GENERAL COMMENTS
Both the live cattle and feeder cattle markets closed lower after charging higher throughout Monday's complex as traders seemed to have hit the pause button for the cattle contracts on Tuesday. The lean hog complex grew stronger as the day traded on, as the market hopes to find the promise of better demand in Wednesday's WASDE report. March corn is down 5 cents per bushel and March soybean meal is down $7.60. The Dow Jones Industrial Average is up 303.80 points.
LIVE CATTLE:
Yes, the live cattle complex closed lower, but that's not to say that the market endured a disappointing day. After running to new contract highs on Monday, Tuesday's complex can be more accurately described as being steady as opposed to lower, as prices merely chopped sideways. It's extremely supportive to see boxed beef prices getting as much support as they are, as not only is February usually a tough month for demand, but that also means that packers will see a little more margin than expected, which could mean that they'll be more active in the cash market too. February live cattle closed $0.25 lower at $160.57, April live cattle closed $0.87 lower at $163.60 and June live cattle closed $0.90 lower at $159.80. The cash cattle market didn't receive too much attention as it's still too early in the week for trade to have developed. Some bids could begin to be offered on Wednesday, but trade is likely to wait until Thursday or even potentially Friday. Asking prices in the South are noted at $161 to $162 and are still unestablished in the North.
Tuesday's slaughter is estimated at 126,000 head, 1,000 head less than week ago and steady with a year ago.
Boxed beef prices closed higher: choice up $0.15 ($266.72) and select up $3.61 ($257.33) with a movement of 107 loads (66.77 loads of choice, 15.65 loads of select, 7.19 loads of trim and 17.34 loads of ground beef). The choice/select spread sits at $9.39.
WEDNESDAY'S CATTLE CALL: Higher. I'm not convinced that trade will actually begin to develop on Wednesday as feedlots are gunning for higher prices, but some bids could be tossed on the table. Prices will likely be higher this week as packers are short bought.
FEEDER CATTLE:
The feeder cattle contracts didn't grow stronger throughout Tuesday's afternoon as the market closed anywhere from $0.40 to $1.12 lower. But after running substantially higher throughout Monday's complex, seeing the complex withdraw from its upward surge isn't surprising given that traders long to see how cash cattle trade this week before they advance the market even higher. For feeders specifically, the combination of sharply higher feeder cattle prices throughout the countryside amid a lower corn complex will likely lead the contracts to higher prices later in the week. March feeders closed $0.50 lower at $187.20, April feeders closed $0.40 lower at $191.35 and May feeders closed $0.72 lower at $194.80. At Joplin Regional Stockyards in Carthage, Missouri, compared to last week, feeder steers weighing under 480 pounds traded $5.00 to $11.00 higher and the heavier weighted steers sold $3.00 higher. Feeder heifers under 480 pounds traded $10.00 to $14.00 higher with the heavier weights trading $2.00 to $6.00 stronger. Feeder cattle supply over 600 pounds was 58%. The CME Feeder Cattle Index for Feb. 6: up $0.94, $182.23.
LEAN HOGS:
The lean hog complex found support in Tuesday's market as the complex grew stronger as the day traded on and ultimately ended Tuesday's market fully higher. April lean hogs closed $0.55 higher at $83.27, June lean hogs closed $0.10 higher at $100.65 and July lean hogs closed $0.10 higher at $102.67. It's not even surprising to see that pork cutouts closed lower as Monday's big rally stemmed from a jolt in belly prices. But come Tuesday, all gamblers were safely betting that pork cutout values would shift gears and close lower as the belly continues to be an extremely volatile cut. It was supportive, however, to see that hog prices closed higher (up $1.73 from Monday's trade). Packers didn't buy an overabundance of hogs, which likely means they'll need to be active in Wednesday's cash market. Pork cutouts totaled 342.05 loads with 320.14 loads of pork cuts and 21.90 loads of trim. Pork cutout values: down $3.06, $78.56. Tuesday's slaughter is estimated at 479,000 head, 4,000 head less than a week ago and 10,000 head more than a year ago. Monday's hog slaughter was revised to 480,000 head. The CME Lean Hog Index for Feb. 3: up $0.24, $73.29.
WEDNESDAY'S HOG CALL: Higher. Given that packers were willing to advance the cash market by $1.73 in Tuesday's market while only buying around 5,000 head, it's quiet likely that they're still in need of hogs and will be active in Wednesday's market.
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