GENERAL COMMENTS:
The livestock complex is trading mixed as the market absorbs Wednesday's WASDE report. Largely the cattle complex is waiting to see how the week's cash cattle market pans out before it makes any move technically. March corn is up 3 cents per bushel and March soybean meal is up $1.80. The Dow Jones Industrial Average is down 227.47 points.
LIVE CATTLE:
The live cattle complex is trading mixed as the market is seeing modest support in its nearby contracts while the deferred contracts are all venturing slightly lower. February live cattle are up $0.27 at $160.85, April live cattle are steady at $163.60 and June live cattle are down $0.07 at $159.72. It was interesting to see tighter production projected for the second quarter of 2023 on Wednesday's WASDE report, which also gives feedlots the cue that prices could be substantially higher as well. The cash cattle market hasn't seen any interest yet, but bids could begin to surface any time now. Asking prices in the South are noted at $161 to $162 and are still not established in the North. Trade will likely be delayed until Thursday or later.
The Fed Cattle Exchange Auction held Wednesday reported seven lots (with six lots in Texas, and one lot in Arizona), totaling 1,219 head of cattle. Opening prices were at $151 and $156; bids were at $156 to $159; and reserve prices were $155 to $161.50. One lot sold in Texas at $159.
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, now 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 are mixed: choice up $0.07 ($266.79) and select down $3.38 ($253.95) with a movement of 55 loads (38.55 loads of choice, 7.77 loads of select, zero loads of trim and 8.18 loads of ground beef).
FEEDER CATTLE:
The feeder cattle complex continues to trade lower as traders scanned the marketplace longing for support. But with the live cattle complex trading mixed and no cash cattle trade to speak of yet, the onset of slightly higher corn prices is keeping the market trading lower. March feeders are down $0.12 at $187.07, April feeders are down $0.20 at $191.15 and May feeders are down $0.10 at $194.70. All the feeder cattle complex needs to see is a slight spark in momentum from either the live cattle contracts or the cash market and its own contracts would likely charge higher. Thankfully feeder cattle demand in the countryside has been incredibly strong, and the CME Feeder Cattle Index is again trading above $180.00, as it closed at $182.23 Tuesday afternoon.
LEAN HOGS:
Wednesday's WASDE report left the hog market mixed messages as the market didn't receive any indication that demand could strengthen in the near term; but thankfully prices are expected to be better in the third quarter when supplies tighten. Even so, from a sheer fundamental sense, the lean hog complex is being rather supported at Wednesday's noon hour as both cash prices and pork cutout values are higher. Thankfully this comes at a time when the lean hog contracts are also trading higher and finding some technical support in the marketplace. April lean hogs are up $0.77 at $84.05, June lean hogs are up $1.07 at $101.72 and July lean hogs are up $1.05 at $103.72. The market's biggest hope is that pork cutout values close higher and Thursday's market stands a chance at trading higher too.
The projected CME Lean Hog Index for 2/7/2023 is up $0.24 at $73.75 and the actual index for 2/6/2023 is up $0.22 at $73.51. Hog prices are higher on the Daily Direct Morning Hog Report, up $3.23 with a weighted average of $75.45, ranging from $67.00 to $80.00 on 6,992 head and a five-day rolling average of $73.30. Pork cutouts total 158.74 loads with 142.49 loads of pork cuts and 16.25 loads of trim. Pork cutout values: up $3.76, $82.32.
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.
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