GENERAL COMMENTS:
Live cattle and lean hog futures are rallying into Monday's trade with a full head of steam. The feeder cattle contracts aren't as confident as feed prices continue to spike. March corn is up 13 3/4 cents per bushel and March soybean meal is up $7.20. The Dow Jones Industrial Average is down 51.14 points and NASDAQ is down 47.12 points.
LIVE CATTLE:
Live cattle futures are leaning into Monday's trade, exhilarated to take on the week and hopefully push cash cattle prices higher again. February live cattle are up $0.10 at $142.15, April live cattle are up $0.07 at $146.95 and June live cattle are up $0.05 at $141.42. You can tell the futures complex is holding its breath, seeming to teeter, and will look to the cash cattle market to dictate whether the market has more upward potential in its near future. The exciting piece about the cash cattle market is throughput has mostly recovered and everyone in the business knows supplies of market-ready cattle are thin -- T.H.I.N.! Monitoring how cattle are committed (for the nearby delivery or deferred delivery) will be incredibly important throughout the spring rally as packers will try to cut the cash cattle market's upward trend by buying cattle with time. Watching boxed beef prices has been and will continue to be very telling. While packers continue to say they want the bigger cattle that will yield choice cuts, it's interesting to note the choice/select spread has narrowed to a thin $2.22 -- which tells us there's more demand for the select carcasses than what's being portrayed. The cash cattle market hasn't seen any interest as of yet and it's likely this week's trade doesn't get underway until Wednesday or later.
Last week's negotiated cash cattle trade totaled 98,188 head. Of that 76% (75,030 head) were committed for nearby delivery, while the remaining 24% ($23,158 head) were committed for deferred delivery. Last week's volume of 98,188 head is 18,432 head more than a week ago, but still 4,320 head less than a year ago.
The bulk of business took place Wednesday and Thursday last week with just a little clean-up trade on Friday. Southern live deals had a full range of $136 to $140, mostly $140, $3 to $4 higher than the prior week's weighted averages. Northern dressed transactions had a full range of $220 to $224, mostly $222, $4 higher than the previous week's weighted average basis Nebraska.
Boxed beef prices are mixed: choice down $0.66 ($279.15) and select up $0.88 ($276.93) with a movement of 44 loads (31.18 loads of choice, 5.00 loads of select, zero loads of trim and 7.36 loads of ground beef).
FEEDER CATTLE:
The feeder cattle market is feeling the heat as Monday posts a generous rally throughout the grains. The corn complex is seeing an 8- to 15-cent rally in nearby contracts; soybean contracts are rallying anywhere from 25 to 28 cents higher in nearby contracts. The feeder cattle contracts are trending lower, but still you must admire where the contracts sit as today they're significantly higher than a year ago. March feeders are down $0.75 at $165.32, April feeders are down $0.97 at $170.45 and May feeders are down $0.62 at $174.72. The feeder cattle market will likely see fewer cattle in auctions this week as the market has moved most of the long-yearlings that were left to sell and buyers will be cognizant of their buying abilities given the higher feed prices. But still, the market has much to offer and buyers are going to want to be able to play the game while the marketplace is hot.
LEAN HOGS:
The current hog market isn't for the faint of heart. As you analyze the futures complex, you see the strength and vigor the market possesses as April 2022 through August 2022 contracts are all trading well above $100.00. But then the tricky part is analyzing the cash hog market. Before you get weighed down in the data of today's current price, the cash spread, and the volume which have sold, I think it's incredibly important to remember just how few hogs trade in the cash market and to remember the cash hog market's fickle nature nowadays. Not only are packers trying to gauge how many hogs they need from the cash market to fill in the gaps here and there, but they also are wanting to protect themselves from shortages of hogs in the near future, all while not giving too much for them as that takes away from their bottom line. Nevertheless, the lean hog market is rallying into Monday's trade with a head full of steam and is ready to take on whatever opportunity to market gives. April lean hogs are up $2.67 at $102.75, June lean hogs are up $2.45 at $111.87 and July lean hogs are up $2.00 at $111.15.
The projected CME Lean Hog Index for 2/1/2022 is up $0.19 at $83.33 and the actual index for 2/3/2022 is up $0.97 at $84.30. Hog prices are lower, sharply lower, on the National Direct Afternoon Hog Report, down $12.61 with a weighted average of $71.83, ranging from $69.00 to $90.00 on 5,876 head and a five-day rolling average of $80.10. Pork cutouts total 194.59 loads with 162.72 loads of pork cuts and 31.87 loads of trim. Pork cutout values: up $4.06, $101.47.
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