GENERAL COMMENTS:
It was a good start to the week for the lean hog and live cattle futures, but the feeder cattle can't say the same. With corn prices shooting higher, feeder contracts were pressured to trade lower as cost of gain became even higher than before. Hog prices closed lower on the National Direct Afternoon Hog Report, down $0.71 with a weighted average of $60.62 on 3,161 head. March corn is up 15 1/4 cents per bushel and March soybean meal is up $6.10. The Dow Jones Industrial Average is up 237.52 points and NASDAQ is up 131.34 points.
LIVE CATTLE:
Other than the spot February contract which only closed slightly lower, the live cattle contracts secured another day of positive gains. The long-term trajectory of the market continues to shine through and traders are seeing the upside to the market and added more long positions. February live cattle closed $0.15 lower at $116.57, April live cattle closed $0.17 higher at $123.95 and June live cattle closed $0.05 higher at $120.02. The feel of the cash cattle is that this week's trade is going to be stronger, but feedlots could grow antsy with corn prices shooting higher. As of Monday afternoon, the cash market was at an utter standstill without bids or asking prices surfacing. It's most likely trade won't develop until the latter half of the week. Monday's slaughter is estimated at 114,000 head -- 3,000 head less than a week ago and 4,000 head less than a year ago. New showlists appear to be mixed, higher in Texas, Nebraska and Colorado, but lower in Kansas.
Last week's cash cattle movement was powerful and amplifies that fact that packers need cattle! Last week's movement of negotiated cash cattle totaled 102,508 head. Of that 74,417 head are scheduled for delivery in the next two weeks while the remaining 28,091 are scheduled for delivery in the following 15 to 30 days.
Boxed beef prices closed mixed: choice up $1.62 ($236.20) and select down $0.18 ($220.61) with a movement of 114 loads (61.97 loads of choice, 18.87 loads of select, 17.42 loads of trim and 15.72 loads of ground beef).
TUESDAY'S CASH CATTLE CALL: Higher. The coin will be flipped and whether it will land on higher trade this week or steady trade is still unknown. Both circumstances are likely, but feedlots do hold the power to move the market higher again this week.
FEEDER CATTLE:
Nearby corn contracts kept their ambitious rally all the way through the day's close, meaning nearby contracts closed 12 to 15 cents higher. The spike in corn prices sent panic throughout the feeder cattle contracts and led the complex to trade lower all throughout Monday. March feeders closed $0.82 lower at $137.45, April feeders closed $0.72 lower at $141.47 and May feeders closed $1.20 lower at $143.57. At Sioux Falls Regional Cattle Auction in Worthing, South Dakota, feeder steers sold evenly steady compared to a week ago, while feeder heifers sold steady to $4.00 lower, except those weighing 500 to 600 pounds which sold $8.00 to $10.00 higher. Even with snow causing headaches getting to the sale and corn prices sharply higher, the sale was met with strong demand. Slaughter cows sold steady to $2.00 higher and bulls sold steady. The CME feeder Cattle Index 2/5/2021: down $0.18, $135.47.
LEAN HOGS:
The upside continues to grow in the lean hog complex as futures contracts keep scaling higher and thankfully strong pork cutout values are complementing the movement. February lean hogs closed $1.20 higher at $72.17, April lean hogs closed $0.35 higher at $80.65 and June lean hogs closed $0.52 higher at $90.07. Packers luckily have a plethora of options right now and are using this time strategically. With excelling export demand, strong domestic demand and the ability to restock coolers, they can do a number of different things with the product they prepare and see the opportunity in the options the market is offering. Pork cutouts totaled 290.70 loads with 258.82 loads of pork cuts and 31.87 loads of trim. Pork cutout values: up $0.69, $84.87. Monday's slaughter is estimated at 498,000 head -- 15,000 head more than a week ago and 9,000 head more than a year ago. Friday's hog slaughter was revised to 469,000 head, and Saturday's hog slaughter was revised to 283,000 head. The CME Lean Hog Index 2/4/2021: up $0.18, $69.27.
TUESDAY'S CASH HOG CALL: Steady to somewhat higher. Packers are being met with excellent demand from the pork market and want to capture its interest while the time is prime.
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