GENERAL COMMENTS:
Cash cattle prices are $3 to $4 stronger this week and cattle futures have given an extended reaction to this week's Cattle Inventory data about the drought-diminished herd size, but even a fundamentally supported rally can't go on indefinitely. There was enough selling pressure to set futures contracts lightly lower at Thursday's close and this carried over to lean hogs as well. On the National Direct Afternoon Hog Report, prices were up $1.80 with a weighted average of $62.11 on 1,104 head. March corn is down 5 3/4 cents per bushel to $6.16 3/4 and March soybean meal is up $2.00 per ton to $437.10. The Dow Jones Industrial Average closed down 519 points and the NASDAQ closed down 639 points.
LIVE CATTLE:
Boosted by bullish confidence from this week's futures trade, as well as the knowledge that packers were aiming to keep a steady slaughter pace (117,000 head Thursday), cash cattle traders have manifested some big results. Light trade reported Thursday in the South showed live deals at mostly $140 per cwt, which is $3 to $4 higher than last week's weighted averages. Wednesday's moderate to good movement in the North was mostly $222, or $4 higher than last week's weighted averages. Asking prices for cattle remaining on showlists are around $140-plus in the South and $224-plus in the North. Futures prices have similarly added $3 or more since last week's close, but no rally can last forever, and traders apparently decided on Thursday afternoon to take a breather on this one. The February live cattle contract closed up $0.475 at $141.60, but the April contract closed down $0.15 at $146.75 after establishing a fresh contract high at $147.275. Live cattle futures haven't traded this high since early 2016.
Meanwhile, support from the beef market may be finding a plateau. Boxed beef prices closed lower again: choice down $1.69 ($281.46) and select down $3.10 ($276.47) with a movement of 134 loads (101.43 loads of choice, 14.62 loads of select, 4.80 loads of trim and 13.22 loads of ground beef).
FRIDAY'S CASH CATTLE CALL: $3.00 to $4.00 higher than last week. Cash cattle prices seem to have found firm footing after this big step up. Asking prices for cattle remaining on showlists are around $140-plus in the South and $224-plus in the North.
FEEDER CATTLE:
Light losses were noted in feeder cattle futures by the close of Thursday's session. March feeders were down $0.15 at $166.725; April feeders closed down $0.025 at $171.80; and May feeders closed down $0.125 at $175.625. The nearby chart is struggling to establish fresh highs in the way live cattle have been effortlessly sailing higher, and that may be due to the ongoing uncertainty about feed prices. Corn prices were lower Thursday and have dropped almost 20 cents since last week, but February is the classic "battle-for-acres season," and traders should be wary of volatility. Overall futures trading volume in feeder cattle has been strong throughout this week as traders have taken positions in response to the Cattle Inventory report, which showed a diminished beef herd and diminished prospects for calf numbers in 2022 and beyond. The CME Feeder Cattle Index for 2/1: up $0.16, $158.93, where it has been fairly steady through the past week.
LEAN HOGS:
Lean hog futures explored a lot of chart territory Thursday, first moving $2 higher and establishing fresh contract highs, then closing as much as $0.90 lower in the nearby February contract. The April contract closed $0.75 lower at $98.375, the May closed $0.85 lower at $102.20, and the June contract hit as high as $110.55 but ultimately closed $0.725 lower at $108.20. A fierce winter storm continues to snarl shipping operations for hog barns and packing plants anywhere from Arkansas to Ohio. As a result, daily hog slaughter Thursday at 424,000 is 51,000 below week-ago numbers and 34,000 below year-ago numbers. Meanwhile, the weekly export sales report showed only 30,400 metric tons (mt) of sales, mostly to Mexico and none to China (actually China reduced orders by 500 mt). But on the other hand, the futures market may look at the rapidly correctly U.S. Dollar Index and feel optimism for better export results in coming weeks. The afternoon pork cut-out report showed prices up $0.77 to $97.21, with 332.64 total loads (294.82 loads of cuts and 37.82 loads of trim). The CME Lean Hog Index for 2/1: up $0.15, $82.29, and the projected index for 2/2 is up $0.04, $83.33.
FRIDAY'S CASH HOG CALL: Steady to $1 higher. Packers may eventually start to shift into recovery mode and want to make up for the ground lost to this week's storm.
No comments:
Post a Comment