GENERAL COMMENTS
It was a mixed day for the livestock complex as the cattle contracts closed lower while the lean hog market saw modest support through Wednesday's end. Come Thursday, all eyes and ears will be waiting to see what the day's export report shapes up be, as well as monitoring any develops in the cash cattle market as prices are expected to be higher again this week. Hog prices closed higher on the Daily Direct Afternoon Hog Report, up $3.51 with a weighted average of $77.58 on 19,032 head. March corn is up 4 1/2 cents per bushel and March soybean meal is up $0.50. The Dow Jones Industrial Average is down 209.65 points.
LIVE CATTLE:
It was another quiet day for the live cattle market as traders appreciated the support of Wednesday's WASDE report, but more than anything, they're anxious to see what feedlots accomplish in this week's cash market. February live cattle closed $0.22 higher at $160.080, April live cattle closed $0.10 higher at $163.70 and June live cattle closed $0.02 lower at $159.77. As feedlots see how sparse fed cattle supplies are, it's not unlikely that this week's trade could be delayed until Friday again as feedlot's have their eyes set on the prize, and that's higher prices. Asking prices are noted at $161 to $162 in the South but are still unestablished in the North.
Wednesday's slaughter is estimated at 124,000 head, 3,000 head less than a week ago and steady with a year ago.
Wednesday's WASDE report favored the cattle and beef markets. Beef production for 2023 was raised by 50 million pounds as the first quarter of 2023 grew by 140 million pounds from last month's projections, which more than offset the 90-million-pound decline projected for the second quarter of the year. The large production for the first quarter of 2023 stems from aggressive cow slaughter, while the reduction for the second quarter portrays tighter fed cattle supplies. Price projections for the first quarter of 2023 gained $1.00 to average $158.00 from January's report, and the second quarter prices grew by $2.00 from January's report to now be projected at $159.00. Both the third and fourth quarters of the year remained steady at $157 (third quarter) and $162.00 (fourth quarter). Beef imports for 2023 grew by 25 million pounds, while exports remained steady.
Boxed beef prices closed mixed: choice up $0.48 ($267.20) and select down $4.17 ($253.16) with a movement of 110 loads (68.12 loads of choice, 23.85 loads of select, 6.30 loads of trim and 11.28 loads of ground beef). The choice/select spread sits at $14.04.
THURSDAY'S CATTLE CALL: Higher. Feedlots know that packers are short bought and fully intend their use their vulnerability as an opportunity to drive the cash market higher.
FEEDER CATTLE:
The feeder cattle market endured a somewhat tough day as the complex closed fully lower and long for fundamental support to arise from the live cattle/cash cattle market, which never came throughout Wednesday's hours. As the day traded on the corn market grew slightly stronger in its rally, which ribbed the feeder cattle market and solidified its lower end. March feeders closed $0.75 lower at $186.45, April feeders closed $0.62 lower at $190.72 and May feeders closed $0.37 lower at $194.42. The feeder cattle market is desperately longing to see what this week's cash cattle market does, and as feedlots strategically market their showlists again this week, feeders may have to wait until Friday to see what the week's cash cattle trade amounts to. At Winter Livestock Action in La Junta, Colorado, compared to last week, steers under 400 pounds traded $2.00 to $3.00 stronger, steers weighing 400 to 650 pounds sold $5.00 to $8.00 stronger with instances of $10.00 to $15.00 higher, and steers weighing 650 to 700 pounds traded steady to $2.00 higher. Heifer calves weighing 450 pounds traded steady to $2.00 higher, heifers weighing 450 to 650 pounds sold $3.00 to $5.00 higher except those weighing 550 to 600 pounds which sold $5.00 to $8.00 higher and the heifers weighing 650 to 700 pounds traded $2.00 higher. Yearling feeder steers weighing 700 to 850 pounds sold $5.00 to $8.00 higher with instances of $10.00 higher, and anything over 850 pounds traded steady. Slaughter cows and bulls sold steady to $1.00 higher. Feeder cattle supply over 600 pounds was 77%. The CME Feeder Cattle Index for Feb. 7: up $0.06, $182.29.
LEAN HOGS:
The lean hog complex closed mostly higher with just a few of the furthest deferred contracts closing just below steady. The market started the day off trading higher and kept with its upward momentum throughout the day, as the market saw the promise of support in the second half of the year in Wednesday's WASDE report. But what was potentially the most exciting thing about the lean hog market Wednesday was its cash hog trade -- right at 19,032 head traded for a weighted average price of $77.58, which is $3.51 higher than Tuesday. It's been weeks since the cash hog market has traded close to 20,000 head on any given day, which could mean that packers see demand increasing or that the lighter carcass weights on Wednesday's hogs is minimizing their production. Either way, it was a good cash day for producers. April lean hogs closed $0.80 higher at $84.07, June lean hogs closed $1.35 higher at $102.00 and July lean hogs closed $1.45 higher at $104.12. Pork cutouts were able to close slightly higher as both the ham and the picnic saw a gain of over $3.00 compared to Tuesday's report. Pork cutouts totaled 259.70 loads with 227.94 loads of pork cuts and 31.77 loads of trim. Pork cutout values: up $0.73, $79.29. Wednesday's slaughter is estimated at 482,000 head, 8,000 head less than a week ago and 6,000 head more than a year ago. The CME Lean Hog Index for Feb. 6: up $0.22, $73.51.
Wednesday's WASDE report shared mixed findings for the pork complex. Pork production fell by 45 million pounds from January's report as carcass weights are lighter than originally expected. Unfortunately, both the first and second quarters of 2023 saw price decreases compared to January's report for the anticipated quarterly price projections. Barrow and gilt prices in the first quarter are expected to average $58.00, which is $5.00 cheaper than January's projection, and second quarter prices are now expected to average $71.00 which is $1.00 lighter than what January's WASDE report forecasted. Pork imports and pork exports for 2023 both remained steady.
THURSDAY'S HOG CALL: Lower. Given that packers were extremely aggressive in Wednesday's market, it's unlikely that they'll need to be as aggressive in Thursday's market.
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