closed $1.12 higher at $191.75 and May feeders closed $0.75 higher at $195.52. With the cash cattle market demanding higher prices and feedlots taking a bolder stance in marketing their cattle, the feeder cattle market sees the upside potential that could come in this bullish run. At Oklahoma National Stockyards in Oklahoma City, Oklahoma, compared to last week and at their midsession point, feeder steers were selling $6.00 to $10.00 higher, which instances as much as $14.00 higher. Feeder heifers were trading $5.00 to $9.00 higher. Steer calves were trading $13.00 to $20.00 higher and heifer calves were traded $9.00 to $14.00 higher. Feeder cattle supply over 600 pounds was 61%. The CME Feeder Cattle Index for Feb. 3: down $0.16, $181.29.

LEAN HOGS:

As the lean hog complex continues to worry about demand in the near term, the market deteriorated throughout Monday's trade. April lean hog closed $3.75 lower at $82.72, June lean hogs closed $2.75 lower at $100.55 and July lean hogs closed $2.30 lower at $102.57. Wednesday's WASDE report will likely help the hog complex better understand what its demand outlook looks like in the near term. Once the market approaches the second half the year, demand is expected to pick up, but until then demand could be scarce. Pork cutouts are unavailable to due to packer submission issues. Monday's slaughter is estimated at 487,000 head, 12,000 head more than last week and 8,000 head more than a year ago. Saturday's hog slaughter was revised to 173,000 head. The CME Lean Hog Index for Feb. 2: up $0.20, $73.05.

TUESDAY'S HOG CALL: Slightly higher. Packers are more likely to show the cash hog market some interest on Tuesday or Wednesday as they can see how pork prices fare early in the week.