GENERAL COMMENTS:
For whatever it was and for whatever it wasn't, the week is finally over and hopefully next week the market can thrive more prosperously than this week's market did, given the severe weather. Hog prices closed lower on the National Direct Afternoon Hog Report, down $0.36 with a weighted average of $69.22 on 4,699 head. March corn is down 7 1/2 cents per bushel and March soybean meal is down $1.60. The Dow Jones Industrial Average is up 0.98 points and NASDAQ is up 9.10 points.
From Friday to Friday livestock futures scored the following changes: February live cattle down $1.28, April live cattle down $1.50; March feeder cattle down $1.72, April feeder cattle down $2.05; April lean hogs down $0.70, June lean hogs up $0.42.
LIVE CATTLE:
External challenges gravely affected the live cattle market this week and there being absolutely nothing anyone could have done differently to avoid it. Even though the cash cattle market didn't gain any ground this week, the market didn't lose any ground either, which is always an accomplishment. In the weeks to come, slaughter speeds are going to need to be ran at full capacity, which means that the cash cattle market stands a chance at seeing higher price levels. Next Friday, the February live cattle contract expires, which will take the highly sought-after April contract to the front and center stage. Feedlots are eager to move the market higher and can't wait to finally get through the blasted first quarter and start relishing in some of the demand that the second quarter historically yields. February live cattle closed $0.80 higher at $115.92, April live cattle closed $0.75 higher at $123.67 and June live cattle closed $0.75 higher at $120.52. There was some light cash cattle trade that developed Friday afternoon, with dressed cattle in the North selling for $180 -- fully steady with last week's weighted averages.
Unfortunately, with some ethanol plants being such down due to weather issues and the lack of natural gas supplies, there are some feedlots having to go without byproducts. This is a feedlot's true nightmare as cattle lose weight and cost of gains become even more costly than before.
Friday's slaughter is estimated at 109,000 head, 3,000 head more than a week ago and 12,000 head less than a year ago. Saturday's kill is projected to be around 63,000 head, 22,000 head more than a week ago and 32,000 head more than a year ago.
Friday's Cattle on Feed report shouldn't shake next week's market, given that there are bigger matters at hand, but it was surprising to see placements up 3% from a year ago, totaling 2.02 million head. To access the full report and to see DTN's comments, go here:
This week's boxed beef movement was considerably lighter with packing plants being temporality down, which also drove boxed beef prices higher again for the week. Throughout the week the week, choice cuts averaged $236.56, up $2.80 from last week and select cuts averaged $224.89, up $4.19 from last week. The week's total movement of cuts, grinds and trim totaled 426 loads.
Boxed beef prices closed higher: choice up $0.38 ($239.23) and select up $0.43 ($227.90) with a movement of 90 loads (52.88 loads of choice, 9.06 loads of select, 11.81 loads of trim and 15.85 loads of ground beef).
MONDAY'S CASH CATTLE CALL: $1.00 to $2.00 higher. Next week's cash cattle trade should see more interest than this week did. With Friday afternoon's report showing only 52,338 head sold this week, packers will need to step to the plate and buy more cattle to make up for the tonnage lost this week.
FEEDER CATTLE:
The slight break in the corn market's rally extended feeder cattle contracts the opportunity to close higher after a mostly lower trending week. March feeders closed $0.92 higher at $139.12, April feeders closed $0.92 higher at $142.67 and May feeders closed $1.10 higher at $145.72. Thankfully, as milder temperatures are on the forecast, sale barns will be able to go back to their normal schedules in most parts of the country and continue to market cattle, as producers desperately need the markets to be open. At Stockmen's Livestock Exchange in Dickinson, North Dakota, compared to two weeks ago, feeder steers weighing 650 to 700 pounds and those weighing 750 to 800 pounds sold $8.00 higher, and steers weighing 700 to 750 pounds and 650 to 900 pounds sold on average $4.00 higher. Feeder heifers weighing 550 to 650 pounds sold $1.00 higher and heifers weighing 650 to 700 pounds and 750 to 800 pounds sold $5.00 higher. Demand was seen throughout the sale and feeders were in light to moderate flesh, which buyers greatly appreciated. Some groups of heifers attracted special interest as they were high enough quality to make replacement females. The CME Feeder Cattle Index for Feb. 18: up $1.82, $138.11.
LEAN HOGS:
Traders grew leery of the nearby hog contracts as the day rounded out, but even with Friday's lower close, it was an exceptional week for the lean hog market. Looking at the lean hog charts, one can't help but be blown away by the exceptional rally the markets have had, but it's also the reason why traders are growing skeptical of pushing the complex much higher. Traders look at the levels that the market is trading at and wonder how much more upside the market truly has. The one (and maybe the only) good thing about COVID-19 is that it has encouraged more domestic meat demand and the pork industry is being fueled by that. The lean hog charts may by getting too high for some, but the market's demand isn't weakening. April lean hogs closed $0.42 lower at $84.50, June lean hogs closed $0.32 lower at $92.32 and July lean hogs closed $0.25 lower at $92.32. Pork cutouts total 247.17 loads with 221.55 loads of pork cuts and 25.62 loads of trim. Pork cutout values: up $0.68, $91.49. Friday's slaughter is estimated at 488,000 head, 5,000 head more than a week ago and 21,000 head more than a year ago. Saturday's kill is projected to be around 173,000 head, 28,000 head less than a week ago and 19,000 head less than a year ago. The CME Lean Hog Index for Feb. 17: up $0.67, $77.20.
MONDAY'S CASH HOG CALL: Steady. Packers were extremely aggressive in this week's cash hog market. Next week, pushing slaughter to maximum capacity will be the first matter of business and depending on the plant, some packers may have to step up and secure more supplies via the cash market again.
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