GENERAL COMMENTS:
It was a sorry day for the cattle contracts, but the lean hog market was able to champion a higher close. The cash cattle market didn't see the prices that it had hoped for as southern live cattle sold $2.00 softer than a week ago and, while Northern dressed cattle sold steady, most of them sold with time! Hog prices closed higher on the National Direct Afternoon Hog Report, up $2.70 with a weighed average of $60.46 on 7,142 head. March corn is up 4 1/2 cents per bushel and January soybean meal is up $2.50. The Dow Jones Industrial Average is down 0.06 points and NASDAQ is down 269.62 points.
LIVE CATTLE:
We knew that at some point the cash cattle market's rally as going to wane leading up to the holidays. With packers being able to commit cattle to the deferred delivery, they have lessened their need to wildly support the cash cattle market and were able to get cattle bought Thursday for steady to $2.00 lower. The problem with the cattle that sold steady in the North was that most of them that sold in Nebraska are set for delivery for the week of Dec. 20. In Kansas and Texas, live deals were marked at $140, which is roughly $2.00 lower than last week, and dressed deals in the North were sold at $220 which is full steady but most sold with time. Some asking prices remain firm around $142 to $145 in the South and $225 plus in the North. The futures market didn't lend much support to the market as it closed fully lower, and with the weaker export report, the day's trajectory was set lower right from the get-go. December live cattle closed $0.82 lower at $136.72, February live cattle closed $0.87 lower at $137.80 and April live cattle closed $0.65 lower at $141.22. Thursday's slaughter is estimated at 122,000 head, 1,000 head less than a week ago and 3,000 head more than a year ago.
Thursday's actual slaughter data shared that for the week ending Nov. 27, steers averaged 926 pounds (up 4 pounds from the previous week) and heifers averaged 847 pounds (down 2 pounds from the week before).
Beef net sales of 4,200 mt for 2021 -- a marketing-year low -- were down 80% from the previous week and 81% from the prior fou-week average. The three largest buyers were Canada, China and Japan.
Boxed beef prices closed mixed: choice up $0.44 ($264.55) and select down $1.41 ($251.68) with a movement of 204 loads (113.76 loads of choice, 20.74 loads of select, 5.64 loads of trim and 63.98 loads of ground beef).
FRIDAY'S CASH CATTLE CALL: Steady with the week's trend. Seeing that cattle have traded in all the major feeding states, any trade that develops come Friday will likely be for steady prices.
FEEDER CATTLE:
The feeder cattle contracts knew that, with the pressures that sent the live cattle contracts trading lower, the complex didn't stand a chance at rallying amid a weaker live cattle market and higher corn prices. January feeder cattle closed $0.67 higher at $164.07, March feeders closed $0.80 lower at $165.07 and April feeders closed $0.65 lower at $167.85. The market is still seeing relatively strong interest in both the calf and feeder markets, but as the days get closer to the holiday, demand will start to wane. At Torrington Livestock Auction in Torrington, Wyoming compared to last week steer calves over 400 pounds sold $2.00 to $5.00 higher, and steer calves under 400 pounds traded $5.00 lower on comparable trades. Heifer calves over 400 pounds traded unevenly steady to $5.00 higher, and heifer calves under 400 pounds traded $2.00 lower. The CME Feeder Cattle Index for Dec. 8: up $0.47, $161.63.
LEAN HOGS:
The problem with last minute holiday buying spikes is that they usually don't support the market for more than a day -- and that's what we saw in Thursday's pork cutout market. On Wednesday, the market closed sharply higher but come Thursday retailers had largely committed all that they needed and let product pass along. However, the market's support stemmed from the invigorated cash market which closed $2.70 higher on over 7,000 head. With packers having been aggressive in the cash market last week, it's comforting to see their interest in this week's market, but when you add the two strong weeks together, we know that here in the near future their aggression in the cash market is going to be nothing more than peanuts. Thankfully packers are looking at the market in 2022 and seeing opportunity as the futures market is trading substantially stronger in the 2022 contracts. December lean hogs closed $1.60 higher at $72.42, February lean hogs closed $1.77 higher at $77.82 and April lean hogs closed $1.62 higher at $83.05. Pork cutouts totaled 363.57 loads with 322.65 loads of pork cuts and 40.92 loads of trim. Pork cutout values: down $3.48, $86.96. Thursday's slaughter is estimated at 473,000 head, 7,000 head less than a week ago and 24,000 head less than a year ago. The CME Lean Hog Index for Dec. 7: down $0.11, $70.83.
Pork net sales of 19,800 mt for 2021 were down 52% from the previous week and 26% from the prior four-week average. The three largest buyers were Mexico, Japan and South Korea.
Thursday's actual slaughter data shared that for the week ending Nov. 27, both live and dressed weights were unchanged from the previous week. Hogs averaged 291 pounds live and 217 pounds dressed.
FRIDAY'S CASH HOG CALL: Lower. After an extremely aggressive day in Thursday's cash market, I don't suspect that packers will be as aggressive in Friday's market.
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