GENERAL COMMENTS:
It was a tough day for the livestock complex as the live cattle, feeder cattle and lean hog contracts all saw losses. The market has become very cautious given the tensions growing with the Russia/Ukraine situation. While that may seem like a foreign issue that won't affect our soil specifically, it will indeed affect our trade. Hog prices closed higher on the National Direct Afternoon Hog Report, up $5.77 with a weighted average of $95.10 on 8,934 head. March corn is up 9 cents per bushel and May soybean meal is up $15.20. The Dow Jones Industrial Average is down 464.85 points and NASDAQ is down 344.03 points.
LIVE CATTLE:
It was a pullback day for the live cattle contracts as its fellow livestock counterparts retreated; traders seem unwilling to push the markets any higher at this point. April live cattle closed $1.27 lower at $144.75, June live cattle closed $0.77 lower at $141.12 and August live cattle closed $0.72 lower at $140.07. It's disappointing to see the futures market retreat from its aggressive push as the cash cattle market now stands an excellent chance at pushing prices higher. But the markets desperately need to work together to reach maximum price discovery. Thankfully, throughput continues to run at strong levels, which only bodes more and more positively for feedlots as packers work through supplies. There was another round of light cash cattle trade. Live prices traded at $142 and dressed prices at $227; but again, this was on a light sampling. The market still needs more cattle to trade and for prices to be solidified for the week.
Wednesday's slaughter is estimated at 123,000 head -- 1,000 head more than a week and year ago.
Boxed beef prices closed lower: choice down $0.76 ($260.88) and select down $4.68 ($258.96) with choice/select spread of $1.92 and a movement of 196 loads (137.84 loads of choice, 23.28 loads of select, 12.57 loads of trim and 22.59 loads of ground beef).
**Correction to Tuesday's Closing Comments -- The last time the choice/select spread was inverted was on 9/12/2017 (choice $190.79, select $190.86, spread -$0.07).**
THURSDAY'S CASH CATTLE CALL: Steady to $2.00 higher. The market still stands a chance at getting prices higher as fundamental cues encourage higher prices. But its whether or not feedlots can move the market higher when the board is trading lower and foreign uncertainty casts a negative tone across the markets.
FEEDER CATTLE:
To no surprise, the feeder cattle complex closed lower amid a rock 'n roll market on the grain side of things. The cash cattle market sold a handful for slightly higher prices, but until the live cattle complex can lend some support and the pressure eases from the commodities, it's a bleak outlook for the feeder cattle contracts. March feeders closed $1.45 lower at $162.77, April feeders closed $0.85 lower at $168.27 and May feeders closed $0.85 lower at $173.67. What's become very apparent at the sale barn level is that buyers are more interested in lightweight calves than they are feeders. With the substantial premiums fall feeder cattle contracts have to offer, buyers know supplies of feeders will be thin during that time and feedlots will have to get aggressive to procure the cattle they need. At Winter Livestock in Dodge City, Kansas, compared to last week on a run of 2,522 head, feeder steers weighing 650 to 975 pounds traded $3.00 to $5.00 lower. Steer calves weighing 350 to 650 pounds sold $6.00 to $10.00 higher. Feeder heifers weighing 625 to 900 pounds traded $3.00 to $4.00 lower. Heifer calves weighing 400 to 625 pounds sold $5.00 to $7.00 higher. Slaughter cows sold steady, but slaughter bulls sold $5.00 lower. The CME Feeder Cattle Index 2/22/2022: up $0.13, $162.13.
LEAN HOGS:
The lean hog complex bled lower like the rest of the marketplace as Wednesday served up a gruesome day for the futures market. April lean hogs closed $4.05 lower at $108.02, June lean hogs closed $2.45 lower at $118.77 and July lean hogs closed $1.92 lower at $118.32. The market's hesitantcy stems from the uncertainty that's looming with the Russia/Ukraine situation. And from the fact that there has been a case of the Highly Pathogenic Avian Influenza (HPAI) in a poultry flock in New Castle County, Delaware, which can be spread to both humans and hogs. At this time, there are no cases of HPAI in hogs in the U.S. But still, it's a market concern. Packers got busy buying hogs Wednesday afternoon as the market saw close to 9,000 head trade and prices jumped $5.77 higher. With supplies of market-ready hogs as thin as they are -- and with low levels of pork in cold storage -- the cash hog market will likely continue to be supported as pork products are in hot demand. Pork cutouts total 248.28 loads with 217.39 loads of pork cuts and 30.89 loads of trim. Pork cutout values: up $0.36, $109.12. Wednesday's slaughter is estimated at 473,000 head -- 1,000 head more than week ago and 22,000 head less than year ago. Tuesday's slaughter was revised to 472,000 head -- 7,000 head less than what was originally stated. The CME Lean Hog index 2/21/2022: up $1.04, $98.16.
THURSDAY'S CASH HOG CALL: Steady to somewhat higher. Packers have been being aggressive in at least two days of this week for cash hog purposes. They were aggressive in Wednesday's market, and it's likely that they'll be somewhat aggressive in Thursday's market as well.
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