GENERAL COMMENTS:
The futures contracts struggled as the onset of the new COVID-19 variant comes with more unknowns than knowns. The feeder cattle complex was the only livestock contract able to close higher, and even its nearby contracts struggled. Hog prices closed higher on the National Direct Afternoon Hog Report up $1.45 with a weighted average of $56.60 on 7,160 head. March corn is down 14 3/4 cents per bushel and January soybean meal is down $0.90. The Dow Jones Industrial Average is down 652.22 points and NASDAQ is down 245.14 points.
LIVE CATTLE:
The live cattle market closed lower Tuesday. December live cattle closed $1.05 lower at $135.87, February live cattle closed $1.40 lower at $137.90 and April live cattle closed $1.45 lower at $141.07. Not helping matters was the nosedive that choice cuts endured by the day's end. While we all thoroughly understand that boxed beef prices have been bolstered to prices nearly $30.00 above last year and that these types of thresholds are rarely sustainable long term, it's never friendly to see the market topple lower. The cash cattle market saw bids of $138 be offered in parts of the Southern Plains, but feedlots paid packers' bids no attention and let the day close without engaging in any trade. The market could see interest pick up as early as Wednesday as packers seek to secure more supplies for the weeks ahead.
Tuesday's slaughter is estimated at 122,000 head, steady with a week and year ago.
Boxed beef prices closed lower: choice down $5.90 ($271.68) and select down $1.73 ($260.29) with a movement of 199 loads (125.97 loads of choice, 30.22 loads of select, 32.25 loads of trim and 10.08 loads of ground beef).
WEDNESDAY'S CASH CATTLE CALL: $1.00 to $2.00 higher. Packers committed 90% of last week's purchases to the nearby delivery, which likely means that they still need cattle and will participate in the weeks ahead.
FEEDER CATTLE:
While the nearby contracts still closed lower, the deferred feeder cattle contracts couldn't help but trade higher as the corn market's $0.14 to $0.15 loss was just too good to be true in feeders' eyes. Not only did the weaker corn market look appealing to the feeder cattle market, but when you think about next year's marketing of spring born calves, next fall is going to yield the potential to demand higher prices as the sees fewer calves available. The liquidation cycle that has pushed a lot of producers into culling a percentage of their herd will undeniably be noted in the calf market in 2022. January feeders closed $0.87 lower at $164.85, March feeders closed $0.05 lower at $166.50 and April feeders closed $0.25 higher at $168.82. At the mid-session point of the sale, at Ozarks Regional Stockyards in West Plains, Missouri, compared to last week, steer and heifer calves under 500 pounds traded $8.00 to $12.00 higher with the heavier weights trading $4.00 to $8.00 higher. The CME Feeder Cattle Index for Nov. 29: up $1.17, $162.46.
LEAN HOGS:
The cash hog market has been able to demand substantial attention over the last couple of days as the market has successfully been able to close higher and on a significant volume of hogs traded (significant for the current cash market anyway). As the market looks to the end of the year, I tend to believe that packers are anxious about getting supplies committed for the weeks ahead to avoid chasing the market during the holidays and in hopes of there even being more export opportunities to come in the near future. Nevertheless, the futures market and pork cutout value didn't fare as positively, but there was significant volume of pork moved as the day's cutouts totaled 440.14 loads. The technical pressure mostly stemmed from the outbreak of the new COVID-19 variant, which sent the entire futures market into a tizzy. December lean hogs closed $0.97 higher at $73.37, February lean hogs closed $0.95 lower at $79.97 and April lean hogs closed $0.65 lower at $85.25. Pork cutouts totaled 440.14 loads with 378.87 loads of pork cuts and 61.27 loads of trim. Pork cutout values: down $1.01, $86.70. Tuesday's slaughter is estimated at 480,000 head, steady with a week ago and 8,000 head less than a year ago. The CME Lean Hog Index for Nov. 26: down $1.03, $70.60.
WEDNESDAY'S CASH HOG CALL: Steady. The hog market has been seeing more interest from packers in the cash market and given that there was a big volume of pork moved, they could continue to chase the cash market in the days ahead.
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