GENERAL COMMENTS
It was a good day for the livestock contracts as all three of the markets closed mostly higher and saw excellent support from either the WASDE report or the market's fundamentals. Thursday's focus will be on export reports and cash cattle trade. Hog prices closed higher on the Daily Direct Afternoon Hog Report, up $0.55 with a weighted average of $79.02 on 14,988 head. May corn is down 8 3/4 cents per bushel and May soybean meal is down $2.10. The Dow Jones Industrial Average is down 157.38 points.
LIVE CATTLE:
As suspected, most of the live cattle contracts closed higher as the market couldn't help but feel encouraged by Wednesday's WASDE report. The spot April contract was the only contract month to close lower, and it only declined mildly. April live cattle closed $0.52 lower at $165.45, June live cattle closed $0.10 higher at $160.65 and August live cattle closed $0.07 higher at $160.17. Some cash cattle trade could begin to develop on Thursday, but it wouldn't be surprising to see trade wait until Friday to really get underway. Asking prices in the South are noted at $166-$167 but are still not established in the North. Seeing boxed beef prices face some headwind doesn't come as a surprise as February and March are usually tough beef demand months where packers see pushback from consumers. Wednesday's slaughter is estimated at 126,000 head, steady with a week ago and 1,000 head more than a year ago.
Wednesday's WASDE report shared exciting news for the cattle and beef markets. Production for 2023 was increased by 170 million pounds, which largely stems from more aggressive beef cow slaughter than originally assumed. The first three quarters of 2023 saw production increases to contribute to the 170 million additional pounds, but the fourth quarter remained unchanged. Quarterly price projections showed a bullish outlook for steer prices as all four quarters of 2023 saw a price increase. Compared to last month, the first quarter was raided by $3.00 to average $161.00, the second quarter was raised by $4.00 to average $163.00, the third quarter was raised by $2.00 to average $159.00 and the fourth quarter was raised by $2.00 to average $164.00. Beef imports remained unchanged at 3,425 million pounds, and exports remained unchanged at 3,090 million pounds.
Boxed beef prices closed mixed: choice down $3.15 ($284.78) and select up $0.63 ($278.12) with a movement of 165 loads (121.29 loads of choice, 20.60 loads of select, 7.28 loads of trim and 15.59 loads of ground beef).
THURSDAY'S CATTLE CALL: $1.00 to $2.00 higher. The cash cattle market will likely see some bids offered on Thursday, but whether or not feedlots will let cattle move that early remains unknown.
FEEDER CATTLE:
New contract highs were the theme of the feeder cattle market by Wednesday's end as many of the nearby contracts jolted to new highs before closing. The market's nearly unbelievable strength is stemming from two factors: deteriorating corn prices and phenomenal countryside demand. As of Wednesday's close, the only feeder cattle contract from March 2023 to January 2024 trading below $200/cwt is the spot March 2023 contract. March feeders closed $1.62 higher at $193.75, April feeders closed $1.40 higher at $200.07 and May feeders closed $1.95 higher at $206.15. At Winter Livestock Auction in La Junta, Colorado, compared to last week, steers weighing 300 to 400 pounds sold mostly steady, steers weighing 400 to 500 pounds traded $5.00 to $8.00 higher, steers weighing 500 to 600 pounds traded $3.00 to $5.00 higher, steers weighing 600 to 700 pounds sold $5.00 to $8.00 stronger with instances of up to $10.00 and $12.00 higher, and steers over 700 pounds traded mostly steady. Heifers under 500 pounds sold mostly steady, heifers weighing 500 to 700 pounds sold $3.00 to $5.00 higher, heifers over 700 pounds sold $2.00 to $3.00 higher. Slaughter cows sold $1.00 to $2.00 higher, and slaughter bulls traded steady to $1.00 lower. Feeder cattle supply over 600 pounds was 61%. The CME Feeder Cattle Index for March 7: up $0.29, $188.33.
LEAN HOGS:
Despite Wednesday's WASDE report not showing much favoritism to the hog complex, the onset of higher cash hog prices and stronger pork cutout values led the market to a higher end by Wednesday afternoon. April lean hog closed $0.95 higher at $85.75, June lean hogs closed $0.20 higher at $100.27 and July lean hogs closed $0.07 higher at $102.67. Pork cutout values were able to close higher as the market saw steady consistent gains throughout most of the cuts as the rib and belly were the only pieces to close lower. Wednesday's slaughter is estimated at 481,000 head, 13,000 head more than a week ago and 4,000 head more than a year ago. Pork cutouts totaled 244.96 loads with 199.10 loads of pork cuts and 45.86 loads of trim. Pork cutout values: up $0.64, $87.66. The CME Lean Hog Index for March 6: up $0.18, $79.09.
Wednesday's WASDE report shared disappointing news for the hog and pork markets. Pork production was lowered from a month ago as higher than previously expected slaughter speeds in the first quarter were more than offset by lighter first half of 2023 carcass weights. Pork production in 2023 fell by 25 million pounds. In terms of quarterly price projections, the market received mixed news as both the first and second quarter of 2023 saw price reductions, but the third and fourth quarter of the year remained unchanged. Barrows and gilts in the first quarter were reduced by $2.00 to average $56.00, prices in the second quarter were reduced by a $1.00 to average $70.00, and both the third and fourth quarter remained unchanged at $73.00 and $64.00. Pork imports remained unchanged at 1,005 million pounds and exports also remained unchanged at 6,350 million pounds.
THURSDAY'S HOG CALL: Lower. Given that packers bought quite a few hogs in Wednesday's market, it's likely that they'll show Thursday's market less interest.
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