GENERAL COMMENTS:
Thursday's trade wasn't anything the livestock contracts got excited about as the market faced minor losses due to the fact that traders have grown leery of pushing the market too much higher, even though the market's fundamentals are still strong. Hog prices closed higher on the National Direct Afternoon Hog Report, up $0.26 with a weighted average of $57.01 on 7,350 head. March corn is up 1/2 cent per bushel and March soybean meal is down $9.50. The Dow Jones Industrial Average is up 300.19 points and NASDAQ is up 66.56 points.
LIVE CATTLE:
Thursday's live cattle contracts faced modest opposition like the rest of the livestock sector. Traders are wanting to see how much short-term upside potential the market has before continuing to invest and risking their position. February live cattle closed $0.45 lower at $116.00, April live cattle closed $0.07 higher at $122.70 and June live cattle closed $0.22 higher at $118.82. The intense market to watch this week is the cash cattle market. Feedlots look at the February contract, see it trading upward of $116, all while continuing to hear bids of $112 hit the table, and by no means are feedlots getting in a rush to dump their pens. The market's real opportunity is obviously going to come with time, and feedlots know that, with boxed beef prices as high as they are, packers want to be processing cattle. So once again, the cattle market sits patiently and waits for cattle to trade. And it would be a shame if we didn't applaud feedlots in their marketing efforts this week. There's been some light trade in Iowa and in Kansas but not nearly enough to establish even a slight trend for the week. Thursday's slaughter is estimated at 120,000 head, steady with a week ago and 3,000 head less than a year ago.
In keeping tabs with all that's to develop Friday, the market is also anxious to see the Cattle Inventory report Friday afternoon. Analysts believe that the report will show lighter figures, but by less than 1%. The smaller the cow herd is the more bullish the report will be for the industry.
Thursday's actual slaughter data shared another week of a rigorous slaughter pace, but unfortunately steer carcass weights are still on the rise. For the week ending Jan. 16m the week's actual slaughter totaled 651,879 head. Steer carcass weights averaged 925 pounds (up 2 pounds from the previous week) and heifer weights decreased by a pound to average 850 pounds.
Beef net sales of 28,800 mt reported for 2021, increases primarily for Japan (9,100 mt, including decreases of 600 mt), South Korea (8,100 mt, including decreases of 400 mt), Mexico (3,800 mt, including decreases of 100 mt).
Boxed beef prices closed higher: choice up $2.33 ($231.99) and select up $1.89 ($220.88) with a movement of 110 loads (79.65 loads of choice, 13.31 loads of select, 4.95 loads of trim and 12.06 loads of ground beef).
FRIDAY'S CASH CATTLE CALL: Higher. Come Friday packers will get aggressive with their bids or they will be sent into next week even more hungry for cattle.
FEEDER CATTLE:
The feeder cattle contracts had an uneventful day, not feeling immense pressure from the corn market as it trades on both sides of steady, but rather that overall interest from traders continues to be the dogging factor that's not allowing the market to trade higher. March feeders closed $0.27 lower at $139.80, April feeders closed $0.40 lower at $142.67 and May feeders closed $0.50 lower at $144.37. Truthfully, the market knows that with the strong fundamentals that keep aligning in favor of both the live cattle and feeder cattle markets, higher trade is on the horizon, but putting your finger on when is what's holding traders back. At Winter Livestock Auction in Pratt, Kansas, compared to a week ago, feeder steers weighing 700 to 1,000 pounds sold $3.00 to $7.00 higher. Steer calves weighing 400 to 700 pounds sold $2.00 to $5.00 lower on a light test. Feeder heifers weighing 600 to 900 pounds sold $2.00 lower. Heifer calves weighing 400 to 600 pounds sold $3.00 to $6.00 lower on a light test. Demand was moderate throughout the entire sale. Slaughter cows and bulls sold $3.00 to $8.00 higher. The CME feeder cattle index Jan. 27: up $0.51, $135.34.
LEAN HOGS:
Lean hogs were trading modestly higher throughout most of the contracts before Thursday's noon hour, but as the day traded on through the afternoon traders grew more skeptical and the complex closed mixed. February lean hogs closed $0.62 lower at $69.95, April lean hogs closed $0.07 higher at $76.37 and June lean hogs closed $0.50 lower at $86.85. It was encouraging to see the cash market close higher again Thursday afternoon on 7,530 head and to see Thursday's slaughter be at 495,000 head. As Monday's Cold Storage report was so vividly shared, there's plenty of room for hogs in the coolers and, with the strong export demand that the hog market has seen, packers need to keep processing speeds elevated, which is long-term bullish for hog producers. Pork cutouts totaled 310.98 loads with 260.77 loads of pork cuts and 50.21 loads of trim. Pork cutout values: up $0.18, $81.11. Thursday's slaughter is estimated at 495,000 head, 3,000 head less than a week ago and 4,000 head more than a year ago. The CME lean hog index Jan. 26: up $0.72, $66.95.
Thursday's actual slaughter data shared a respectable slaughter for the week ending Jan. 16 and even better lighter weights for the pork industry. For the week ending Jan. 16, slaughter totaled 2,643,757 head with live weights averaging 295 pounds (down 2 pounds) and dressed weights averaging 221 pounds (down 1 pound).
Pork net sales of 52,900 mt reported for 2021, increases primarily for Mexico (18,900 mt, including decreases of 1,100 mt), China (13,900 mt, including decreases of 1,000 mt), the Philippines (6,000 mt, including decreases of 200 mt).
FRIDAY'S CASH HOG CALL: Steady to somewhat higher. With packers interested in keeping processing speeds elevated, their interest in the cash market will likely continue through the week.
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