GENERAL COMMENTS:
It was a tremendous day for the hog market, but the cattle complex didn't close with the same gusto. Live cattle futures chopped sideways, yearning for support, and feeder cattle futures closed lower on higher grain prices. Hog prices were unavailable on the National Direct Afternoon Hog Report due to confidentiality, but we can see that 3,365 head sold and that the five-day moving average now sits at $88.45. March corn is up 3 cents per bushel and March soybean meal is down $0.20. The Dow Jones Industrial Average is down 622.24 points and NASDAQ is down 407.38 points.
LIVE CATTLE:
Live cattle futures continued to chop sideways through Thursday's trade despite seeing a supportive export report and more cash cattle trade. Part of the market's inability to push any higher is that while the February contract may have a few more trading days left, most of the spot market's attention is now on the April contract. That said, April leads with a significant premium to the following contracts, until you get to December 2022. Cattlemen and traders alike see this premium and are being cautious in how they're handing the summer 2022 contracts. February live cattle closed $0.27 higher at $143.40, April live cattle closed $0.15 lower at $146.77 and June live cattle closed $0.10 lower at $142.15. The futures market could take on the long-term resistance that looms, but it would need immense cash support. And while pushing the market $1.00 or $2.00 higher is attainable in the short term, soon packers are going to pump the brakes on the cash market gains as they have cattle committed with time and intend to use those inventories to limit the cash market advancement. There was some more trade that developed in parts of Nebraska at $226 and $143 live, and in parts of Texas for $142 -- both fully steady with the week's trend. It's looking like the bulk of this week's trade is done. Thursday's slaughter is estimated at 122,000 head -- 1,000 head less than a week ago and 13,000 head more than a year ago.
Thursday's actual slaughter data shared that for the week ended 2/5/2022, steer carcasses averaged 930 pounds (up two pounds from a week ago and up 11 pounds from a year ago), heifer carcasses averaged 854 pounds (steady with a week ago and six pounds heavier than a year ago).
Beef net export sales of 23,000 metric tons (mt) for 2022 were up 18% from the previous week and up 38% from the prior 4-week average. The three largest buyers were South Korea (10,100 mt), Japan (7,200 mt) and Canada (1,600 mt).
Boxed beef prices closed lower: choice down $0.03 ($269.59) and select down $1.23 ($264.85) with a movement of 161 loads (105.07 loads of choice, 28.33 loads of select, 16.91 loads of trim and 10.76 loads of ground beef).
FRIDAY'S CASH CATTLE CALL: Steady. Given that the week's trade is all but done, any more trade will likely be clean up in nature and steady with the rest of the week's business.
FEEDER CATTLE:
Higher corn, higher soybeans and a sideways chopping live cattle complex led the feeder cattle contracts to a lower close. March feeders closed $1.25 lower at $166.20, April feeders closed $1.02 lower at $171.15 and May feeders closed $0.82 lower at $175.72. Technically speaking, the market simply didn't have the support it needed to push the futures higher. But from a fundamental standpoint, the market sees the cash cattle market's $2.00 advancement as long-term encouragement. At Winter Livestock in Dodge City, Kansas, compared to last week, yearling steers and heifers weighing 550 to 950 pounds sold steady to $3.00 lower. Steer calves weighing 400 to 550 pounds traded $6.00 to $10.00 higher. Heifer calves weighing 400 to 550 pounds sold $3.00 to $5.00 higher. Demand was called excellent on cattle under 550 pounds and moderate on cattle over 550 pounds. Slaughter cows traded $3.00 lower and slaughter bulls sold steady. The CME Feeder Cattle Index 2/16/2022: down $0.45, $162.14.
LEAN HOGS:
Upon absorbing the immense support the pork cutouts provided, the futures shot higher and closed above the market's previous resistance. At midday, pork cutout values were up $11.04, so I figured they'd be higher in the afternoon report. But I didn't see a $10.02 jump -- wow! April lean hogs closed $2.17 higher at $107.57, June lean hogs closed $2.22 higher at $117.17, and July lean hogs closed $2.10 higher at $116.10. Tuesday and Wednesday were big days for the cash hog market, and upon securing enough supply for their short-term needs, packers left the cash market high and dry come Thursday as the country didn't even see enough hogs trade for USDA to be able to report prices without breaching confidentiality. There's been a dip in pork production over the last two days, which could end up driving pork prices even higher as demand is high (HIGH HIGH) amid short supplies and other meats are expensive. Pork cutouts total 316.10 loads with 272.56 loads of pork cuts and 43.54 loads of trim. Pork cutout values: up $10.02, $116.54. Thursday's slaughter is estimated at 465,000 head -- 8,000 head less than a week and year ago. Wednesday's hog slaughter was revised to 472,000 head -- 6,000 head less than what was originally stated. The CME Lean Hog Index 2/15/2022: up $1.50, $93.34.
Thursday's actual slaughter data shared for the week ended 2/5/2022 live hog weights averaged 293 pounds (down 1 pound from a week ago) and dressed carcasses averaged 218 pounds (up 1 pound from a week ago).
Pork net export sales of 18,300 mt for 2022 were up 1% from the previous week but down 46% from the prior 4-week average. The three largest buyers were Mexico (4,800 mt), South Korea (3,400 mt) and Japan (3,300 mt).
FRIDAY'S CASH HOG CALL: Steady. There could be a little more trade in Friday's cash market than what Thursday saw, but it's unlikely it will be much more. Given that plants are running a tick slower at the end of this week, packers aren't going to want to buy more hogs amid waned production.
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