Early livestock comments
The Panhandle is still asking $112.00-$113.00 live, while Kansas lots are asking $112.00. Asking prices in Nebraska are now $2.00 over the February futures. Packers have opened with $108.00 bids in SW Kansas, but we have a hard time finding bids anywhere else. As with the past few weeks, futures action will be important to the direction of cash trade.
The choice cutout was up $0.46 at $169.56 last night, with the select up $1.18 at $169.33. All major primals except for the choice round gained in value. Volume was slower than last week again as buyers resisted higher prices. Last night's USDA Cold Storage Report may give buyers more incentive to resist the market going forward. The report is usually not a big deal in the market, but last night's report caught many traders by surprise as it showed a net in-movement of beef to freezers when a net out- movement had been expected.
Tuesday's Cold Storage Report showed larger than expected freezer stocks of beef as of the end of January. Stocks totaled 460.2 mill lbs compared to 426.2 mill lbs last year and 445.0 mill lbs at the end of December. This represented a 15.3 mill lb increase during the month.
Analysts had been expecting about a 13 mill lb decline in stocks. It was the first time since 2006 that the industry moved beef into freezers during January. The huge in-movement during the month is thought to be indicative of more resistance than expected to historically high beef prices.
Hog calls are mostly steady this morning. Increasing margins are supporting hog prices despite the fact that most packers are fairly well covered for the week.
The pork cutout gained $1.01 last night mostly on strength in belly prices, which shot up a dime from the last quote to $1.30. Loins and butts were quoted as mostly steady on the day. Hams were unquoted. We wonder if the ham market is going to ease down a bit in here after last night's Cold Storage Report showed much larger than expected stocks in the freezers.
Tuesday's Cold Storage Report showed larger than expected stocks of pork. Total pork stocks were 840.9 mill lbs compared to 492.3 mill lbs last year. This represented an in-movement of only 65.1 mill lbs. It was the largest in-movement since 2008. Much of the increase in total stocks came from active freezing of hams. Ham stocks grew 33.4mill lbs during January, also the largest increase since 2008. January stocks were 101.4 mill lbs. It was the first time stocks have exceeded 100 mill lbs at the end of January, and substantially more than expected by the industry. Belly stocks were slightly smaller than expected at 51.3 mill lbs. compared to 50.7 mill lbs at the end of December, and 53.6 mill lbs last year.