GENERAL COMMENTS:
As the week starts out, the livestock complex is optimistic as the live cattle, feeder cattle and lean hog futures trade mostly higher. Helping drive the markets higher is the phenomenal fundamental demand the market has seen for both pork cutouts and packer interest in the cash cattle market. March corn is down 3 3/4 cents per bushel and March soybean meal is down $8.40. The Dow Jones Industrial Average is down 71.17 points and NASDAQ is up 120.48 points.
LIVE CATTLE:
After a large volume of cash cattle traded last week and a robust slaughter pace, this week's cash cattle market is hitting Monday excited to hopefully continue the upward quest. February live cattle are up $0.55 at $142.42, April live cattle are up $0.20 at $146.37 and June live cattle are up $0.32 at $141.45. I was surprised to see how many cattle traded in last week's negotiated cash cattle trade, but also see that only 20% of the cattle were committed with time. As feedlots approach this week's trade, one of their biggest challenges will be keeping packers from getting a sizeable volume of cattle committed for deferred delivery. This matters because the more cash cattle packers buy with time, the easier it becomes for them to dictate the current week's trade.
Last week's negotiated cash cattle trade totaled 104,457 head. Of that 80% (83,348 head) were committed for nearby delivery while the remaining 20% (21,109 head) were committed for deferred delivery.
Boxed beef prices are higher: choice up $0.24 ($274.76) and select up $1.79 ($269.62) with a movement of 27 loads (16.90 loads of choice, 4.90 loads of select, 3.32 loads of trim and 2.36 loads of ground beef).
FEEDER CATTLE:
With the February 2022 through August 2022 live cattle contracts rallying into Monday afternoon, the feeder cattle complex is optimistic and trading higher to start the week. March feeders are up $0.90 at $167.12, April feeders are up $0.60 at $171.30 and May feeders are up $0.57 at $175.32. Helping matters is the fact that the grain complex is trending lower as both corn and soybean prices sink to weaker prices. Demand is anticipated to be strong again this week throughout sale barns as buyers see the opportunity within the cattle market. The main thing that worries them about buying too aggressively is that drought conditions are likely to last through 2022, which drives feed prices higher.
LEAN HOGS:
The lean hog complex is back to its normal self as the market ignites a rally right from the get-go Monday. April lean hogs are up $1.30 at $103.52, June lean hogs are up $0.75 at $112.97 and July lean hogs are up $0.85 at $112.45. I was surprised to see cash hog prices over $2.00 higher Monday morning, as I assumed packers would only show vague interest in the cash market early in the week. But with pork cutout values closing $8.48 higher last Friday, packers could be looking to chase the retail market while buyers are willing to cough up the coin.
The projected CME Lean Hog Index for 2/11/2022 is up $1.59 at $90.51 and the actual index for 2/10/2022 is up $1.18 at $88.92. Hog prices are higher on the National Direct Morning Hog Report up $2.89 with a weighted average of $84.37, ranging from $76.00 to $93.00 on 4,289 head and a five-day rolling average of $79.89. Pork cutouts total 151.01 loads with 132.96 loads of pork cuts and 18.05 loads of trim. Pork cutout values: up $6.36, $116.32.
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