GENERAL COMMENTS:
Besides the moderate rally that took place in the lean hog complex, there wasn't much newsworthy trade in the livestock complex on Tuesday. By Wednesday, the market could begin to see some light packer interest, but trade isn't expected to really develop until Thursday or potentially even Friday. Hog prices closed higher on the Daily Direct Afternoon Hog Report, up $0.79 with a weighted average of $76.19 on 9,081 head. March corn is down 2 3/4 cents per bushel and March soybean meal is down $3.00. The Dow Jones Industrial Average is down 101.87 points.
LIVE CATTLE:
It wasn't surprising to see the live cattle contracts struggle through Tuesday's market as the spot April contract carved out yet another new contract high Monday afternoon. If the supportive nature of the boxed beef complex holds through the entirety of the week and cash cattle can trade at least steady, then the complex could again trade higher. But as traders continue to pressure the market's resistance levels and push the contracts to new highs on nearly a weekly basis, the market must thrive fundamentally for traders to continue this upward drive. No trade developed throughout Tuesday's market, and it's not likely that we'll see any trade develop ahead of Thursday. Early asking prices in the South are noted at $163. April live cattle closed $0.42 lower at $164.67, June live cattle closed $0.20 lower at $160.22 and August live cattle closed $0.17 lower at $159.22.
Tuesday's slaughter is estimated at 125,000 head, 1,000 head less than a week and year ago.
Boxed beef prices closed higher: choice up $2.11 ($272.06) and select up $2.57 ($258.78) with a movement of 113 loads (64.31 loads of choice, 23.78 loads of select, 14.78 loads of trim and 10.15 loads of ground beef). The choice/select spread currently sits at $13.28.
WEDNESDAY'S CATTLE CALL: Steady. Given that packers were able to build up their inventory last week, they'll likely be tougher to negotiate with this week. But that's not to say that prices won't be able to trade at least steady, if not $1.00 higher, as showlists are extremely thin and strong beef demand will keep packers needing to process more beef.
FEEDER CATTLE:
The feeder cattle complex closed lower as the live cattle/cash cattle market lent little to no support throughout Tuesday's trade. The market may have been able to trade higher if the live cattle complex would have traded higher itself, but with the corn market closing mixed (lower in its nearby contracts but higher in its deferred months) the market wasn't overly confident about doing too much of anything. Feeder cattle demand remains extremely strong in the countryside as buyers are soberly aware of the market's thin supply of cattle. March feeders closed $0.55 lower at $186.65, April feeders closed $0.70 lower at $190.90 and May feeders closed $0.67 lower at $194.90. At Joplin Regional Stockyards in Carthage, Missouri compared to last week feeder steers traded $2.00 to $6.00 higher and feeder heifers traded steady to $3.00 stronger. Feeder cattle supply over 600 pounds was 63%. The CME Feeder Cattle Index for Feb. 13: down $0.27, $183.06.
LEAN HOGS:
The lean hog complex didn't squander its opportunity throughout Tuesday's market as the contracts rallied steadily throughout the day. April lean hogs closed $0.90 higher at $87.20, June lean hogs closed $0.57 higher at $104.82 and July lean hogs closed $0.55 higher at $106.35. The combination of ample technical support and higher prices in the cash market, and support in afternoon pork cutout values, makes for a perfect storm in the eyes of the lean hog market. If demand can continue to nudge pork cut prices higher in Wednesday's market, the contracts should be able to continue to trade higher as they're far from resistance pressure. Pork cutouts totaled 315.41 loads with 291.25 loads of pork cuts and 24.17 loads of trim. Pork cutout values: up $0.14, $81.88. Tuesday's slaughter is estimated at 477,000 head, 2,000 head less than a week ago and 2,000 head more than a year ago. The CME Lean Hog Index for Feb. 10: up $0.63, $74.64.
WEDNESDAY'S HOG CALL: Higher. Even though packers were modestly aggressive in Tuesday's cash hog market, it's likely that they'll be active again in Wednesday's market as they'll need to procure more hogs.
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