GENERAL COMMENTS:
Friday's commodities were mixed and so were livestock with live cattle and feeders trading modestly lower at midday, while lean hog futures were higher, staying near contract highs. March corn is up 2 cents and March soybean meal is up $5.10, on track for a new closing high for the contract. The Dow Jones Industrial Average is trading down 220 points after the Labor Department reported a much higher than expected increase in January nonfarm payrolls.
LIVE CATTLE:
Cattle futures are on track for higher closes this week, but are mostly lower Friday. February live cattle are up $0.12 at $141.72, April live cattle are down $0.32 at $146.42 and June live cattle are down $0.30 at $141.22. To keep in perspective, Friday's April prices are still near the highest in six years as producers continue to climb out from under a painful multi-year glut of cattle. This week's cash cattle trade was mostly seen at $140 in the South, up $3 to $4 from last week. In the North, trades ranged from $220 to $224, mostly near $222, which is $4 higher on the week. Light trade is still possible later Friday.
Thursday's actual slaughter data for the week ended Jan. 22, 2022, showed steers averaged 925 pounds, up 3 pounds from the week before. Heifers averaged 853 pounds, up 2 pounds on the week. Slaughter had been running higher earlier this week but stumbled a bit Thursday as USDA estimated 117,000 head, down from 118,000 last week. Dow Jones estimated Friday's slaughter at 118,000.
Friday morning's choice boxed beef prices were down $1.60 at $279.86 and selects were down $0.45 at $276.02 with 55 total loads. Choice prices are on track for losses of over $10 from last Friday, while selects are down over $7.00.
FEEDER CATTLE:
March feeder cattle are down $0.55 at $166.17, while March corn is trading a couple cents higher on the day. After so many bearish factors weighed on cattle prices last week, this week saw relief from bearish pressures with encouragement from lower corn prices, higher cash cattle trade, increased slaughter and a roughly steady stock market. The U.S. Labor Department reported nonfarm payrolls increased by 467,000 in January, much more than expected and good news for retail demand in general. This week's winter storm may also have been a factor helping prices as temperatures plunged below zero in the Northern Plains and snow and ice crossed the Southern Plains. Technically, March feeder cattle are trading in a sideways range, recovered from last week's sell-off and appear poised to trade higher, now holding above the 100-day average at $162.60. Wednesday's CME Feeder Index was listed at $159.25.
LEAN HOGS:
April lean hogs are up $1.42 at $99.80, knocking on the door again of $100.00, a price that producers saw briefly last year, but not since 2014 before that. June lean hogs are up $1.12 at $104.95, its highest price since last June with ongoing support from lower hog inventory in 2022 and active retail demand. Thursday's USDA report showing 30,400 metric tons (mt) of pork export sales last week was also not bad for business as Mexico accounted for two-thirds of sales. The estimated slaughter pace is lower this week with Thursday's estimate dropping to 424,000, a total that was likely impacted by this week's winter storm. Dow Jones estimates Friday's hog slaughter at 462,000, down from 474,000 last week. Overall, hog futures are on track for positive gains this week and continue to pull cash prices higher.
Friday's Swine/Pork Market Formula price from USDA's national morning report showed a weighted average price of $86.84 with a head count of 105,753, up $5.27 from last Friday afternoon. The negotiated weighted average was not available Friday morning. Overall, cash hog prices bottomed near Thanksgiving and have been gradually increasing since, following the lead of much higher futures prices, especially in the summer months. The projected CME Lean Hog Index for Wednesday, Feb. 2, is $83.33, up $3.58 from a week ago. February lean hogs are up $0.37 at $86.82 and are set to expire on Valentine's Day. USDA's also showed pork cutouts up $2.44 Friday morning at $99.65 on 102.98 loads. Bellies, picnics and butts were the popular cuts pushing the carcass value higher. If Friday morning's values hold, pork cutouts would be up roughly $3 on the week.
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