GENERAL COMMENTS:
The cattle contracts sank lower before Friday's close, but the cash cattle market didn't squander the opportunity to still trade higher. Meanwhile, the lean hog contracts closed mixed with strong pork cutout values helping keep some of the contracts elevated through closing. Hog prices closed lower on the National Direct Afternoon Hog Report, down $0.23 with a weighted average of $56.78. March corn is up 12 1/2 cents per bushel and March soybean meal is up $3.90. The Dow Jones Industrial Average is down 620.74 points and NASDAQ is down 266.47 points.
From Friday to Friday livestock futures scored the following changes: February live cattle down $1.68, April live cattle down $0.67; March feeder cattle down $6.43, April feeder cattle down 5.38; February lean hogs down $0.13, April lean hogs up $0.50.
LIVE CATTLE:
There's no better way to round out the week than with a bullish Cattle Inventory report, and with significantly stronger cash cattle prices. The futures market closed modestly lower Friday afternoon as traders avoided the cattle contracts, unsure if their positions would be secure if the contracts went much higher. February live cattle closed $0.95 lower at $115.05, April live cattle closed $0.85 lower at $141.85 and June live cattle closed $1.22 lower at $117.60. Even though the futures market hit a lull, the cash market and boxed beef prices continues to trail higher through the week's close. This week's cash cattle trade was only lightly tested as packers tried to avoid higher cash cattle prices at all costs. Packers dipped into the slaughter cow and bull market aggressively in efforts to lessen their need of cash cattle. Oklahoma reported slaughter cows $6.00 to $10.00 higher and bulls $2.00 higher. But even with buying slaughter cows and bulls, live cattle prices in the South jumped $3.00, averaging $113, and Northern dressed cattle traded $5.00 higher at $178.
Friday's slaughter is estimated at 120,000 head, 1,000 head more than a week and year ago. Saturday's slaughter is projected to be around 62,000 head.
Friday's Cattle Inventory report thankfully shared more bullish news that favors cattle producers. All cattle and calves in the United States as of Jan. 1, 2021, totaled 93.54 million head, which is down slightly from the 93.79 million head from Jan. 1, 2020. Even more importantly to cattle producers across the U.S. is that beef cows totaled 31.15 million head, down 1% from a year ago. This adds strength to the long-term trajectory of the cattle market as fewer cows yield fewer calves, which ultimately means that producers could potentially see greater returns with less supply pressure on the market.
It was another stellar week for boxed beef prices! For the week, choice cuts jumped $11.19 to average $230.28, and select cuts jumped $10.58 to average $219.22 and the week's total movement of cuts, grinds and trim totaled 528 loads.
Boxed beef prices closed higher: choice up $1.96 ($233.95) and select up $1.82 ($222.70) with a movement of 75 loads (47.44 loads of choice, 7.02 loads of select, 13.85 loads of trim and 6.26 loads of ground beef).
MONDAY'S CASH CATTLE CALL: Higher. It's unlikely that packers will jump into the cash cattle market as early as Monday, but with sale reports still being light for the week, packers are mostly likely going to have to support the cash cattle market again next week in order to secure enough cattle.
FEEDER CATTLE:
As the nearby corn contracts kept their $0.11 to $0.12 gains through closing, the feeder cattle contracts were pressured to trade sharply lower. March feeder cattle closed $2.07 lower at $137.72, April feeder cattle closed $1.92 lower at $140.75 and May feeders closed $2.00 lower at $142.37. Looking to next week's trade, if corn prices continue to rally the feeder cattle contracts will be pressured to continue to trade lower. With the strong gains seen through this week's cash cattle market, and with seeing lighter receipts no longer pressuring sale barns throughout the countryside, the feeder cattle contracts will be given mixed signals. The complex will have to continue to manage the rising cost of inputs, all while balancing strong demand from auctions. Oklahoma's Weekly Summary shared that, throughout the state, compared to last week, steer calves sold steady to $3.00 higher and heifer calves sold steady to $4.00 higher, and feeder heifers sold steady to $3.00 higher. Slaughter cows sold mostly steady to $6.00 higher with instance of $7.00 to $10.00 stronger, and slaughter bulls sold $2.00 higher. Packer interest was extremely aggressive this past week for slaughter cows and bulls compared to weeks past. The CME feeder cattle index for Jan. 28: up $0.68, $136.02.
LEAN HOGS:
The lean hog contracts closed mixed as some nearby contracts were able to defend their stronger positions through closing. February lean hogs closed $0.15 lower at $69.80, April lean hogs closed $0.27 higher at $76.65 and June lean hogs closed $0.45 higher at $87.30. Largely throughout the week both pork cutout values and a slightly stronger cash market helped encourage the market to keep trading positive. Friday's afternoon cash prices aren't that surprising as packers look to the weekend and would prefer to buy more hogs next week rather than to carry them over and pay more now. Pork cutouts totaled 245.28 loads with 216.38 loads of pork cuts and 28.90 loads of trim. Pork cutout values: up $1.87, $85.36. Friday's slaughter is estimated at 487,000 head, 3,000 head less than a week ago and 4,000 head more than a year ago. Saturday's slaughter is projected to be around 249,000 head. The CME lean hog index for Jan. 27: up $0.34, $67.29.
MONDAY'S CASH HOG CALL: Steady. It was a good week for the cash hog market and heading into next week, if pork cutout values keep trading higher, packers may continue to show buying aggression.
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