DTN Midday Livestock Comments          01/30 11:34

   Livestock Prices Start Higher in Cold Week

   Active futures contracts for live cattle, feeders and lean hogs were all 
trading higher at midday Monday with April cattle challenging new contract 
highs and April hogs finding support for prices that had fallen to their lowest 
levels in three months.

Todd Hultman
DTN Lead Analyst

GENERAL COMMENTS:

   Livestock prices are starting higher Monday with traders anticipating USDA 
to publish lower numbers of Jan. 1 cattle inventory on Tuesday afternoon. 
Prices also continue to benefit from last week's report of higher export sales 
and calmer market view of the rate hike expected Wednesday.

LIVE CATTLE:

   Live cattle futures are higher at midday Monday with the April contract up 
$2.22 at $163.05, pushing into new high territory. After colder air descended 
into the western Plains Sunday, Monday morning temperatures were below zero in 
the Northern Plains and down to single digits as far south as Kansas. Those 
lower temperatures are expected to hang around most of the week, turning 
gradually warmer by the weekend. The cold makes travel difficult and will keep 
weights down, possibly spurring higher packer bids.

   Last week's cash trade was roughly steady to a dollar higher in the South 
and steady in the North. Fairly soon Monday, USDA will release its weighted 
averages for the week. So far this month, packers haven't shown much need for 
negotiated trade, but there is no question supplies of available cattle are 
down from a year ago. Tuesday afternoon's inventory report will back that up, 
possibly showing U.S. cattle inventory down 3% or 4% from a year ago on Jan. 1.

   The slaughter pace was slightly higher last week, up 13,000 to 659,000 and 
remains active with Dow Jones estimating 125,000 cattle Monday, down 2,000 from 
last week. Choice boxed beef prices were up $0.07 at $267.83 early Monday after 
finishing down $3.96 last week at $267.76. Selects were up $1.14 to $251.68 
early Monday after finishing down $5.89 last week at $250.54. USDA reported 36 
loads early Monday. Thursday's USDA report of 25,100 mt of beef export sales 
for the previous week was an encouraging sign of international demand, despite 
concerns in the news headlines.

FEEDER CATTLE:

   March feeder cattle are up 77 cents at $184.25 at midmorning Monday after 
having pivoted off the three-month low of $179.17 on January 19, a distinct 
change in short-term momentum. March corn is roughly steady Monday after 
Argentina got some beneficial rain over the weekend, but chances remain limited 
in the week ahead. The new burst of cold air invading the northern and western 
Plains is obviously stressful to cattle and will make conditions difficult this 
week before more moderate temperatures are expected to return by the weekend. 
As with live cattle, the feeder trade will pay attention to Tuesday afternoon's 
inventory report for guidance on just how much liquidation has taken place over 
the past year. Overall, feeder prices remain well-supported despite high feed 
costs and would be most helped by better prospects for precipitation in 2023 -- 
a possibility as the La Nina influence is expected to turn neutral by April. 
The CME Feeder Index posted $179.57 for Friday, Jan. 27, up $2.54 from a week 
ago.

LEAN HOGS:

   At midmorning Monday, April hog futures are trading a little higher, up 35 
cents at $86.80 after a lower start. Hog futures are still showing signs of 
support after Thursday's bullish price reversal responded to prices testing 
their lowest levels since early October. Part of Thursday's buying enthusiasm 
was likely triggered by USDA's report of 44,700 mt of pork export sales to 
Mexico, China and others. China's interest in U.S. pork at a time when China's 
hog prices are depressed is curious but may have to do with distribution 
problems in the country, while COVID-19 infections remain high.

   Also adding to the bullish change of heart, USDA's morning pork report 
posted Monday's cutouts up $2.21 at $81.46 with help from an $8.64 gain in 
hams. USDA reported 155.43 loads of pork cuts and 30.88 loads of trim. Of 
course, morning carcass reports are notoriously flighty and Monday morning's 
Daily Direct Hog report from USDA was not so encouraging. USDA's report showed 
a national negotiated price of $70.25 on scant trade, still a depressed level 
and below the swine formula base of $71.64. Hog slaughter remains active and 
was slightly higher last week at 2.54 million head. On Monday, Dow Jones 
estimates 488,000 head, down 2,000 from last week. CME's Lean Hog Index was 
projected at 72.21 for Friday, up 8 cents from a week ago. Despite futures 
prices finding support, the recent cash trade in U.S. hogs suggests inventory 
is easily available for packers, regardless of what USDA's December inventory 
report said.

   Todd Hultman can be reached at Todd.Hultman@dtn.com

   Follow him on Twitter @ToddHultman1




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