GENERAL COMMENTS:
It was a lower day for cattle futures as traders let the markets fall, but the lean hog contracts leaped higher as traders wanted all they could take in that market! Hog prices closed lower on the National Direct Afternoon Hog Report, down $3.72 with a weighted average of $66.56 on 4,554 head. March corn is up 1/2 cent per bushel and March soybean meal is up $2.50. The Dow Jones Industrial Average is down 313.26 points and NASDAQ is down 186.24 points.
LIVE CATTLE:
Live cattle futures were stronger for a short while Thursday but, by noon, the market's outlook was pretty grim. February live cattle closed $0.22 lower at $138.32, April live cattle closed $0.17 lower at $143.17 and June live cattle closed $0.10 lower at $138.37. Thursday's weaker trade stemmed from traders' unwillingness to drive the market any higher following Wednesday's aggressive push. The cash cattle market was quiet with just a little clean-up trade. So far this week, Northern dressed deals have been mostly $218, fully steady with last week's weighted averages. Many of these cattle are set for delivery the weeks of Jan. 31 and Feb. 7. Southern live transactions have been mostly $137, $1 to $1.50 higher than last week's weighted averages. Thursday's slaughter is estimated at 116,000 head -- 2,000 head more than a week ago and 6,000 head less than a year ago.
Thursday's actual slaughter data showed for the week ended 1/8/2022 steers stayed steady at 928 pounds (but that's 16 pounds heavier than the same week a year ago) and heifers dropped four pounds from the previous week to average 851 pounds. It's important to not overlook how big these carcass weights are getting -- and this data represents the time before reduced slaughter speeds of 2022 hit the market. The market could be in for a big wake-up call in the next couple of weeks as weights are likely growing heavier and heavier as cattle are sitting in feedlots for longer than anticipated.
Boxed beef prices closed higher: choice up $1.38 ($292.98) and select up $1.75 ($282.18) with a movement of 129 loads (94.59 loads of choice, 14.45 loads of select, 3.88 loads of trim and 15.94 loads of ground beef).
FRIDAY'S CASH CATTLE CALL: Steady with the week's trend. It's looking like the bulk of this week's business is essentially done. There may be some clean-up trade Friday but largely the week's trade is wrapped up.
FEEDER CATTLE:
Feeder cattle futures can't even blame their weaker close on the corn market as the corn complex also closed lower Thursday. Traders took one look at Thursday's market early in the day and, after driving the market higher through Wednesday's close, traders got cold feet and opted to move their positions to the sidelines and let the feeder cattle complex flop lower. January feeders closed $0.22 lower at $161.17, March feeders closed $0.67 lower at $164.95 and April feeders closed $0.52 lower at $169.52. With the live cattle contracts also closing lower, and not much optimism in the cash cattle market, the feeder cattle contracts didn't have much support. At Torrington Livestock Action in Torrington, Wyoming, compared to last week, on a run of 7,639 head, steer calves weighing 450 to 700 pounds traded $2.00 to $4.00 stronger, while all other steer calves traded mostly steady. Heifer calves weighing 500 to 550 pounds traded $3.00 higher, and all other weight groups traded mostly steady. The CME Feeder Cattle Index 1/19/2022: down $0.04, $161.20.
LEAN HOGS:
Despite all the fundamental factors of the market closing weaker (slaughter lower, cash prices lower, pork cutouts lower) traders drove the futures higher through Thursday's close. For the nearby contracts, both the April and June made new contract highs, as traders wasted no time rallying the market before the day's last bell. February lean hogs closed $2.62 higher at $84.92, April lean hogs closed $2.65 higher and June lean hogs closed $1.95 higher at $103.82. The wild ride in pork cutout values is enough to give you whiplash. While ham prices were up over $30.00 on Wednesday's close, come Thursday the market tumbled lower and ham prices alone fell $25.80. Unfortunately, this type of volatility isn't expected to lessen until processing speeds get back to normal. Pork cutouts total 296.32 loads with 263.90 loads of pork cuts and 32.41 loads of trim. Pork cutout values: down $3.23, $92.24. Thursday's slaughter is estimated at 457,000 head -- 4,000 head less than a week ago and 41,000 head less than a year ago. The CME Lean Hog Index 1/18/2022: up $0.07, $76.85.
Thursday's actual slaughter data for the week ended 1/8/2022 showed live carcass weights averaged 294 pounds (up two pounds from the previous week) and dressed weights averaged 219 pounds (up one pound from the previous week).
FRIDAY'S CASH HOG CALL: Lower. Given that packers were aggressive earlier in the week, and that absenteeism has been an issue at plants, I think it is safe to bet Friday's cash hog market will be weaker as packers give the market a rest ahead of the weekend.
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