GENERAL COMMENTS
It was a powerful day for the livestock complex as all three of the livestock markets closed higher thanks to ample trader interest and strong market fundamentals. Heading into Wednesday's market, keeping an eye on consumer demand via boxed beef prices and pork cutouts will be imperative. Hog prices closed higher on the Daily Direct Afternoon Hog Report, up $0.15 with a weighted average of $78.12 on 17,162 head. March corn is up 2 3/4 cents per bushel and March soybean meal is up $6.60. The Dow Jones Industrial Average is down 657.71 points.
LIVE CATTLE:
The dynamic nature of the cattle market has begun an upward trek as we forecast what the market could accomplish in the next two to three years, I believe that the market's previous highs will indeed be tested. What's helped the rallying nature of the cattle market thus far through 2023 is not only the limited supply of cattle, but also the unwavering demand from that we've seen from consumers. With packers seeing more support than assumed through February, it's likely that they'll have to stay engaged and active in the cash market to ensure that they have enough cattle for their upcoming kills. Cash cattle prices should be higher again this week, and trade won't likely develop until Thursday or Friday. Trade could be slow to develop this week not only because feedlots will want to see higher prices, but also because Friday will unveil another Cattle on Feed report. Early asking prices are noted in the South at $164 plus but are still unestablished in the North.
Tuesday's slaughter is estimated at 127,000 head, 2,000 head more than a week ago and year ago.
Boxed beef prices closed higher: choice up $4.31 ($287.20) and select up $2.79 ($270.84) with a movement of 114 loads (69.31 loads of choice, 21.57 loads of select, 9.30 loads of trim and 13.95 loads of ground beef). The choice/select spread sits at $16.36.
WEDNESDAY'S CATTLE CALL: $1.00 to $2.00 higher. With demand as vibrant as it is, packers will likely continue to stay engaged in the cash market as they want to ensure that they have enough cattle for their scheduled kills. Market-ready supplies of cattle are still thin so prices should trade higher.
FEEDER CATTLE:
Corn prices may have closed higher ($0.02 to $0.03 stronger in the nearby contracts) but the bullish nature of the cattle complex outpowered the negativity that higher corn prices have on the feeder cattle market. March feeders closed $0.35 higher at $186.87, April feeders closed $0.35 higher at $190.80 and May feeders closed $0.52 higher at $194.87. With the live cattle/cash cattle market establishing new contract highs, and new cash cattle highs for the year almost weekly, the feeder cattle complex can't help but to continue to trade higher as the bullish nature of the cattle market begins to fire. Feeder cattle sales could be affected this week as some parts of the North are being blasted with a blistery winter storm. At Oklahoma National Stockyards in Oklahoma City, Oklahoma, compared to last week, feeder steers traded steady to $2.00 higher, but the steers weighing 650 to 700 pounds sold sharply higher as they sold $10.00 to $14.00 stronger. Feeder heifers traded $4.00 to $7.00 higher, and steer and heifer calves sold $4.00 to $7.00 higher. Feeder cattle supply over 600 pounds was 54%. The CME Feeder Cattle Index for Feb. 20: up $0.38, $182.59.
LEAN HOGS:
The lean hog contracts saw the biggest day over day gains out of all the livestock contracts on Tuesday. The supportive nature of better-than-assumed consumer demand has encouraged traders to advance the market and that's exactly what took place Tuesday. Afternoon pork cutout values did close lower, but the drastic decline in prices is largely because of the $26.98 drop in bellies. It will be important to monitor pork cutout values the rest of the week to decipher if Tuesday's decline was one day of tough news or if consumers are starting to purchase other products. I tend to believe that the first option in the case here. April lean hogs closed $3.82 higher a $89.10, June lean hogs closed $2.55 higher at $105.27 and July lean hogs closed $2.55 higher at $107.15. Pork cutouts totaled 260.96 loads with 241.17 loads of pork cuts and 19.79 loads of trim. Pork cutout values: down $4.71, $83.01. Tuesday's slaughter is estimated at 479,000 head, 2,000 head more than a week ago and 8,000 head more than year ago. The CME Lean Hog Index for Feb. 17: up $0.32, $76.41.
WEDNESDAY'S HOG CALL: Steady. Packers were aggressive in Tuesday's cash market, which could mean that prices could trend either way come Wednesday.
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