DTN Livestock Midday: Contracts Jump Higher

    Wednesday’s market has served as an opportunity for the livestock contracts to trade higher and the markets haven’t wasted any time in doing so.

    GENERAL COMMENTS:

    It’s a strong day for the livestock contracts as the markets are rallying in an aggressive manner. The only market trading mixed is the feeder cattle contracts; with corn prices shooting higher it makes sense that the market is teetering in its position.

    March corn is up 13 cents per bushel and March soybean meal is up $8.70. The Dow Jones Industrial Average is up 96.17 points and NASDAQ is up 78.18 points.

    LIVE CATTLE:

    Wednesday’s cattle slaughter is anticipated to hit 117,000 head, which would be the second time this week the market has achieved that level. The live cattle complex is relieved to see progress being made on the packing front as feedlots desperately want to maintain the currentness the market sought in the latter part of 2021. February live cattle are up $1.32 at $139.00, April live cattle are up $1.70 at $143.55 and June live cattle are up $1.55 at $138.62.

    Thankfully this hiccup in the market has come at a time when boxed beef prices are very lucrative for packers, so while they don’t like paying generously in the cash cattle market, they will likely support the market as they want to keep enough cattle in the pipe to chase the dividends that boxes are giving right now. The disappointing piece about this week’s trade is that the cash trade puked cattle early in the week, so packers have gotten cattle bought at weaker prices.

    If feedlots would have waited until later in the week to trade, the market may have been able to hold prices steady with a week ago. Another round of light trade is being reported in the South at $137, which is $1.00 to $1.50 lower than last week. More trade has also been noted in the North for $218, which is steady with last week’s trade, but a large percentage of the cattle trading dressed are also trading with time.

    The Fed Cattle Exchange Auction listed a total of 3,580 head, of which none actually sold, 159 were scratched from the auction and 3,421 head were listed as unsold, as they did not meet the reserve prices, that ranged from $125 to $139.50 Opening prices ranged from $122 to $136, high bids ranged from $134 to $138.

    The state-by-state breakdown looks like this: Texas 1,008 total head, all of which went unsold; Kansas 1,301 total head, 1,142 head went unsold and 159 head were scratched from the auction; Nebraska 1,233 total head, all of which went unsold; California 38 total head, all of which went unsold.

    Boxed beef prices are higher: choice up $1.56 ($291.05) and select up $1.32 ($279.71) with a movement of 78 loads (42.87 loads of choice, 11.50 loads of select, 10.66 loads of trim and 13.43 loads of ground beef).

    FEEDER CATTLE:

    Feeder cattle contracts are walking a tightrope Wednesday as the complex would love to trade higher along with the rest of the livestock sector, but with corn prices well above $6.00 a bushel (and trading closer to the $6.10 to $6.14 mark in the nearby contracts) feeders are again weighing the pros and cons of the market.

    January feeders are down $0.45 at $161.00, March feeders are up $0.02 at $165.45 and April feeders are up $0.05 at $169.62. It wouldn’t be surprising to see order buyers take a removed position in sales this week as they look to see what further develops in the market before jumping into more cattle.

    LEAN HOGS:

    After rallying Wednesday, the lean hog contracts are really taking to moving bullishly as the market has seen strong interest in the cash market, midday pork cutout values are higher and it looks as though the day may be able to process more hogs as well. February lean hogs are up $0.85 at $82.45, April lean hogs are up $1.87 at $91.15 and June lean hogs are up $1.45 at $101.80. With the hog market eager to rally, any additional export support the market could get would only support the market further in its aspirations.

    The projected CME Lean Hog Index for 1/18/2022 is up $0.07 at $76.85 and the actual index for 1/17/2022 is up $0.88 at $76.78. On the National Direct Morning Hog Report 7,403 head of hogs have traded for a weighted average of $70.07, ranging from $60.00 to $74.00 and the five-day rolling average has now moved to $66.95. Pork cutouts total 230.98 loads with 207.16 loads of pork cuts and 23.83 loads of trim. Pork cutout values: up $6.29, $93.50.

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