The omicron strain of COVID is taking its toll on the entire marketplace, including the livestock contracts.
I know it’s the absolute last thing you want to spend time talking about, but the outbreak of the omicron COVID variant has sent the market tumbling lower as vaccines are less effective on this strain and it could take months before a new vaccine is developed.
From the corn market to the NASDAQ to the feeder cattle contracts, the entire marketplace is lower — worried about what this may mean for the marketplace and the U.S. economy. March corn is down 17 1/4 cents per bushel and January soybean meal is down $0.40. The Dow Jones Industrial Average is down 663.88 points and NASDAQ is down 322.81 points.
As if the struggles of a scant labor force and a broken supply chain weren’t problematic enough, the pressure of the unknown surrounding the omicron variant is having a toll on the live cattle contracts. December live cattle are down $1.10 at $135.75, February live cattle are down $1.72 at $137.57 and April live cattle are down $1.72 at $140.80.
Thankfully the market hasn’t seen any doggish attitudes surround the cash cattle market thus far, but it’s still early in the week. There are a few bids being offered in Texas at $138, but the South is asking $143 to $145, and the North has yet to disclose their asking prices. Trade isn’t expected to really shake loose until midday Wednesday, or potentially even later in the week.
Boxed beef prices are lower: choice down $1.05 ($276.53) and select down $0.80 ($261.22) with a movement of 87 loads (48.54 loads of choice, 12.74 loads of select, 18.69 loads of trim and 7.28 loads of ground beef).
Feeder cattle contracts are closely watching the cash cattle market to see how it’s going (or not going) to be affected by the new COVID strain, as they would love to rally as the corn market tumbles 16 to 18 cents lower in fear of the virus. But without the fundamental support of the cash market, the complex is trading modestly lower — not seeming in a hurry to decide what exactly its position is yet.
January feeders are down $1.07 at $164.67, March feeders are down $0.55 at $166.00 and April feeders are down $0.37 at $168.20. It will be interesting to see how sale barns fare with this new news buzzing throughout the marketplace. It’s most likely the markets still see strong demand as the live cattle futures still show excellent rewards in the months to come.
The lean hog complex would most likely be rallying as pork cutout values are higher again and the cash market is continuing to be supported. But the futures aren’t going to get overly confident without knowing how vast the toll of this new strain is going to be. December lean hogs are down $0.07 at $72.32, February lean hogs are down $1.87 at $79.05 and April lean hogs are down $1.45 at $84.45.
If cutouts can champion a higher close Tuesday afternoon, then packers could continue to support the cash market in the days to come as they are seeing strong demand even though holiday buying is nearing its end.
The projected CME Lean Hog Index for 11/29/2021 is down $0.56 at $70.04, and the actual index for 11/26/2021 is down $1.03 at $70.60. Hog prices are higher on the National Direct Morning Hog Report, up $0.32 with a weighted average of $55.42, ranging from $55.00 to $58.00 on 4,885 head and a five-day rolling average of $55.13. Pork cutouts total 215.28 loads with 177.89 loads of pork cuts and 37.40 loads of trim. Pork cutout values: up $1.82, $89.53.