GENERAL COMMENTS:
Cattle futures quickly reversed early week momentum Thursday as active trade pressure developed in all live cattle and feeder cattle trade. The announcement that JBS's Greeley Plant had voted to strike was the initial spark that hinted at market pressure. But the aggressive and uniform pressure seen in all cattle trade indicates that this news was only the tip of the iceberg, and early week support was unable to hold the weight of the initial market shift lower. Outside markets also played a significant role in underlying cattle market support, given the active financial losses, which are creating additional economic concerns. Hog prices closed lower on the Daily Direct Afternoon hog report, down $0.24 with a weighted average of $86.58 on 2,279 hogs. March corn closed up 5 1/2 at $4.35 and March soybean meal closed up $7.00 at $303.20. The Dow Jones Industrial Average is down 592.58 at 48,908.72.
LIVE CATTLE:
Live cattle futures posted strong triple-digit gains Monday in reaction to continued bullish beef and cash market news, as well as last Friday's Cattle Inventory Report. Steers weighing 500 pounds or more are down 1% from year-ago levels, with total cattle and calves on feed in all feedlots down 3% from year-ago levels. The main change in year-over-year levels is seen in reporting feedlots with fewer than 1000 head. This is a segment that is not measured in the monthly cattle on feed reports and impacts overall numbers, although not the majority of the industry.
Cash cattle markets are still generally quiet, with a handful of trades reported sold in Eastern Nebraska this afternoon at $378, certainly not enough to establish an accurate trend for the week. A few bids are on the table in parts of Iowa, but they are being passed. Significant trade volume will likely be delayed until later today and/or Friday. February live cattle closed $5.28 lower at $235.25, April live cattle closed $6.20 lower at $235.60 and June live cattle closed $5.03 lower at $232.20. Thursday's slaughter is estimated at 114,000 head, 2,000 head more than a week ago and 3,000 head less than a year ago.
Boxed beef prices closed lower: choice down $0.77 ($367.25) and select down $1.72 ($360.37) with a movement of 114.89 loads (82.78 loads of choice, 7.34 loads of select, 15.64 loads of trim and 9.13 loads of ground beef).
FRIDAY'S CATTLE CALL: Steady to $1 Lower. Limited traction in cash cattle trade so far this week, combined with sharp lower futures trade and eroding beef values, may limit active price support and feeders' leverage through the end of the week.
FEEDER CATTLE:
Feeder cattle tumbled lower Thursday with active losses seen throughout the entire session. The focus on the news that a strike vote was seen in JBS's Greeley plant seemed to get most traders' and market watchers' attention. But it appears that the market focus and uniform softness through the entire complex have more to do with the lack of trade being able to withhold any sense of correction pressure following early week gains. The strong outside market softness is creating trader apathy, as there remain concerns that economic pressure is developing and could quickly affect consumer spending activity. Given current beef values, this could have a much more significant hit on long-term cattle and beef prices than any short-term production shift through the processing plants. March feeders closed $6.00 lower at $364.075, April feeders closed $7.00 lower at $360.5 and May feeders closed $7.55 lower at $356.2. The CME Feeder Cattle Index for February 3: up $0.59, $375.16.
LEAN HOGS:
Lean hog futures closed mixed in very limited market direction Thursday, with February futures leading the market lower with a 70-cent loss as the market freefall in the cattle complex seemed to have some spillover impact in nearby lean hog trade. The entire lean hog market continues to trend higher, with traders still optimistic about overall demand support through the rest of the year. February lean hogs closed $0.70 lower at $87.3, April lean hogs closed $0.08 lower at $98.375 and May lean hogs closed $0.25 lower at $101.50. Thursday's hog slaughter is estimated at 492,000 head, 9,000 head more than a week ago and 11,000 head more than a year ago. Pork Cutouts totaled 323.08 loads with 291.22 loads of pork cuts and 31.86 loads of trim. Pork cutout values are up $2.27 at $95.27. The CME Lean Hog Index for February 3: up $0.23, $86.06.
FRIDAY'S HOG CALL: Steady to $1 Higher. Continued support in pork values through the last couple of days, as well as active processing schedules, is expected to support early bids Friday.
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