GENERAL COMMENTS:
Between coronavirus, the cattle inventory report and trying to keep up with what seems like a bottomless board, this week has been a handful. Hopefully the market will be able to capacitive on the positive findings of this week (cattle inventory report) and let the other problems fade into the background next week. Hog prices are lower on the National Direct Afternoon Hog Report, down $1.71 with a weighted average of $52.49. March corn is up 1 3/4 cents per bushel and March soybean meal is down $0.50. The Dow Jones Industrial Average is down 538.36 points and NASDAQ is down 116.88 points.
From Friday to Friday livestock futures scored the following changes:
February live cattle down $3.47, April live cattle down $4.63; March feeder cattle down $3.60, April feeder cattle down $4.97; February lean hogs down $10.10, April lean hogs down $11.85.
LIVE CATTLE:
Friday's anxiousness centered around the Cattle Inventory report, which unveiled that the Jan. 1 cattle inventory was down just slightly and that the 2019 calf crop is down 1%. It's important to remember that this is a bi-annual report, and that this is the first time in six year (the first time in the last 12 printed reports) that the data has shown a decrease in total numbers; that is significant, noteworthy and most definitely bullish.
The board was reluctant to get caught closing higher before confirmation that the report did indeed show lighter numbers. Nearby contracts closed mostly lower and deferred contracts closed mildly higher. February live cattle are down $0.40 at $121.37, April live cattle are down $0.52 at $119.67 and June live cattle closed $0.45 lower at $111.57. A light trade developed in the North mostly at $194 ($4.00 lower than last week's weighted average) and business in the South was mostly just clean up.
It's interesting to look at the last couple of weeks' worth of Saturday kills and it's important to notice that packers are starting to back off on Saturday kills and are trying to spread supplies out without having to invest higher in the cash market.
Boxed beef prices are lower: choice down $0.35 ($213.00) and select down $0.82 ($210.66) with a movement of 74 loads (37.66 loads of choice, 11.84 loads of select, 12.66 loads of trim and 11.58 loads of ground beef). Friday's slaughter is estimated at 122,000 head - steady with a week ago and 17,000 head more than a year ago. Saturday's slaughter is projected to be around 30,000 head.
MONDAY'S CASH CATTLE CALL: Steady. It will be interesting to see what Monday's showlists amount to, and at this point packers are going to work hard on keeping prices right where they have them.
FEEDER CATTLE:
Feeder cattle markets closed the week far better off than where things were headed earlier in the week. March feeders closed $0.42 higher at $136.07, April feeders closed $0.40 higher at $137.52 and May feeders closed $0.42 higher at $139.70. As the market closes down for the week and catches its breath before next week, most would agree that, although prices fell this week with the Cattle Inventory report showing lower numbers, next week has the opportunity to trade higher.
On Thursday an estimated run of 4,397 head at Billings Livestock Commission in Billings, Montana, compared to the previous week, feeder steers weighing less than 650 pounds showed lower undertones, steers over 650 pounds sold mostly steady with instances of slightly weaker. Heifers weighing 600 to 649 pounds sold as the best market test and sold $1.00 to $2.00 higher, while all other weights of heifers sold unevenly steady. As a side note, with the warmer weather, it was noticeable that calves are starting to pack a little more fill. The CME feeder cattle index 1/30/2020: down $0.50, $148.38.
LEAN HOGS:
Huge losses in the lean hog market leave the week $10.00 lower than last week's close in the February contract. The bottom of the board gave way on Wednesday and since then prices have dropped $7.00 in the last three days. February lean hogs close $4.17 lower at $57.12, April lean hogs close $4.22 lower at $61.60 and May lean hogs close $2.30 lower at $70.02. Pork cutouts totaled 340.69 loads with 310.71 loads of pork cuts and 29.98 loads of trim. Pork cutout values: down $1.33, $69.57. Friday's slaughter is estimated at 484,000 head, 10,000 head less than a week ago and 17,000 head more than a year ago. Saturday's slaughter is projected to be around 235,000 head. The CME lean hog index 1/29/2020: up $0.38, $62.78.
MONDAY'S CASH HOG CALL: Lower. It wouldn't be surprising to see prices lower again in the hog market, as the market is in what seems to be a perpetual downfall worrying about both internal and external factors.
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