GENERAL COMMENTS:
It was a hectic Tuesday for the cattle contracts as the markets tried to understand just how long lasting the corn market's surge to $6.00 a bushel in the nearby contracts was going to be. The feeder cattle contracts took the brunt of the corn market's blow, but the live cattle contracts suffered as well. Hog prices closed higher on the National Direct Afternoon Hog Report, up $1.37 with a weighted average of $63.09 on 5,813 head. March corn is up 20 1/4 cents per bushel and March soybean meal is up $3.40. The Dow Jones Industrial Average is up 214.59 points and NASDAQ is down 210.08 points.
LIVE CATTLE:
Live cattle futures didn't have as bad a day as the feeder cattle complex, but by no means did live cattle weather the corn market's 16- to 20-cent jump without showing some fear. February live cattle closed $1.10 lower at $137.82, April live cattle closed $1.52 lower at $142.67 and June live cattle closed $1.10 lower at $137.65. The cash cattle market didn't see any substantial interest arise; the only bid offered throughout the day was in Nebraska at $220. Feedlots let the bid sit idle on the table and are hopeful for stronger prices. Early asking prices of $140 have been noted in the South, but the North has yet to disclose what they'd like to see this week. With cold storage supplies strong, and sales of beef over the past two weeks thin or for delayed delivery, the slower slaughter pace could be multifaceted on those points as well as worker absenteeism post the New Year holiday. Tuesday's slaughter is estimated at 117,000 head -- 5,000 head less than a week ago and 1,000 head less than a year ago. Monday's slaughter was revised to 107,000 head -- 5,000 head less than what was originally stated.
Boxed beef prices: unavailable due to technical difficulties at USDA.
WEDNESDAY'S CASH CATTLE CALL: Steady to $1.00 higher. Feedlots may be concerned with the onset of higher corn prices, but they also know they hold a considerable share of the market's leverage and in the weeks ahead packers are going to need cattle.
FEEDER CATTLE:
Tuesday's feeder cattle market was a tough pill to swallow amid the corn market's 16- to 20-cent leap in the nearby contracts, which pushed the March 2022 through May 2022 contracts above $6.00/bushel. But bigger than Tuesday's shake down with corn skyrocketing and feeders plummeting is the question left unanswered: What will the rest of the year bring? Is $6.00 a bushel corn going to be the song and dance we sing through 2022? Or is this a pop in the market that's largely being weather driven and can still stand a chance at changing? Like always, the unsettling reality of this current corn/feeder cattle situation will only be answered with time. As the market sits right now, the reason corn jumped so aggressively is because both Brazil and Argentina are enduring another terribly dry season and unless both countries get moisture (which could happen), demand for U.S. corn is going to be wild. Markets that are weather influenced are extremely tricky as they can change in a second. January feeders closed $3.57 lower at $162.67, March feeders closed $3.17 lower at $166.35 and April feeders closed $2.70 lower at $169.77. At Ozarks Regional Stockyards in West Plains, Missouri, at the midsession point compared to the last sale nearly three weeks ago, steers traded $6.00 to $9.00 higher while heifer calves traded $4.00 to $8.00 stronger. The market noted tremendous demand amid a heavy offering and that was well after the corn market closed sharply higher -- signaling buyers are still willing to dive into the market at this point regardless of the corn market's leap. The CME Feeder Cattle Index 1/3/2021: down $3.00, $162.35.
LEAN HOGS:
While the cattle complex floundered lower, the lean hog contracts held their ground and traded stronger throughout Tuesday's trade. February lean hogs closed $0.97 lower at $80.15, April lean hogs closed $0.35 higher at $87.00 and June lean hogs closed $0.40 higher at $98.27. Helping boost the complex's morale was the stronger cash hog trade which pushed the market $1.37 higher. As the market dives into a new year, seeing the demand on Thursday's export report will be insightful. Pork cutouts are unavailable due to packer submission problems. Tuesday's slaughter is estimated at 472,000 head -- 8,000 head less than a week ago and 16,000 head less than a year ago. Monday's slaughter was revised to 458,000 head -- 13,000 head less than what was originally stated. The CME Lean Hog Index: unavailable at this time.
WEDNESDAY'S CASH HOG CALL: Steady. With pork processing speeds down slightly and packers aggressively supporting the cash market through Tuesday's trade, it's likely that Wednesday sees steady business.
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