GENERAL COMMENTS:
The livestock complex is trading mixed as both the live cattle and feeder cattle markets settle into a weaker position heading into Tuesday's afternoon, while the nearby lean hog contracts are finding modest support as the noon hour approaches. It's unlikely that any cash cattle trade begins Tuesday afternoon, but it's not unlikely that packers could offer up some bids by Wednesday as they'd like to see trade develop earlier than later. March corn is down 3 cents per bushel and March soybean meal is down $6.80. The Dow Jones Industrial Average is down 94.25 points.
LIVE CATTLE:
The live cattle complex is trading lower as traders timidly approach Tuesday's market. The timid attitude doesn't come because fundamental support is in question, but rather because the contracts have been rallying aggressively, and in the case of the live cattle market, actually reaching new contract highs nearly daily. February live cattle are down $0.10 at $160.72, April live cattle are down $0.72 at $163.75 and June live cattle are down $0.67 at $160.02. What's been interesting to watch as of late (beside the cash cattle market) has been boxed beef prices. Beef demand continues to remain extremely high, which is helping boxed beef prices trade higher when, historically, boxed beef prices are pressured throughout the month of February. This is a win-win situation for the cattle and beef markets as packers will see the benefit of slightly higher boxed beef prices, which could entice/allow them to be more aggressive in the cash market. No cash cattle trade has developed at this point, but it's highly likely that packers start showing the market some support come Wednesday as they're shorter bought than what they'd like to be. Asking prices in the South are noted at $161 to $162 and are still unestablished in the North.
Boxed beef prices are higher: choice up $1.11 ($267.68) and select up $3.50 ($257.22) with a movement of 67 loads (39.85 loads of choice, 9.41 loads of select, 5.51 loads of trim and 12.31 loads of ground beef).
FEEDER CATTLE:
After rallying aggressively throughout Monday's market, the feeder cattle contracts are trading lower as the market pauses, waiting to see how the market's fundamentals shake out this week. Demand throughout sale barns early this week has been exceptional and with the nearby corn contracts trading $0.02 to $0.05 lower, the market stands an excellent chance at rallying again when traders find confidence in the market's fundamental behavior. March feeders are down $0.20 at $187.52, April feeders are down $0.15 at $191.60 and May feeders are down $0.27 at $195.25.
LEAN HOGS:
After becoming subject to immense pressure throughout Monday's market, the nearby lean hog contracts are finally finding some technical support while the deferred contracts continue to trade modestly lower. It would help if pork cutout values could indeed trade higher again Tuesday as the cash market is seeing some mild support, but pork cutouts continue to be extremely volatile. April lean hogs are up $0.50 at $83.22, June lean hogs are down $0.30 at $100.25 and July lean hogs are down $0.45 at $102.07. The market could potentially find some more long-term support on Wednesday when the newest WASDE report is released.
The projected lean hog index for Feb. 6 is up $0.22 at $73.51, and the actual index for Feb. 3 is up $0.24 at $73.29. Hog prices are higher on the Daily Direct Morning Hog Report, up $0.41 with a weighted average of $72.22 on 2,854 head, ranging from $65.00 to $76.00 and a five-day rolling average of $72.22. Pork cutouts total 178.72 loads with 164.56 loads of pork cuts and 14.16 loads of trim. Pork cutout values: down $0.15, $81.47.
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