GENERAL COMMENTS:
It was a good day for the livestock sector as the lean hog contracts were able to close mixed and the cattle contracts closed fully higher. The market's real test will be the fundamental aspect this week. The lean hog market needs slaughter speeds and pork cutout prices to keep trading higher and the cash cattle market needs to see progression as well. Hog prices closed higher on the National Direct Afternoon Hog Report, up $2.55 with a weighted average of $90.27 on 7,928 head. May corn is down 8 3/4 cents per bushel and May soybean meal is down $11.30. The Dow Jones Industrial Average is up 103.23 points and NASDAQ is up 162.30 points.
LIVE CATTLE:
The live cattle contracts traded mildly higher, feeling some energy from last week's slightly higher cash cattle trade and from the neutral to somewhat bullish Cattle on Feed report shared last Friday. April live cattle closed $0.37 higher at $118.77, June live cattle closed $0.25 higher at $118.92 and August live cattle closed $0.35 higher at $118.12. With boxed beef prices starting to climb higher, this week's cash cattle market could easily stand to gain another $1.00 to $2.00, and if the board supports higher trade -- heck, what's wrong at wanting $3.00 higher? The cash cattle market performed as it usually does on a Monday, as it was at a mere standstill. Hopefully feedlots will resist the market's early bids and push this week's cash cattle trade out until at least Wednesday, if not at least Thursday. Monday's slaughter is estimated at 116,000 head -- 9,000 head more than a week ago and 1,000 head less than a year ago. Saturday's cattle slaughter was revised to 68,000 head.
Last week there were right at 80,719 head of negotiated cash cattle sell, of which 75% (60,980 head) sold for delivery in upcoming two weeks while the remaining 25% (19,739 head) sold for delivery in the following 15 to 30 days.
Boxed beef prices closed higher: choice up $0.96 ($230.95) and select up $3.10 ($223.05) with a movement of 83 loads (56.87 loads of choice, 11.36 loads of select, 6.41 loads of trim and 8.00 loads of ground beef).
TUESDAY'S CASH CATTLE CALL: Higher. I'm hopeful that feedlots won't accept any of the market's early cash cattle bids and that trade won't develop until Wednesday -- maybe even Thursday. There are higher prices to be had this week, but as always, feedlots will have to play their cards strategically to secure those higher margins.
FEEDER CATTLE:
The feeder cattle contracts closed modestly higher while the cash market continues to be sought after aggressively as buyers are seeking botj feeders and calves. March feeders closed $0.40 higher at $135.07, April feeders closed steady at $139.42 and May feeders closed $0.42 higher at $145.10. The feeder cattle contracts were encouraged by the live cattle contracts' stronger trade, the corn markets slight regression and the immense amount of demand from the countryside. At West Point Livestock Auction in West Point, Nebraska, compared to the previous sale two weeks ago, steers weighing 700 pounds sold $1.00 to $2.00 higher, and steers weighing 800 pound and up sold $8.00 higher. Heifers weighing 700 pounds sold steady to $3.00 higher and those weighing 800 pounds or more sold $5.00 higher. The market had ample listings of load lots where were highly sought after. The CME Feeder Cattle Index for March 19: up $0.23, $134.26.
LEAN HOGS:
The lean hog contracts may not have been able to close fully higher, but they surely closed mixed. The futures market was leery of how the market would trade fundamentally and didn't want to extend itself out past the market's true demand, so they traded cautiously throughout the day. April lean hogs closed $0.80 higher at $95.05, June lean hogs closed $1.12 lower at $99.47 and July lean hogs closed $0.95 lower at $99.67. Thankfully the market's strong demand from the cash hog market -- and the market's aggressive slaughter -- should ease the future market's tension and potentially allow for higher trade come Tuesday. Pork cutouts barely closed higher, but higher is higher. Pork cutouts totaled 259.60 loads with 234.55 loads of pork cuts and 25.05 loads of trim. Pork cutout values: up $0.27, $103.26. Monday's slaughter is estimated at 494,000 head, 12,000 head more than a week ago and 5,000 head less than a year ago. The CME Lean Hog Index for March 18: up $0.47, $91.71.
TUESDAY'S CASH HOG CALL: Steady to somewhat higher. Monday's closing cash market was far more aggressive than I thought it would be. With the market's strong demand from packers and the continued vigorous chain speed throughout packing plants, Tuesday's market could be higher or at least steady.
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