GENERAL COMMENTS:
Thus far, it's been a stellar Monday for the livestock contracts, as the live cattle, feeder cattle and even the lean hog contracts are seeing support from traders. That's not to say that the market is free and clear from all pressures, as the war in Ukraine is still a wild card. But the market is taking all of Monday's support, as it's been a grim last two weeks. May corn is down 20 3/4 cents per bushel, and May soybean meal is up $9.90. The Dow Jones Industrial Average is up 235.68 points, and the NASDAQ is down 144.09 points.
LIVE CATTLE:
The live cattle contracts are leaning into Monday's trade ready to push into the new week with ample support from traders. The market is rallying off the support plane at $132.50, and it's refreshing to see the April 2022 contract trading above $140 again. Monday's boost of support doesn't mean the market is free and clear from all the war rhetoric, but the market might as well jump to trading higher when the opportunity presents itself because we know all too well how fast it can crumble in the opposite direction. April live cattle are up $3.45 at $140.75, June live cattle are up $3.30 at $136.25, and August live cattle are up $2.30 at $137.37. With packers having found some support in boxed beef prices last week, it's likely that they find support again in this week's market, which could mean that feedlots stand a fighting chance at trading cattle at least steady. The pressure that feedlots are going to face in the weeks ahead stems from throughput. Packers are notorious for needing to 'clean their coolers' when supplies of market-ready cattle are thin, and lo and behold, that's where we're at. Supplies of fat cattle are thin, and instead of chasing the market and cutting into their own margin when supplies are tight, it better suits their bottom line to cut production for a couple of weeks, let supplies build up and then turn the machines back to full bore once summer meat demand shows some interest. New showlists appear to be mixed, somewhat higher in Kansas, higher in Texas, and lower in Nebraska/Colorado.
Last week's negotiated cash cattle trade totaled 83,264 head. Of that, 76% (63,306 head) were committed for the nearby delivery, while the remaining 24% (19,958 head) were committed for the deferred delivery.
Boxed beef prices are mixed: choice up $0.33 ($255.04) and select down $0.04 ($249.07) with a choice/select spread of $5.97 and a movement of 42 loads (20.94 loads of choice, 6.50 loads of select, 6.85 loads of trim and 7.97 loads of ground beef).
FEEDER CATTLE:
The feeder cattle contracts are having a heyday with Monday's trade as the corn and soybean contracts are trading lower. With some immediate pressure relieved from the input cost side of things, the market's technicals are able to push the contracts higher, and it may even help the market's sales throughout the countryside. Buyers have been leery of jumping into calves and feeders over the past three weeks as inputs have simply gotten nearly impossible to pencil in, and even if you can pencil in your cost of gains to manageable prices, there's still plenty of volatility in the cattle contracts, which makes one wonder when the market's focus will shift back to supply and demand mechanics. March feeders are up $3.15 at $156.42, April feeders are up $5.12 at $163.10 and May feeders are up $4.22 at $167.95. Monday's rally is a breath of fresh air for the market, but there's still a long way to go before the market is fully healed from the recent bloodbath it endured.
LEAN HOGS:
The lean hog complex is resting in the market's undeniable truth that supplies are tight -- and that they're likely to stay that way for the next three to six months. The futures market is struggling to accept that reality but instead wants to know how nearby demand is going to treat the market before it jumps beyond trading in its comfortable sideways choppy form. The cash hog market has seen strong interest already, as over 4,000 head have traded, and at stronger prices. If pork cutout values do indeed find support in the afternoon's report, then the contracts will likely feel more comfortable trading modestly higher. April lean hogs are down $0.32 at $102.40, June lean hogs are up $1.40 at $119.57, and July lean hogs are up $1.00 at $118.62.
The projected lean hog index for 3/11/2022 is up $0.07 at $100.83, and the actual index for 3/10/2022 is up $0.85 at $100.76. Hog prices are higher on the Daily Direct Hog Report, up $1.72 with a weighted average of $100.65, ranging from $98 to $110 on 4,110 head and a five-day rolling average of $99.68. Pork cutouts total 176.53 loads with 151.69 loads of pork cuts and 24.84 loads of trim. Pork cutout values: up $5.84, $108.39.
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