DTN Midday Livestock Comments 01/25 11:42
Meat Prices Show Topping Signs
Both pork cutout and boxed beef prices have shown some weakness early
Tuesday, which could signal that prices are topping.
DTN Livestock Analyst
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.
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
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).
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.
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.
DTN Livestock Analyst ShayLe Stewart will be at the NCBA convention in
Houston Feb. 1-3. Stop by the DTN/Progressive Farmer booth and meet her.
ShayLe Stewart can be reached at firstname.lastname@example.org
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