GENERAL COMMENTS:
It may have seemed like just another week came and gone for the livestock contracts, but when you dive into the fine details of the market, all the livestock contracts saw positive developments this past week. Hog prices closed lower on the National Direct Afternoon Hog Report, down $1.16 with a weighted average of $51.09 on 5,672 head. March corn is up 5 cents per bushel and January soybean meal is up $7.60. The Dow Jones Industrial Average is down 159.43 points and NASDAQ is down 79.35 points.
From Friday to Friday livestock futures scored the following changes: December live cattle up $1.73, February live cattle up $1.60; January feeder cattle up $0.73, March feeder cattle up $1.75; February lean hogs up $2.58, April lean hogs up $2.43.
LIVE CATTLE:
The live cattle contracts carried their momentum into Friday's close and rounded out the week mostly higher. It was a great week for the live cattle contracts, as the South was able to fight tooth and nail for steady money, boxed beef prices started to show signs that the market is looking for a bottom, and once again December's Cattle on Feed report shared lighter placements, which is extremely positive for the second quarter of 2021. December live cattle closed $1.12 higher at $110.47, February live cattle closed $0.40 stronger at $114.85 and April live cattle closed $0.22 higher at $118.65.
The market's cash cattle trade could seem odd as the North sold cattle for $165 to $168 dressed, which was steady to $3.00 lighter than a week ago, and live for $105 to $108, which was $1.00 to $2.00 higher. You might scratch your head and wonder why trade wasn't more consistent, but when you understand that the North needed to clear out their pens of heavy cattle before being forced to sit on them until after the New Year, you can understand why liquidating inventory was necessary. Meanwhile, the South played an excellent game of hardball and pushed packers into paying $108, which is slightly (by a couple of cents) stronger than last week's trade. This week's movement is relatively light, but considering that fewer cattle are processed over the Christmas and New Year holiday weeks. the market sits in stable position. Friday's slaughter is estimated at 117,000 head, 1,000 head less than a week ago and 1,000 head more than a year ago. Saturday's slaughter is projected to be around 69,000 head.
Friday's Cattle on Feed report shared that Cattle on Feed were steady with a year ago at 12.0 million head; placements were down 9% from a year ago at 1.91 million head and marketings were down 2% from 2019 levels at 1.78 million head. The long-term protectory for 2021 is growing more favorable to cattlemen and feedlots alike. Looking down the road into the second quarter of 2021 and beyond, fed cattle supplies are bound to favor sellers and hopefully feedlots can obtain more leverage throughout the marketplace and find greater profitability. With next week being Christmas, it's unlikely that the market will rally astutely around the bullish report, but the lower placements do add bullish undertones to the 2021 market.
This past week, boxed beef prices continued to wane lower, but it was interesting to see later in the week that there were some higher closes, indicating that a bottom in the boxed beef market is being found. This past week choice cuts averaged $208.88 (down $11.73 from last week) and select cuts averaged $192.91 (down $9.24 from last week). The week's total movement of cuts, grinds and trim totaled 712 loads.
Boxed beef prices closed mixed: choice down $0.88 ($208.63) and select up $0.57 ($194.27) with a movement of 115 loads (76.29 loads of choice, 18.37 loads of select, 12.80 loads of trim and 7.38 loads of ground beef).
MONDAY'S CASH CATTLE CALL: Steady to slightly weaker. Given that it's the week of Christmas and that packers are going to be sour overpaying slightly more money in the South this week, they aren't going to be generous whatsoever to next week's cash cattle trade.
FEEDER CATTLE:
The feeder cattle contracts had a softer Friday, but the rally administrated throughout the week is quite commendable. Given that there was uncertainty in the live cattle market and that corn prices successfully closed higher throughout much of the week -- the feeder cattle contracts had enough pressure to trade lower but opted to take advantage of trader's willingness to invest. January feeders closed $0.52 lower at $140.45, March feeders closed $0.30 lower at $142.30 and April feeders closed $0.10 lower at $143.90. This past week in North Dakota, compared to a week ago, steer calves under 550 pounds sold unevenly steady and steers over 550 pounds, $3.00 to $7.00 higher. Heifer calves sold mostly steady to instances of $3.00 higher with the exception of the heifers weighing 600 to 660 pounds, which sold $4.00 lower. There were a lot of long-weaned calves that were highly sought after and are in excellent condition given the incredible feeding weather this fall has provided. The CME feeder cattle index for Dec. 17: up $1.29, $138.48.
LEAN HOGS:
The lean hog market kept its support through closing and rounded out the week on a substantially stronger front. February lean hogs closed $0.30 higher at $65.80, June lean hogs closed $0.60 stronger at $80.77 and July lean hogs closed $0.47 higher at $81.40. The fundamentals are still lagging in the lean hog market, but with the dawning of a new year right around the corner, it's not crazy to think that the market's fundamentals could change after the holidays are behind us. Pork cutouts totaled 343.89 loads with 307.45 loads of pork cuts and 36.44 loads of trim. Pork cutout values: down $1.75, $71.47. Friday's slaughter is estimated at 481,000 head, 9,000 head less than a week and year ago. Saturday's slaughter is projected to be around 380,000 head. Thursday's slaughter was revised to 467,000 head. The CME lean hog index for Dec. 16: down $0.66, $64.39.
MONDAY'S CASH HOG CALL: Lower. Given that next week is Christmas and will be shortened, it's unlikely that packers step aggressively into the cash market.
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