GENERAL COMMENTS:
It was a great day for the livestock contracts, but an even better day for the cash cattle market. The cash cattle market was standing at an utter standstill as packers were reluctant to pay feedlots' asking prices, but low and behold, come Thursday afternoon, country-buyers came with the checkbooks in hand. Hog prices were lower on the National Direct Afternoon Hog Report, down $0.94 with a weighted average of $52.07 on 6,985 head. March corn is up 5 1/4 cents per bushel and January soybean meal is up $3.40. The Dow Jones Industrial Average is up 147.25 points and NASDAQ is up 106.55 points.
LIVE CATTLE:
Sound the trumpets, ladies and gentlemen! When you wait ever so patiently -- and no weak partners sell out early -- it's amazing, and you get what you ask for! It would be a shame if we didn't take the time to commend the southern feedlots for waiting until Thursday afternoon to trade cattle. We understand why the northern feedlots needed to move cattle earlier in the week, as they were leery of sitting on heavy cattle over the next two weeks given that there will be hit and miss trade thanks to the holidays. However, the strategic marketing of the South wins the banner this week! There was a considerable movement of cattle trade Thursday afternoon in the South for $108, which is technically a couple cents more than what last week's averaged ended up being. Thursday's slaughter is estimated at 116,000 head, 4,000 head less than a week ago and 6,000 head less than a year ago.
This serves as a great opportunity to shine light on the fact that even though we sit at the tail end of the week -- the week before Christmas -- packers still need cattle.
Beef net sales of 10,100 mt reported for 2020 were up noticeably from the previous week, but down 15% from the prior four-week average. Increases primarily for Japan (3,800 mt, including decreases of 800 mt), South Korea (2,200 mt, including decreases of 1,300 mt) and Canada (1,700 mt, including decreases of 100 mt).
Thursday's actual slaughter data shared exciting news for the beef industry! For the week ending Dec. 5, 2020, there were 669,457 head of cattle processed, which is the largest slaughter since COVID-19 restrictions went into play earlier this spring. Steer carcass weighs were up 1 pound to average 922 pounds and heifer carcass weights averaged 850 pounds, which was steady with last week's report.
Boxed beef prices closed higher: choice up $2.29 ($209.51) and select up $1.61 ($193.70) with a movement of 103 loads (63.83 loads of choice, 18.19 loads of select, 7.31 loads of trim and 13.58 loads of ground beef).
FRIDAY'S CASH CATTLE CALL: Steady. Seeing that there's been trade in both the North and the South now, it's safe to say that Friday's clean up trade will fall within the tested ranges of the market.
FEEDER CATTLE:
The feeder cattle contracts were determined to close higher again Thursday afternoon, pushing the week to have a commendable trade thus far considering that traders have had mixed feelings. January feeders closed $0.12 stronger at $140.97, March feeders closed $0.62 higher at $142.60 and April feeders closed $0.75 higher at $144.00. Not only is it impressive that the futures market has been able to rally throughout most of the week, but it has done so while corn prices have scaled higher as well. Nearby corn contracts closed $0.04 to $0.05 stronger in Thursday's close. It was another good day for the feeder cattle market as the board's support seeped into the live auctions and buyers were willing to invest, especially on those longer-weaned cattle. At Winter Livestock Auction in Pratt, Kansas, compared to a week ago, feeder steers weighing 600 to 950 pounds sold $2.00 to $6.00 stronger. Feeder heifers weighing 600 to 850 pounds sold mostly steady. It was noted that in Thursday's action more than 70% of the sale was of feeder cattle weighing over 600 pounds. The CME feeder cattle index for Dec. 16: up $0.55, $137.19.
LEAN HOGS:
The lean hog market was able to squeak by with the entire marketplace, closing higher other than the spot February lean hog contract. With cash hog prices closing lower and the afternoon pork cutout value unable to catch a break, the weaker fundamental pressures of the market are weighing heavily on the spot February contract. Meanwhile, the rest of the contracts are ready for 2021 and are ready for a change of tune. Pork cutouts totaled 324.20 loads with 292.85 loads of pork cuts and 31.35 loads of trim. Pork cutout values: down $1.64, $73.22. Thursday's slaughter is estimated at 475,000 head, 18,000 head less than a week ago and 21,000 head less than a year ago. The CME lean hog index for Dec. 15: down $0.01, $65.05.
Pork net sales of 39,900 mt reported for 2020 were up 51% from the previous week and from the prior four-week average. Increases primarily for Mexico (22,400 mt, including decreases of 900 mt), China (11,600 mt, including decreases of 1,500 mt), Canada (1,900 mt, including decreases of 400 mt).
FRIDAY'S CASH HOG CALL: Lower. Rounding out the week and heading into the shortened Christmas holiday week, packers will most likely be idle in the cash hog market.
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