GENERAL COMMENTS:
The livestock complex trades cautiously Wednesday as the detection of Highly Pathogenic Avian Influenza in a commercial poultry flock in New Castle County, Delaware, raises red flags for the market. In addition, the developments between Russia and Ukraine continue to be worrisome. March corn is up 2 1/4 cents per bushel and May soybean meal is up $12.60.
The Dow Jones Industrial Average is up 61.06 points and NASDAQ is down 24.68 points.
LIVE CATTLE:
Live cattle futures are trending lower as the market trades timidly Wednesday. April live cattle are down $0.22 at $145.82, June live cattle are down $0.02 at $141.87 and August live cattle are down $0.17 at $140.62. The market has yet to see any cash cattle trade, but bids of $144 live and $227 dressed have been spotted in Nebraska. Asking prices are noted at $144 to $145 in the South and $230-plus in the North. It's anyone's guess at this point how cash cattle are going to trade. Feedlots stand a strong chance at getting cattle sold higher than last week as throughput continues at a good pace and packers need cattle. But given the developments between Ukraine and Russia, the entire marketplace is trading in a cautious and uneasy manner.
Tuesday's USDA Cold Storage report shared that pounds of beef in freezers rose 4% from last month and rose 1% from a year ago.
The Fed Cattle Exchange Auction on Wednesday listed a total of 2,037 head (Texas 1,650 head; California 140 head; Iowa 115 head; Nebraska 69 head; Oklahoma 63 head), of which none actually sold, as they did not meet the reserve prices, which ranged from $143 to $145. Opening prices were $140, high bids ranged from $140 to $143.50.
Boxed beef prices are mixed: choice up $0.97 ($262.61) and select down $2.15 ($261.49) equating to a choice/select spread of $1.12, and with a movement of 131 loads (98.29 loads of choice, 10.87 loads of select, 10.20 loads of trim and 11.99 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).**
FEEDER CATTLE:
With the soybean market rallying on top of what Tuesday's market accomplished, and with the corn market trending mostly steady, the feeder cattle contracts are still holding their breath, uneasy about the market's situation. March feeders are down $0.97 at $163.30, April feeders are down $0.22 at $168.90 and May feeders are down $0.27 at $174.25. The March contract dipped below the 40-day moving average by Tuesday's close, but now the market is teetering with trading below or right at the 100-day moving average. The feeder cattle market will need to see dynamite support from the live cattle complex if it's to trade higher amid the grain market's current pressure.
LEAN HOGS:
For the first time in six days, the lean hog complex is facing some opposition as the contracts come up against strong resistance. First, the market is weary of the presence of Highly Pathogenic Avian Influenza (HPAI) that was most-recently detected in a poultry flock in New Castle County, Delaware. This becomes worrisome for both humans and pork producers as the strain can be transmitted to people and pigs. The Center for Disease Control and Prevention stated that the recent HPAI detections do not present an immediate public health concern, but the markets are reacting. April lean hogs are down $3.87 at $108.20, June lean hogs are down $2.35 at $118.87 and July lean hogs are down $1.90 at $118.35.
Tuesday's USDA Cold Storage report should come as bullish news to the lean hog complex as frozen pork supplies were up 8% from last month, but down 6% from a year ago. And stocks of pork bellies were up 17% from a month ago, but down 43% from a year ago.
The projected CME Lean Hog Index for 2/22/2022 is unchanged at $98.15, and the actual index for 2/21/2022 is up $1.04 at $98.16. Hog prices are unavailable due to confidentiality. We can see 2,734 head have traded and the five-day moving average now sits at $84.66. Pork cutouts total 160.58 loads with 137.48 loads of pork cuts and 23.10 loads of trim. Pork cutout values: up $2.15, $112.24.
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