GENERAL COMMENTS:
Both the live cattle and feeder cattle markets are rallying into Monday's afternoon as the contracts anxiously wait to see what this week's cash cattle market shapes up to be. Meanwhile, the lean hog complex has been hit hard at Monday's start as the industry is still concerned about demand. March corn is down 4 1/4 cents per bushel and March soybean meal is down $7.90. The Dow Jones Industrial Average is down 102.42 points.
LIVE CATTLE:
The live cattle market is quietly doing its thing, continuing to pressure the upside of its market and trade at new contract highs. February live cattle are up $0.67 at $160.85, April live cattle are up $0.40 at $164.52 and June live cattle are up $0.35 at $160.62. The momentum that's alive and well in the contracts largely stems from the fact that traders know this week's cash cattle market will likely be higher. With last week's negotiated trade as thin as it was, with only a small movement of cattle trading in the North and hardly enough cattle moving in the South to even be reported -- packers are short bought heading into this week. It's also encouraging to see boxed beef prices higher at Monday's start as February has historically been a tough month for boxes, which consequently adds more pressure to packers too. It will be a top priority to monitor the cash market this week as packers will likely be pushed into paying substantially higher prices for the cattle they need as feedlots know they sit with the ability and power to drive this market as they see fit.
Last week's negotiated cash cattle market waited to trade until Friday of last week, and at which point very few cattle sold. Northern cattle sold for mostly $248 to $251, mostly at $250 though which is $2.00 higher than the previous week's weighted average. Of the sparse cash cattle trade that was reported in the South, cattle were trading at $159 which is $3.00 higher than the previous week's weighted average.
Last week's negotiated cash cattle trade totaled 64,468 head. Of that 92% (59,129 head) were committed for the nearby delivery, while the remaining 8% (5,339 head) were committed for the deferred delivery.
Boxed beef prices are higher: choice up $1.62 ($266.36) and select up $1.70 ($253.31) with a movement of 67 loads (40.61 loads of choice, 5.32 loads of select, 8.23 loads of trim and 12.83 loads of ground beef).
FEEDER CATTLE:
The feeder cattle complex is off to a brisk start Monday morning as the complex sees ample support from the live cattle/cash cattle market and loves the onset of cheaper corn. This combination has allowed for feeders to push a modest rally into Monday's noon hour where the spot March contract, and the deferred contracts of August 2023 through January 2024, are all rallying over $1.00 higher. It's logical for the spot March contract to be trading as aggressively as the deferred months as its contract price is $4.00 to $8.00 cheaper than that of the April 2023 and May 2023 contracts. But the momentum and vigor in the deferred months (where the contracts are all trading above $200.00) stems from the fact that supplies will be drastically thinner in the second half of the year, which consequently will drive prices higher. March feeders are up $1.57 at $187.67, April feeders are up $1.02 at $191.65 and May feeders are up $0.77 at $195.55.
LEAN HOGS:
The lean hog complex is enduring a tough start to the week as the complex sees anywhere from $2.00 to $3.00 drained from its nearly contracts. The biggest question continues to be: What is demand going to be in the near term? We understand that, come the second half of the year, demand should be better, but until then, the market could be in for a bumpy ride. On Wednesday of this week the newest WASDE report will be released which could answer some of our questions in terms of demand. February lean hogs are up $0.17 at $75.20, April lean hogs are down $3.35 at $83.12, and June lean hogs are down $2.50 at $100.80.
The projected lean hog index for Feb. 3 is up $0.24 at $73.29, and the actual index for Feb. 2 is up $0.20 at $73.05. Hog prices are lower on the Daily Direct Morning Hog Report, down $0.84 with a weighted average of $71.81, ranging from $65.00 to $77.00 on 3,720 head and a five-day rolling average of $71.87. Pork cutouts total 145.05 loads with 125.16 loads of pork cuts and 19.89 loads of trim. Pork cutout values: up $8.87, $87.96.
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