GENERAL COMMENTS:
Jumps in beef and pork prices at the midpoint of this week helped to add some stable optimism to the live cattle and lean hog futures markets Wednesday, although they ended the session with some lightly lower corrections. In the cash cattle market, asking prices are around $163 in the South but still not established in the North, and major trading isn't expected until Thursday or Friday. The National Direct Afternoon Hog Report showed purchased swine prices up $1.17 to a weighted average of $77.36 on 13,658 head. Prices ranged from $67 to $80, and the 5-day rolling average is now $76.85. March corn closed down 6 cents to $6.76 1/4 per bushel and March soybean meal closed down $9.90 per ton to $491.10. The Dow Jones Industrial Average was up 39.07 points and the NASDAQ was up 97 points.
LIVE CATTLE:
Live cattle futures were mixed Wednesday but generally spent the trading session within $1 of Monday's new contract highs. The February contract closed up $0.40 at $162.55; the April contract closed down $0.075 at $164.60; and the June contract closed down $0.025 at $160.20. Boxed beef prices have kept improving through the month of February and are now more valuable than they've been since last April. This is not necessarily a common seasonal expectation for this time of year, but since retail grocery shoppers are still willing to explore higher prices, perhaps the wholesale beef market can also continue to improve. In the cash cattle market, asking prices are around $163 in the South but still not established in the North, and major trading isn't expected until Thursday or Friday. For reference, if $163 actually trades (and it might, given these newly friendly economics of beef packing), that will be another $2 weekly gain on top of last week's score, when cash cattle traded from $160 to $161 in the South.
Boxed beef prices suddenly higher: choice up $3.66 ($275.72) and select up $2.83 ($261.61), with a movement of 101 loads (61.34 loads of choice, 18.61 loads of select, 10.14 loads of trim and 10.99 loads of ground beef).
THURSDAY'S CASH 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:
Buying interest kept building for feeder cattle futures through Wednesday's trading session, and the market closed with mild gains. The March feeder cattle contract was up $0.675 at $187.325; the April contract was up $0.25 at $191.15; and the May contract was up $0.075 at $194.975. A slight reprieve in high feed costs Wednesday (corn down 6 cents; soybean meal down almost $10 per ton) may have sparked some algorithmic trade for feeder cattle. Other than these outside influences, the futures must move without much testing of the physical market. A streak of crummy winter weather may challenge logistics through Kansas, Nebraska, and Iowa during the last half of the week.
LEAN HOGS:
After gaining a quick $3 per cwt since the end of last week, the lean hog market may have felt on Wednesday that a pause and a mild correction were due. The April lean hog contract closed down $0.75 at $86.50; the April contract closed down $0.35 at $95.70; and the June contract closed down $0.525 at $104.30. The supply of market-ready hogs being processed continues to be abundant, knocking on the door of 490,000 head most days. But apparently the market is finding customers for all this product, and it may finally be time for the pork and lean hog markets to find some upward momentum off their recent lows. The afternoon pork cut-out showed the overall carcass value down $0.94 to $80.94. There were 280.30 total loads (244.28 loads of cuts and 36.02 loads of trim). The CME Lean Hog Index for 2/13: up $0.54, $75.18, and the projected Index for 2/14: up $0.44, $75.62.
THURSDAY'S CASH HOG CALL: Higher. Packers have already shown some willingness to be aggressive this week, which may be what it takes to keep the nation's rollicking slaughter pace rolling.
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