GENERAL COMMENTS:
Strong triple-digit gains have flooded through live cattle and feeder cattle markets Wednesday, moving nearby live cattle and feeder cattle prices to new record-high levels. The most obvious shift is spot month live cattle contracts closing above the $200-per-cwt threshold. The ability to move to the double-century market currently plays a bigger role than any technical or fundamental factors in the market. Although it is expected that the current support will find additional momentum, it is uncertain how aggressive traders will be early Thursday morning as they return to the market. Hog prices closed higher on the Daily Direct Afternoon hog report, up $1.51 with a weighted average of $81.26 on 6,868 hogs. March corn closed down 5 3/4 at $4.843, and March soybean meal closed up $4.80 at $315.8. The Dow Jones Industrial Average is up 130.92 at 44,156.73.
LIVE CATTLE:
Live cattle futures moved to new highs Wednesday afternoon, with the spot-month February contract moving above $200 per cwt for the first time in history. This move helped to support additional buyer support flooding into the entire complex as traders continue to focus on strong beef market fundamentals, but also increased technical support and expectations that these moves will gain a broader base of buyer support over the coming days and weeks. The ability to sustain price levels at this point through the next several days may not only instill strong activity and momentum in front-month contracts, but the strength is expected to filter through the rest of the cattle complex. Cash cattle markets are relatively quiet midweek, although the overall optimism of strong futures market support and early week cash trade at last week's levels is helping to cause many to feel prices will be at worst steady for the week. A few bids are now on the table in parts of Texas near midday at fully steady money with Tuesday's light Southern business. Live deals were marked at $201, also fully steady with the prior week's weighted averages. The North was fairly quiet with just a handful of dressed trade reported in Iowa at $320, certainly not enough trade to establish any kind of accurate trend for the week. On Wednesday, asking prices are around $202-plus in the South but still not fully established in the North. February live cattle closed $3 higher at $200.05, April live cattle closed $2.45 higher at $199.775 and June live cattle closed $2.25 higher at $194.9.
Wednesday's slaughter is estimated at 124,000 head, 1,000 head less than a week ago and 1,000 head less than a year ago.
Boxed beef prices closed lower: choice down $0.03 ($332.02) and select down $1.56 ($317.99) with a movement of 138.83 loads (98.57 loads of choice, 22.02 loads of select, 6.86 loads of trim and 11.38 loads of ground beef).
THURSDAY'S CATTLE CALL: Steady. Limited but steady cash cattle trade has developed over the past two days in Southern areas. With cash and futures prices at record levels, it is uncertain how aggressive packers will be at these price points through the end of the week.
FEEDER CATTLE:
Feeder cattle futures posted triple-digit gains Wednesday afternoon with nearby contracts once again moving to record-high levels. January futures closed above $277 per cwt, with gains above $2 per cwt for the day, while March through May contracts posted gains of $4 to $5 per cwt as traders continue to flood into the market following the higher upward shift in both live cattle and feeder cattle trade. The additional softness in the grain market is giving additional support to the feeder cattle complex, allowing for even wider spreads given the higher beef values and lower feed costs available at this point. January feeders closed $2.65 higher at $277.05, March feeders closed $5.83 higher at $273.075 and April feeders closed $4.83 higher at $271.3. The CME Feeder Cattle Index for Jan. 17: up $0.16, $278.18.
LEAN HOGS:
Lean hog futures closed higher Wednesday afternoon following spillover support from the aggressive gains in cattle trade. Even though the price trajectory of the cattle and hog markets remains in completely different directions, the strength in all cattle and beef markets is helping to support the hog complex. This support may be temporary, as the fundamental activity in pork markets is quite different than in the cattle market. But any support to lean hog futures is a welcome sight. February lean hogs closed $0.28 higher at $81.475, April lean hogs closed $0.58 higher at $87.275, and May lean hogs closed $0.58 higher at $92. Wednesday's hog slaughter is estimated at 444,000 head, 33,000 head less than a week ago and 46,000 head less than a year ago. Pork cutouts totaled 282.71 loads with 247.12 loads of pork cuts and 35.59 loads of trim. Pork cutout values are down $0.65 at $90.17. The CME Lean Hog Index for Jan. 17: up $0.06, $81.46.
THURSDAY'S HOG CALL: Steady. Early cash hog bids are expected to be generally steady Thursday morning. The lack of active direction in pork cutout values and sluggish reaction in lean hog futures may limit end-of-the-week cash hog prices.
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