The cattle complex is worried about processing speeds as the market looks at its third week of lower chain speeds.
The cattle contracts are having a tough start to the week as a lag in production could hinder the market’s ability to rally. Meanwhile, the lean hog contracts are seeing support growing stronger in their nearby contracts as the market crosses its fingers for more export opportunities.
March corn is down 2 cents per bushel and March soybean meal is down $13.10. The Dow Jones Industrial Average is down 562.77 points and NASDAQ is down 303.37 points.
Pressure lies over the live cattle market as the industry desperately wants to see production speeds back up to a normal level; this is the third week of reduced speeds. February live cattle are down $0.25 at $137.72, April live cattle are down $0.20 at $141.92 and June live cattle are down $0.42 at $137.20.
Unfortunately, there has been a handful of sales noted in the South for $137, which is $1.00 to $1.50 lower than last week’s business. If processing speeds don’t gain momentum this week, it’s likely packers will get cattle bought for softer prices as they regain leverage in the cash cattle market.
Last week’s negotiated cash cattle trade totaled 61,172 head. Of that 74% (45,559 head) were committed for nearby delivery, while the remaining 26% (15,613 head) were committed for deferred delivery.
Boxed beef prices are higher: choice up $1.43 ($289.29) and select up $0.78 ($277.83) with a movement of 77 loads (34.86 loads of choice, 10.51 loads of select, 10.34 loads of trim and 20.93 loads of ground beef).
The feeder cattle market is treading lightly through Tuesday as the market isn’t expecting to see as many calves and feeders run through this week’s market. While the grain markets are trending lower, the live cattle market isn’t sitting in a strong enough position to lend any support. March feeders are down $0.87 at $165.50, April feeders are down $0.80 at $169.50 and May feeders are down $0.70 at $172.02.
It wouldn’t be surprising to see the less interest in feeders and calves this week as order buyers aggressively procured the cattle they needed the last two weeks. Also, with the market’s uncertainty in the packing sector, buyers could opt out of aggressively purchasing until they have a better understanding of the market’s trajectory.
The lean hog complex is seeing more and more interest develop in nearby contracts as the day trades on. February lean hogs are up $0.12 at $81.02, April lean hogs are up $0.60 at $89.05 and June lean hogs are up $0.40 at $100.30. Pork cutout values are up slightly and with African swine fever continuing to plague various European countries, the hope is the U.S. will get more export demand.
The projected CME Lean Hog Index for 1/17/2022 is up $0.88 at $76.78, and the actual index for 1/14/2022 is up $1.58 at $75.90. Hog prices are unavailable due to confidentiality, but we are able to see that 3,820 head have traded and the five-day rolling average now sits at $64.28. Pork cutouts total 175.27 loads with 161.39 loads of pork cuts and 13.88 loads of trim. Pork cutout values: up $1.79, $93.73.