GENERAL COMMENTS:
After seeing Thursday's bearish export report, both the live cattle and lean hog contracts scaled mostly lower, which lent an opportunity for the feeder cattle contracts to trade higher amid slightly weaker corn prices. Hog prices closed sharply higher again on the National Direct Afternoon Hog Report, up $2.24 with a weighted average of $77.94 on 12,030 head. May corn is down 7 1/4 cents per bushel and May soybean meal is down $4.30. The Dow Jones Industrial Average is down 559.85 points and NASDAQ is down 478.54 points.
LIVE CATTLE:
The live cattle contracts didn't fare well after Thursday's weak export report, but feedlots aren't willing to accept the market's recent weakness as a reason for why cash cattle prices should be steady this week when boxed beef prices are as lofty as they are. April live cattle closed $0.55 lower at $121.67, June live cattle closed $0.60 lower at $119.50 and August live cattle closed $0.47 lower at $118.15. There was some trade that took place Thursday afternoon, and though it would have been best for the cash cattle market to have all sellers wait until Friday to trade to try to milk as much out of this week as possible, feedlots in the North did demand $182, which is $1.00 more than last week's trade. There was only a handful of cattle sold in the South for $114, which is mostly steady with last week's trade. Come Friday, the market will look for buyer interest to be more aggressive. As the February board prepares to expire, feedlots know that the springtime is their chance to move the cash cattle market higher before the dog days of summer, and they don't want to squander this opportunity after enduring 2020's sorry prices. Thursday's slaughter is estimated at 121,000 head, 10,000 head more than a week ago and 2,000 head less than a year ago.
Thursday's actual slaughter data shared that, for the week ending Feb. 13, carcass weights were steady to slightly higher. Steers averaged 919 pounds, which is steady with the previous week, but heifers gained an additional two pounds to average 850 pounds
Beef net sales of 8,500 mt reported for 2021 were down 63% from the previous week and 66% from the prior four-week average. The three largest buyers were South Korea (3,800 mt), Japan (3,100 mt) and Mexico (700 mt).
Boxed beef prices closed lower: choice down $0.36 ($240.39) and select down $1.00 ($228.79) with a movement of 92 loads (62.74 loads of choice, 10.73 loads of select, 3.63 loads of trim and 14.59 loads of ground beef).
FRIDAY'S CASH CATTLE CALL: Steady to $1.00 stronger. It's a positive sign that both the North and South still expect business to develop before the week's end, but packers are doing everything in their power to avoid paying more for cattle this week than last. $1.00 higher isn't out of the picture if feedlots can wait patiently.
FEEDER CATTLE:
While the rest of the livestock contracts closed mostly lower, the feeder cattle contracts capitalized on the opportunity to attract traders and trade mildly higher throughout Thursday's trade. As both the lean hog and live cattle contracts veered lower, the feeder cattle contracts had the opportunity to close higher as corn prices endured some modestly pressure. March feeders closed $0.05 higher at $140.42, April feeders closed $0.32 higher at $145.07 and May feeders closed $0.42 higher at $147.22. At Hub City Livestock Auction in Aberdeen, South Dakota, compared to last week, the best test on steers was on those weighing 550 to 600 pounds sold mostly steady, 651 to 700 pound steers sold $2.00 to $4.00 lower, those weighing 701 to 900 pounds sold mostly steady with instances of $2.00 lower of those weighing 700 to 800 pounds. The best test on heifers was on those weighing 600 to 650 pounds, which sold $2.00 to $4.00 higher, the 651- to 750-pound heifers sold steady to at times $3.00 lower on those weighing 700 to 750 pounds. Demand was good throughout the sale, though it was noted that some cattle are starting to carry tags as warmer temperatures have let the ground thaw in some parts. The CME Feeder Cattle Index for Feb. 24: down $0.63, $139.48.
LEAN HOGS:
The futures market may have closed mixed for the hog contracts, but the demand from the countryside remains jaw-dropping. April lean hogs closed $0.32 higher at $89.75, June lean hogs closed $0.15 lower at $95.75 and July lean hogs closed $0.05 higher at $95.47. The contracts were pressured after seeing Thursday's disappointing export report, but when the cash market keeps pushing hog prices higher, and on a noteworthy movement of 12,030 head while the afternoon's pork cutout value nearly closes $3.00 stronger -- the market is bursting at the seams to continue this upward rally. After Wednesday's weaker pork cutout close, there was a lot of pressure on the market to see how Thursday's cutout value would fare, but Thursday came back to push the market substantially higher. Pork cutouts total 281.69 loads with 263.30 loads of pork cuts and 18.39 loads of trim. Pork cutout values: up $2.99, $95.13. Thursday's slaughter is estimated at 497,000 head, 18,000 head more than a week ago and 1,000 less than a year ago. The CME Lean Hog Index for Feb. 23: up $0.96, $79.12.
Thursday's actual slaughter data for the week ending Feb. 13 showed lighter weights for the hog industry. Live weights averaged 290 pounds, which is down 3 pounds from the previous week, and dressed weights fell 2 pounds to average 217 pounds.
Pork net sales of 25,600 mt reported for 2021 were down 23% from the previous week and 40% from the prior four-week average. The three largest buyers were Japan (4,100 mt), China (3,700 mt) and South Korea (3,200 mt).
FRIDAY'S CASH HOG CALL: Steady to somewhat higher. Packers have dived head first into the cash hog market this past week and it's looking like the rally is going to healthily continue into Friday's business.
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