1/21/2025 Market Commentary

Live Cattle:  Futures started the shortened holiday week with a softer tone. Bull spreads continue to hold as traders are unwilling to let the front months trade too far away from the cash market, while some skepticism remains as to the duration of this cash market continuing to be sustainable. Morning boxes were softer in the choice, but higher in the select. The Choice/Select spread continues to narrow, now down to 11.16, indicating softer demand. The long-asked question of how long the consumer can withstand these prices at the meat counter is starting to show signs of weakness. With December credit card receipts hitting the already taxed consumer, cheaper and lower cuts are finding demand at the grocery store. Early asking prices in the country are steadily higher this week. Trade will most likely be late in the week with some basis trade exceptions, with most feedlots wanting to gain some weight back after this cold weather snap. The next Cattle on Feed report will be out on Friday at 2 p.m. The average guess for On Feed is 99.8% of a year ago, with Placements at 101.8% and Marketings at 101.3%.

Feeder Cattle:  Cash feeder cattle have seemed to plateau for the time being. Corn futures have rallied close to 60 cents a bushel over the last 2 months and, as a result, feedlots have taken the top end off of their bids in sale barns. The index has not backed off in extreme fashion but has started to move sideways. Nearby futures continue to be supported by the cash while the deferred contracts are starting to grow weary as to the staying power of the cash feeders at this level. The index today is quoted up 1.86 at 278.92. Weather seems to also be playing a factor in softer bids in the sale barns, although we have yet to see that reflected in the index.

Lean Hogs: Futures started the day higher but quickly turned lower in most of the deferred months. Cash and index remain steady while the product works slightly higher to a new high for the month of January. Last week we mentioned the US Dollar/Peso and its potential effect on pork exports to Mexico, this morning the US Dollar is sharply lower, helping that spread become more attractive for exports to Mexico. The Trump administration is not currently announcing immediate tariffs, but rather putting the agreements up for review, which is a small victory for the time being.

Corn: Strength across the futures market continued to start the week. March corn took out the next line of resistance at 488 this morning, while May and July are bumping up against $5. The corn market is trying to make up the price discrepancy now that we have shrunk our carryout 26% since June. A combination of increased demand and smaller production throughout the latest reports has brought our carryout to a much more manageable level and much tighter than originally thought. Cash basis continues to drift lower with the rally in the futures. A lot of elevators and ethanol plants have plenty of corn around them and aren’t needing to push bids to get corn bought.