GENERAL COMMENTS:
Monday was a tremendous day for the livestock complex as all three of the markets closed higher. Hog prices closed lower on the Daily Direct Afternoon Hog Report, down $1.65 with a weighted average of $75.40 on 5,067 head. March corn is up 4 1/2 cents per bushel and March soybean meal is up $4.60. The Dow Jones Industrial Average is up 348.15 points.
LIVE CATTLE:
The spot April contract carved out yet another new contract high and it's only Monday -- if this momentum continues, imagine what the rest of the week could accomplish. April live cattle closed $1.15 higher at $165.10, June live cattle closed $0.67 higher at $160.42, and August live cattle closed $0.70 higher at $159.40. Traders noted the large volume of cash cattle bought in last week's market alongside the close of stronger boxed beef prices and couldn't help but support the contracts. The big unanswered question about this week's market remains in the cash sector: What will cash prices do? Will feedlots simply trade cattle steady on last week's advancement now that packers sit with cattle committed? Or will they attempt to again price cattle higher and get another $1 or more added to the market? Time will tell. Monday's slaughter is estimated at 126,000 head -- 6,000 head more than a week ago and 4,000 head more than a year ago. New showlists appear to be lower in all three major feeding states.
Last week's trade developed late in the week again as feedlots were pressuring packers and wanted to get more money. Northern dressed cattle traded for $245 to $256, but mostly at $254, which is $4 higher than the previous week's weighted average. Southern live cattle deals traded on Friday at a range of $159 to $161, but mostly at $160 to $161 which is $1.50 to $2.50 higher than the previous week.
Last week's negotiated cash cattle trade totaled 108,421 head. Of that 75% (81,474 head) were committed for nearby delivery while the remaining 25% (26,947 head) were committed for deferred delivery.
Boxed beef prices closed higher: Choice was up $0.29 ($269.95) and select up $1.92 ($256.21), with a movement of 116 loads (79.51 loads of choice, 11.55 loads of select, zero loads of trim and 24.49 loads of ground beef).
TUESDAY'S CATTLE CALL: Steady. Given that packers were able to build their inventory last week, this week's cash cattle market will likely trade steady.
FEEDER CATTLE:
The feeder cattle complex was skeptical of whether trading higher was a wise move for its market, given that corn prices were trading higher, but as the live cattle market lent more and more support as the day traded on, feeders, too, rounded out Monday's market higher. March feeders closed $0.80 higher at $187.20, April feeders closed $0.92 higher at $191.60 and May feeders closed $1.02 higher at $195.57. It will be interesting to see what feeder cattle prices do this week because they were sharply higher last week. Thankfully, the market's strong environment throughout the live cattle/cash cattle market continues to support higher feeder cattle prices, so the only hinderance that the market currently must monitor is again inputs, especially in the form of corn. At Oklahoma National Stockyards in Oklahoma City, Oklahoma at their midsession point and when compared to last week, feeder steers were trading steady to $3 lower, while feeder heifers were trading mostly steady. Steer calves were trading steady to $5 lower than last week's sharply higher market. Heifer calves were trading steady to $3 higher, with the market's biggest advancements being seen on the five weights. Feeder cattle supply over 600 pounds was 53%. The CME feeder cattle index for Feb. 10, 2023: Up $0.24, at $183.33.
LEAN HOGS:
The lean hog complex performed exceptionally well throughout Monday's market as the complex opened higher right from the day's get-go, but only grew stronger as time progressed. Monday's monstrous performance could have been partly fueled by Hong Kong announcing an outbreak of African swine fever on a farm near its border to China; 45 pigs were reported dead from the outbreak. April lean hogs closed $3.02 higher at $86.35, June lean hogs closed $2.60 higher at $104.25 and July lean hogs closed $2.17 higher at $105.80. It was again encouraging to see pork cutout values close higher and the biggest driving factor wasn't a fluctuation in belly prices -- the reason why the carcass was able to close higher mostly stemmed from the $4.71 gain on the ribs. Pork cutouts totaled 271.04 loads with 244.60 loads of pork cuts and 26.44 loads of trim. Pork cutout values: up $0.69, at $81.74. Monday's slaughter is estimated at 485,000 head -- 5,000 head more than a week ago and 19,000 head more than a year ago. Friday's hog slaughter was revised to 476,000 head, and Saturday's how slaughter was revised to 86,000 head. The CME lean hog index for Feb. 9, 2023: Up $0.21, at $74.01.
TUESDAY'S HOG CALL: Higher. Given that Monday's market closed substantially higher and that pork cutout values saw support through the day's afternoon report too, it wouldn't be a surprise to see packers active in Tuesday's cash hog market.
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