GENERAL COMMENTS:
With the lousy beef export report, I was concerned the complex may trade lower, but thankfully the entire livestock complex is trading higher into Thursday afternoon. Heading into the latter part of the day the market will be looking to see where the day's slaughter ends up, as well as pork cutout values. March corn is up 1 1/4 cents per bushel and March soybean meal is down $2.60. The Dow Jones Industrial Average is down 30.14 points and NASDAQ is up 51.86 points.
LIVE CATTLE:
Even with a less-than-desirable export report, live cattle futures are trading mostly higher. It's too bad the week's cash cattle trade developed early in the week as boxed beef prices are still trending higher and now the futures are as well. Again, the biggest, unsettling question of this week is the slower slaughter place. Are plants running slower due to the worker absenteeism after the holidays? Or because of health issues? Either way, for the long-term health of the cattle market, we desperately need to see production back up to at least 120,000 head per day to stay current. The cash cattle market hasn't seen any renewed interest and it's likely the bulk of this week's trade is done. Southern live deals have traded at $138, steady with last week's market; Northern dressed trade has been marketed at mostly $220, which is steady to $1.00 lower than last week. February live cattle are down $0.35 at $136.90, April live cattle are up $0.20 at $142.15 and June live cattle are up $0.07 at $137.32.
Beef net sales of reductions of 3,900 mt for 2021 -- a marketing year low -- were down noticeably from both the previous week and the four-week average. The increases were primarily for Taiwan (100 mt), the Netherlands (100 mt) and Indonesia (100 mt).
The Fed Cattle Exchange Auction listed a total of 1,820 head, of which 35 actually sold, 129 were scratched from the auction and 1,656 head were listed as unsold, as they did not meet the reserve prices, which ranged from $129 to $138.50. Opening prices ranged from $127 to $136, high bids ranged from $129 to $136.75. The state-by-state breakdown looks like this: Texas 968 total head, all of which went unsold; Kansas 723 total head, 594 head went unsold and 129 head were scratched from the auction; California 129 total head, with 35 head sold at $129, 94 head went unsold.
Boxed beef prices are higher: choice up $1.10 ($268.03) and select up $0.55 ($260.16) with a movement of 82 loads (61.83 loads of choice, 11.40 loads of select, 3.68 loads of trim and 5.38 loads of ground beef).
FEEDER CATTLE:
With the live cattle complex trading modestly higher, the feeder cattle futures feel secure (for the time being) to trade mildly higher as they muster some support from the live cattle contracts and thankfully demand hasn't seemed to wane throughout the countryside even with the onset of higher corn prices. January feeders are up $0.47 at $162.60, March feeders are up $0.50 at $166.65 and April feeders are up $0.70 at $170.47. With Tuesday's sharp sell-off, the feeder cattle contracts don't have any nearby resistance to worry about; the market simply needs support.
LEAN HOGS:
With Thursday's strong export report and renewed support in both the cash market and pork cutout values, the lean hog complex is rallying into Thursday afternoon. February lean hogs are up $0.72 at $83.00, April lean hogs are up $0.45 at $89.10 and June lean hogs are up $0.40 at $99.80. With support encouraging the market to trade higher from nearly every angle, the complex is thriving heading into the afternoon. As of right now, it looks as though the effects of Prop 12 haven't been as detrimental as everyone feared; but we will know more as the market stomachs this change in the long term.
Pork net sales of 19,400 mt for 2021 were up noticeably from the previous week, but down 6% from the prior four-week average. The three largest buyers were Mexico (16,100 mt), Canada (1,400 mt) and China (1,200 mt).
The projected CME Lean Hog Index for 1/5/2022 is down $0.30 at $73.57 and the actual index for 1/4/2022 is up $1.12 at $73.87. Hog prices are higher on the National Direct Morning Hog Report, up $1.25 with a weighted average of $68.15 ranging from $64.00 to $70.00 on 8,095 head and a five-day rolling average of $64.88. Pork cutouts total 255.26 with 222.82 loads of pork cuts and 32.44 loads of trim. Pork cutout values: up $5.60, $91.52.
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