GENERAL COMMENTS:
Wednesday's livestock marketplace was heavy as the burdens of this recent storm throw curve balls for the market to jump over. The livestock contracts were unable to gain the support necessarily from the technical side of the market, as trades looked at the marketplace and grew worrisome about the functionality throughout the countryside this week. Hog prices closed lower on the National Direct Afternoon Hog Report, down $1.01 with a weighted average of $68.55 on 13,750 head. March corn is up 3/4 cent per bushel and March soybean meal is up $3.30. The Dow Jones Industrial Average is up 90.27 points and NASDAQ is down 82.01 points.
LIVE CATTLE:
Even if you don't live in Texas (or the South), we all have reasons to hate when the Southern Plains get freezing temperatures now that it's affecting the cattle market to such extreme measures. Tyson and Cargill have both announced that their temporary shutdowns in some Southern states are likely to last through at least Thursday. Specifically, in Texas, Cargill has three meat plants closed through Thursday because their ability to access natural gas supplies has been reduced by the state in efforts to redirect the supplies to homes through these historically cold times. This week's slaughter is going to be significantly lower and put pressure on packers to run double shifts in the weeks to come to try to recover some of the lost tonnage the market was accounting for.
The live cattle contract didn't have a strong day as the uncertainty that's surrounding the lasting effects of this storm are largely unknown. February live cattle closed $0.85 lower at $115.30, April live cattle closed $1.65 lower at $124.15 and June live cattle closed $1.07 lower at $120.62. The cash cattle market was largely in the same position, as packers have yet to offer bids. Trade is likely to be delayed until late in the week again as feedlots see an opportunity to move the cash market higher and plan to do so regardless of freezing temperatures or snow fall. Wednesday's slaughter is estimated at 99,000 head, 17,000 head less than a week ago and 23,000 head less than a year ago. Tuesday's cattle slaughter was revised to 91,000 head.
Boxed beef prices closed higher: choice up $2.74 ($237.51) and select up $3.61 ($225.64) with a movement of 70 loads (38.16 loads of choice, 10.40 loads of select, 9.49 loads of trim and 12.03 loads of ground beef).
THURSDAY'S CASH CATTLE CALL: Steady to $1.00 higher. Packers are going to be incredibly hard to deal with this week as their schedules have been completely thrown off kilter. Some feedlots could grow worrisome and cave at steady prices, while others are going to hold their ground and demand more money than that week's business.
FEEDER CATTLE:
Even though the corn contracts didn't rally by a significant measure, the feeder cattle contracts weren't able to rally higher as traders were unwilling to invest in the market. March feeders closed $2.35 lower at $138.42, April feeders closed $1.85 lower at $142.75 and May feeders closed $0.95 lower at $145.25. Both the live cattle and feeder cattle contracts suffered through Wednesday's trade as the uncertainty surrounding the weather outcome has cattle producers, packers and traders all on edge. At Bassett Livestock Auction in Bassett, Nebraska, compared to two weeks ago, steers weighing 550 to 700 pounds sold unevenly steady, 550-pound heifers traded $2.00 lower and heifers weighing 600 to 650 pounds traded $3.00 to $4.00 higher. Demand was surprisingly strong given the freezing temperatures, but the cattle did carry commendable quality and buyers were willing to invest in quality cattle. The CME Feeder Cattle Index for Feb. 16: up $0.11, $135.71.
LEAN HOGS:
The lean hog market fought vigorously early in the day to keep the upward momentum that the market has been thriving on, but as the afternoon traded on, the market's pressure grew and ultimately lead the day to a lower close. April lean hogs closed $1.27 lower at $84.90, June lean hogs closed $0.25 lower at $92.62 and July lean hogs closed $0.07 lower at $92.37. The cash hog market and pork cutout values have been telling different tales as packers dove headfirst into the cash market, purchasing 13,750 head; Tuesday's slaughter was revised to a lower count and pork cutout values are trending lower. Looking beyond Wednesday's marketplace, and beyond this week, once the freezing temperatures subside and production gets back to a normal speed, packers will be itching to get hogs slaughtered and to make up for the tonnage lost this week. Wednesday's cash market offered them an opportunity to secure inventory. Pork cutouts total 277.56 loads with 256.03 loads of pork cuts and 21.53 loads of trim. Pork cutout values: down $0.54, $89.17. Wednesday's hog slaughter is estimated at 492,000 head, 2,000 head more than a week ago and 1,000 head more than a year ago. Tuesday's hog slaughter was revised to 411,000 head. The CME Lean Hog Index for Feb. 15: up $0.97, $75.51.
THURSDAY'S CASH HOG CALL: Steady. With the large number of hogs that packers were able to secure Wednesday afternoon, their willingness to pay more moving forward is going to lull with having secured supplies.
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