GENERAL COMMENTS
It was a mixed day for the cattle market as feeders traded lower as the corn market posed a modest rally, but the live cattle market was able to close mostly higher as the market focused on sharp gains in the boxed beef department. Meanwhile, the lean hog complex had no issue trading higher throughout the day as traders were finally given the chance to trade Friday's exciting Quarterly Hogs and Pigs report. Hog prices averaged $77.80 on the Daily Direct Afternoon Hog Report, with selling 9,889 head and the five-day rolling average now sitting at $78.43. March corn is up 8 1/2 cents per bushel and March soybean meal is down $3.50. The Dow Jones Industrial Average is up 37.63 points.
LIVE CATTLE:
The live cattle complex traded mixed throughout Tuesday's market as traders were to keep with last week's upward momentum, but given the jump in boxed beef prices, traders came around to supporting the complex again. Tuesday's surge in boxed beef prices is a big development for the market. Substantially higher boxed beef prices likely means that some packers will run a Saturday kill this week in order to ensure that they can capitalize on the selling of product at these levels. Secondly, with last week's negotiated cash cattle market only selling 44,000 head, packers will need to be more aggressive in this week's market to ensure they have cattle committed for the upcoming weeks, which becomes slightly easier for them to do when boxed beef prices are soaring. Heading into 2023, monitoring throughput, and keeping a close eye on showlists current-ness will be a top priority. February live cattle closed $0.12 higher at $157.87, April live cattle remained steady at $161.82 and June live cattle closed $0.17 lower at $157.67.
Tuesday's slaughter is estimated at 128,000 head, 4,000 head more than a week ago and 7,000 head more than a year ago. Monday's slaughter is estimated at 6,000 head.
New showlists appear to be higher in all three major feeding states, somewhat higher in Texas, but higher in Kansas and Nebraska/Colorado.
The bulk of last week's light business took place on Thursday and Friday, with Northern dressed sales ranging from $246 to $250, mostly $249, $1 higher than the prior week's weighted averages. Southern live deals were at $155 to $156, fully steady to $1 higher than the previous week's weighted averages. Last week's negotiated cash cattle trade totaled 44,051 head. Of that, 88% (38,827 head) were committee for the nearby delivery, while the remaining 12% (5,224 head) were committed for the deferred delivery.
Boxed beef prices closed higher: choice up $8.09 ($280.04) and select up $0.17 ($245.64) with a movement of 78 loads (42.39 loads of choice, 20.66 loads of select, 3.98 loads of trim and 10.74 loads of ground beef). The choice/select spread sits at $34.40.
WEDNESDAY'S CATTLE CALL: Higher. With last week's negotiated cash cattle trade only seeing 44,000 head sold, packers will need to be active in this week's market to secure supplies for upcoming kills.
FEEDER CATTLE:
The feeder cattle complex closed lower, which comes as no surprise as placements were higher than what analysts projected on Friday's Cattle on Feed report, and as corn prices grew stronger as the day traded on. January feeders closed $0.90 lower at $183.10, March feeders closed $1.35 lower at $185.40 and April feeders closed $1.12 lower at $189.12. If the cash cattle market and live cattle complex can lend the feeder cattle market support later in the week, then the complex stands a chance at trading sideways to somewhat higher so long as the grain market doesn't impose too much more pressure. It was positive to see that the market remained above both its 40-day and 100-day moving averages even with Tuesday's downturn. The CME Feeder Cattle Index for Dec. 23: down $0.38, $176.37.
LEAN HOGS:
The lean hog complex had no issues trading higher throughout Tuesday's market as traders finally had the opportunity to trade Friday's strong Quarterly Hogs and Pigs report. With thinner supplies forecast throughout much of 2023, hog producers are hoping that the thinner supplies will lay a foundation for potentially higher prices. With cold storage flush with inventory, that isn't the case in Tuesday's market, but it could be in 2023. Pork cutout values again sank lower by Tuesday's close with the belly being the biggest problem as it alone dropped $8.03. Meanwhile the butt gained $3.83, the loin closed $1.08 higher, and the rib gained $1.00 by today's end. February lean hogs closed $3.65 higher at 91.47, April lean hogs closed $1.07 higher at $96.45 and June lean hogs closed $0.17 higher at $108.92. Pork cutouts totaled 267.93 loads with 236.38 loads of pork cuts and 31.55 loads of trim. Pork cutout values: down $1.14, $90.92. Tuesday's slaughter is estimated at 490,000 head, 1,000 head more than a week ago and 14,000 head more than a year ago. The CME Lean Hog Index for Dec. 22: down $0.93, $78.74.
WEDNESDAY'S HOG CALL: Higher. Given that packers were so lax in last week's market, they'll need to be more aggressive this week in order to ensure they have enough inventory for upcoming kills.
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