GENERAL COMMENTS
It was another strong day for the livestock complex as all three of the markets were able to close mostly higher. Come Thursday, cattlemen will be paying close attention to any bids that develop from packers as the cash market has yet to really trade. Hog prices closed higher on the Daily Direct Afternoon Hog Report, up $1.10 with a weighted average of $72.27 on 14,308 head. March corn is down 2 1/4 cents per bushel and March soybean meal is up $5.70. The Dow Jones Industrial Average is down 49.60 points. Wednesday's Cold Storage report shared that total red meat supplies in freezers were up 2% from last and up 11% from a year ago. Total pounds of beef in freezers were up 4% from last month and up 7% from last year. Frozen pork supplies were up 1% from the previous month and up 16% from last year. Stocks of pork bellies were up 16% from last month and up 66% from last year.
LIVE CATTLE:
The live cattle market performed rather well throughout Wednesday's market as the complex traded higher in its futures contracts, and the cash cattle market remains undeveloped for the week as feedlots have their eyes set on higher prices while packers would obviously like to see the market regress. February live cattle closed $0.25 lower at $157.60, April live cattle closed $0.25 higher at $161.55 and June live cattle closed $0.35 higher at $158.20. The cash cattle market could begin to trade on Thursday, but it's just as likely that the market holds out and waits to trade on Friday. Feedlots are liking the support that's building in the market's technical arena, and hope to carry that over to the market's fundamental side later this week. It's normal for boxed beef prices to wane from now through February, which consequently cuts in packer margins and makes them even more determined to hold the cash market steady. Asking prices in the South are noted at $157 but are still not established in the North.
Wednesday's slaughter is estimated at 127,000 head, 7,000 head more than both a week and year ago.
Boxed beef prices closed lower: choice down $1.36 ($268.28) and select down $0.59 ($251.80) with a movement of 137 loads (84.78 loads of choice, 28.38 loads of select, 6.35 loads of trim and 17.28 loads of ground beef). The choice/select spread sits at $16.48.
THURSDAY'S CATTLE CALL: Steady to $1.00 higher. Feedlots know that packers need cattle and it's likely that they use the momentum that's building on the board to help keep prices at least steady, if not advance them mildly.
FEEDER CATTLE:
It was a good day for the feeder cattle complex as the market saw mostly strong demand throughout the countryside which was complimentary to the action seen on the board as the feeder cattle contracts closed anywhere from $0.07 to $0.45 higher. The spot March contract was able to close above its 100-day moving average and could (like the rest of the contracts) continue to skate higher so long as corn doesn't pose a threat. The cash cattle market is expected to begin to trade Thursday, and if prices hold at least steady, then feeders will likely take that as a positive sign and could potentially keep with their upward momentum. March feeders closed $0.15 higher at $183.75, April feeders closed $0.42 higher at $188.35 and May feeders closed $0.60 higher at $192.57. At Philip Livestock Auction in Philip, South Dakota, compared to two weeks ago, feeder steers under 600 pounds traded steady, steers weighing 600 to 750 pounds traded steady to $2.00 higher. Heifers weighing 450 to 600 pounds traded $2.00 to $3.00 lower, heifers weighing 600 to 700 pounds sold steady to $2.00 lower. Feeder cattle supply over 600 pounds was 77%. The CME Feeder Cattle Index for Jan. 24: up $0.24, $177.77.
LEAN HOGS:
The lean hog complex had a mostly successful day as cash prices closed higher and other than the immediate nearby contracts, the futures market closed mostly higher too. February lean hogs closed $0.30 lower at $76.80, April lean hogs closed $0.05 lower at $85.32 and June lean hogs closed $0.12 higher at $101.80. Packers have shown this week more support in the cash market than they have over the last month as once again prices closed higher, up $1.10 with a total movement of 14,308 head. As packers look to the upcoming months, they know the promise of better demand exists and they want to have the product necessary to sell. Pork cutouts totaled 269.21 loads with 222.33 loads of pork cuts and 46.89 loads of trim. Pork cutout values: down $0.95, $79.11. Wednesday's slaughter is estimated at 490,000 head, 9,000 head more than a week ago 14,000 head more than a year ago. The CME Lean Hog Index for Jan. 23: down $0.02, $72.11.
THURSDAY'S HOG CALL: Lower. Given that packers have been fairly aggressive in the market early this week, it's likely that they'll be aggressive in the later half of the week.
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