Tuesday Closing Livestock Market Update - Pork Cuts, Boxed Beef Prices Tip Lower

GENERAL COMMENTS:

It was a split day for the marketplace as cattle futures closed mostly lower, but the lean hog market continued to demand support and kept trading higher. A California judge ruled that Prop 12 enforcement should be halted on sales of pork, which helped boost the lean hog market's spirits and aided in the higher close. Hog prices closed higher on the National Direct Afternoon Hog Report, up $6.44 with a weighted average of $72.13 on 9,755 head. March corn is down 1 cent per bushel and March soybean meal is down $1.90. The Dow Jones Industrial Average is down 66.77 points and NASDAQ is down 315.83 points.

LIVE CATTLE:

I was rooting for the cash cattle market to wait to trade until at least Wednesday, but some early trade broke loose and both live and dressed cattle traded steady with last week's market. Southern live deals were marked at $137 and Northern dressed cattle were sold at $218, both fully steady with last week's market. Tuesday's trade was only a light sampling, so come Wednesday the market fully expects more cattle to trade. It's likely Wednesday will see cattle trade for steady prices as the futures market isn't granting the complex any supportive favors. Also, with boxed beef prices cooling off, the market will likely trade steady. February live cattle closed $0.77 higher at $137.10, April live cattle closed $0.02 higher at $140.10 and June live cattle closed $0.15 lower at $135.42. 

The market did see a positive step made in terms of processing speeds as Tuesday's slaughter is estimated at 118,000 head. The more progress that can be made on throughput the better as feedlots are starting to grow wary about currentness. Tuesday's slaughter is estimated at 118,000 head -- 1,000 head more than a week and year ago.

Boxed beef prices closed lower: choice down $1.12 ($292.38) and select down $1.47 ($283.32) with a movement of 143 loads (95.70 loads of choice, 13.58 loads of select, 13.38 loads of trim and 20.32 loads of ground beef).

WEDNESDAY'S CASH CATTLE CALL: Steady. Given that cattle have sold in both the North and the South, prices will likely trend steady with the week's tone.

FEEDER CATTLE:

The corn market closed higher, but the deferred contracts walked away with the bigger gains and nearby contracts traded only $0.01 to $0.03 higher. Still, the jump in corn prices and the weaker undertones in the cattle market all aided in the feeder cattle contracts demise by Tuesday's close. March feeders closed $1.40 lower at $159.85, April feeders closed $1.10 lower at $165.27 and May feeders closed $1.12 lower at $169.20. It's unlikely the feeder cattle market will see much support from either the technical or fundamental side of the market as external influences remain unfriendly to the market's success. At Oklahoma National Stockyards in Oklahoma City, Oklahoma, compared to last week on a run of 12,274 head, feeder steers and heifers traded $3.00 to $5.00 lower. Steer calves traded unevenly steady and heifer calves traded $3.00 to $5.00 lower. Continued cold and dry conditions across the region have many of the cattle coming to the market in thin condition. The CME Feeder Cattle Index 1/24/2022: down $0.69, $159.77.

LEAN HOGS:

The lean hog market continued its upward climb Tuesday on continued support in the cash hog market and a California court halted the enforcement of Prop 12, which moves back the enforcement of the law by six months once the rules are finalized. The Supreme Court's next conference is scheduled for Feb. 18. The entire lean hog complex rallied throughout Tuesday, but it wasn't only the deferred contracts that saw immense support, but also the nearby contracts. February lean hogs closed $1.12 higher at $87.45, April lean hogs closed $1.92 higher at $97.25 and June lean hogs closed $0.62 higher $106.57. Pork cutouts totaled 347.08 loads with 311.70 loads of pork cuts and 35.39 loads of trim. Pork cutout values: down $3.20, $92.46. Tuesday's slaughter is estimated at 476,000 head -- 8,000 head more than a week ago and 27,000 head more than a year ago. Monday's hog slaughter was revised to 448,000 head -- which is 7,000 head less than what was originally stated. The CME Lean Hog Index 1/21/2022: up $0.81, $78.32.

WEDNESDAY'S CASH HOG CALL: Higher. With the findings on the Prop 12 legislation, the cash market could see more interest in Wednesday's market as packers look to procure all the hogs the market can stomach.

Tuesday Midday Livestock Market Summary - Meat Prices Show Topping Signs

GENERAL COMMENTS:

Tuesday's market has shown a dip in both boxed beef and pork cutout prices. The market could grow stronger before the day's end, but it's not unlikely that prices are peaking. March corn is up 8 cents per bushel and March soybean meal is down $0.30. The Dow Jones Industrial Average is down 293.66 points and NASDAQ is down 367.24 points.

LIVE CATTLE:

Historically speaking, the boxed beef market has rallied into the first two to three weeks of January as retailers restock their coolers. But as February approaches the market levels out. That's exactly what we are seeing in Tuesday's beef market. February live cattle are up $0.17 at $136.50, April live cattle are down $0.35 at $139.75 and June live cattle are down $0.22 at $135.35. The big concern is how much will boxed beef prices dip? Wanting the product to be more affordable for customers is a valid plea. But on the same token, if boxed beef prices dip too much, many packers may opt to run slow processing speeds, which would drastically hinder the market's ability to fully capture a spring rally. There's been a little bit of cash cattle trade in the South at $137, which is fully steady with last week's trad; but largely the market has yet to be tested and it is likely cash cattle wait to trade until Wednesday.

Asking prices are noted in the South at $138 and the North has yet to signal what they're hoping to get.

Boxed beef prices are lower: choice down $0.16 ($293.34) and select down $0.14 ($284.65) with a movement of 84 loads (52.02 loads of choice, 8.50 loads of select, 7.31 loads of trim and 15.80 loads of ground beef).

FEEDER CATTLE:

With the corn market trading comfortably in the $6.20 per bushel range, the feeder cattle complex is nauseous. If feeders were trading substantially higher, the market could stomach the cost of these higher inputs. But making cattle pencil in today's market takes a crafty mind and one who likes to look risk right in the eye. January feeders are down $0.07 at $158.40, March feeders are down $2.15 at $159.10 and April feeders are down $1.75 at $164.62.

LEAN HOGS:

Even with the morning cash trade and morning pork cutout values showing some weakness, the lean hog futures are rallying into Tuesday afternoon. February lean hogs are up $0.87 at $87.20, April lean hogs are up $1.55 at $96.87 and June lean hogs are up $0.72 at $106.67. The market is still rallying on the excitement of what could come. With African swine fever plaguing numerous foreign countries, the U.S. market is crossing its fingers that export opportunities will only get more and more plentiful.

The projected CME Lean Hog Index for 1/21/2022 is up $0.81 at $78.32 and the actual index for 1/20/2022 is up $0.72 at $77.51. Hog prices are lower on the National Direct Morning Hog Report, down $0.56 with a weighted average of $61.25, ranging from $60.00 to $75.00 on 2,650 head and a five-day rolling average of $64.82. Pork cutouts total 204.20 loads with 184.07 loads of pork cuts and 20.13 loads of trim. Pork cutout values: down $0.12, $95.54.

Tuesday Morning Livestock Market Update - Cattle Continue to Struggle

GENERAL COMMENTS:

The cattle complex gapped lower at the open and did not look back. The positive aspect was that live cattle futures closed about a $1.00 off their lows, with feeder cattle about $2.00 off their lows. Futures moved as expected in reaction to the Cattle of Feed report, which showed higher numbers than expected and the third consecutive month of higher placements. With more cattle and higher weights, it will take some time for these to work through the system. There were no bids or offers placed Monday, providing no indication of potential cash for the week. Boxed beef continued higher with choice up $1.09 and select up $2.46. The Commitment of Traders report showed funds as net buyers of 236 contracts bringing their net long positions to 62,177 contracts.

Hogs continued to roll higher for contracts in the first half of the year. Spread trading was evident with the June contract the recipient of the greatest buying interest. This pushed futures over $106 for a time but ended up closing just shy of the level at $105.95. The combination of $3.00 higher cash on the National Direct Afternoon report and cutouts increasing $2.37, kept support under the market through the first half of the year. Packers being aggressive at the beginning of the week bodes well for cash today as good demand and increasing slaughter pace needs to be satisfied. The Commitment of Traders report showed funds as net sellers of 9 contracts bringing their net long positions to 48,795 contracts.

	BULL SIDE		BEAR SIDE
1)	All live cattle and feeder cattle contracts left a gap on the open that will be closed at some point.	1)	The cattle complex may struggle for a while as it deals with higher placements and higher weights.
2)	Cattle futures rebounded significantly from their lows possible, indicating the market has the report already factored in.	2)	Packers are not expected to be very aggressive with their bids this week. Feedlots will want to move cattle as grain prices continue to increase.
3)	Strong cash at the beginning of the week is a good sign that packers need hogs sooner rather than later. Increasing slaughter pace requires more hogs with packers aggressively looking for supply.	3)	Hog futures are overbought and ripe for a price retracement.
4)	Technical traders are not shy about buying into an overbought market feeling any weakness will be short lived.	4)	Cumulative pork export sales for far for 2022 are running significantly below last year and 2020. China has been more interested in purchasing beef rather than pork.

Monday Closing Livestock Market Update - Cattle Trade Sheepishly

GENERAL COMMENTS:

It was a tough day for the cattle contracts, as the market absorbed Friday's USDA Cattle on Feed report and tried to make sense of the spike in placements all while battling a weaker-toned market throughout the rest of the sector. Meanwhile, the lean hog complex rallied higher as excellent meat demand is helping push the complex higher and higher. Hog prices are higher on the National Direct Afternoon Hog Report, up $3, with a weighted average of $65.69 on 4,065 head. March corn was up 4 3/4 cents per bushel, and March soybean meal was up $1.20. The Dow Jones Industrial Average was up 99.13 points, and the NASDAQ was up 86.21 points.

LIVE CATTLE:

Much like Dorothy, the Tin Man and the Scarecrow chanted "Lions and tigers bears, oh my!" as they warily skipped down the Yellow Brick Road, feedlots are chanting "Weak through-put and heavier carcass weights and a doubtful cash cattle market, oh my!" as they keep a wary eye on the current cattle market. There's been dark cloud hanging over the live cattle market ever since the dawn of 2022, and cattlemen are growing worried about how the market will fare during its attempt at a spring rally. Thankfully, processing speeds are showing improvement, but just maintaining currentness is a dire concern for feedlots, as they don't want to have just an average rally this spring -- they were hoping for a real chance at driving prices well above $140.

Monday's market traded weaker throughout the day, and February, April and June contracts all either closed below their 100-day moving averages or came extremely close to doing so. February live cattle closed $1.60 lower at $136.32, April live cattle closed $2.02 lower at $140.07, and June live cattle closed $1.72 lower at $135.57. The cash cattle market didn't see any interest, and it's likely that trade holds off until after Wednesday. 

Monday's slaughter is estimated at 115,000 head -- 2,000 head more than a week ago and down 1,000 head from a year ago.

Boxed beef prices closed higher: choice up $1.09 ($293.50) and select up $2.46 ($284.79) with a movement of 80 loads (58.51 loads of choice, 9.53 loads of select, 3.45 loads of trim and 8.59 loads of ground beef).

TUESDAY'S CASH CATTLE CALL: Steady to somewhat weaker. Given that processing speeds still aren't back to full capacity, packers will likely try to push the market lower again this week.

FEEDER CATTLE:

Following the weaker tone of the cattle complex and the corn market's slightly higher close, the feeder cattle contracts kept with their lower plummet throughout the day. January feeders closed $1.80 lower at $158.47, March feeders closed $2.05 lower at $161.25 and April feeders closed $1.75 lower at $166.37. The market's lower push drove both the January and March contracts to close below the 100-day moving average. At West Point Livestock Auction in West Point, Nebraska, compared to last week, on a run of 2,290 head, feeder steers weighing less than 500 pounds sold $5 to $6 higher, while those weighing more than 500 pounds traded steady to $2 higher. Feeder heifers weighing less than 600 pounds sold steady to $5 higher, and those weighing more than 600 pounds traded $2 to $4 lower. The CME feeder cattle index 1/21/2022: not available at this time.

LEAN HOGS:

Early in Monday's trade, the lean hog contracts were faced with some modest pushback, but as the noon hour approached, the market grew stronger and stronger and, ultimately, the nearby contracts closed higher before the day's end. February lean hogs closed $0.12 higher at $86.32, April lean hogs closed $0.37 higher at $95.32, and June lean hogs closed $1.17 higher at $105.95. The jump in pork cutout prices continues to help spur on the momentum throughout the futures market and could aid in supporting this rally for a healthy stint of time. The biggest jumps in Monday's pork cutout market were seen in the picnic ham prices (up $7.77) and in the bellies (up $10.71). Pork cutouts total 342.46 loads with 304.65 loads of pork cuts and 37.81 loads of trim. Pork cutout values: up $2.37, $95.66. Monday's slaughter is estimated at 455,000 head -- 60,000 head more than a week ago and 34,000 head less than a year ago. The CME lean hog index 1/20/2022: up $0.71, $77.51.

TUESDAY'S CASH HOG CALL: Higher. With processing speeds higher than a week ago and pork cutout values still growing stronger -- it wouldn't be surprising to see packers aggressively buying more hogs.