GENERAL COMMENTS
It was a tremendous week for the livestock complex, and for the most part, the market ended on a positive note by Friday's close. Hog prices are unavailable on the Daily Direct Afternoon Hog Report because of confidentiality issues. However, we can see that 440 head have traded and that the five-day rolling average sits at $79.66. March corn is up 5 3/4 cents per bushel, and March soybean meal is up $3. The Dow Jones Industrial Average is up 176.44 points.
From Friday to Friday, the livestock futures scored the following changes: December live cattle up $1.85, February live cattle up $1.97; January feeders up $0.22, March feeders up $2.05; February lean hogs up $2.05, April lean hogs up $2.65; March corn up $0.13, May corn up $0.12.
LIVE CATTLE:
If this week wasn't a gift from old Saint Nick himself, I don't know what it was. From the market's ability to trade cash cattle higher despite throughput being at a fraction of what it was just a few weeks ago, to the onset of sharply higher box prices, and the note from Friday's Cattle on Feed report that on-feed numbers are lighter than a year ago and that marketings in November were the most aggressive for the month since the report began back in 1996 is something worth celebrating! February live cattle closed $0.45 higher at $157.75, April live cattle closed $0.50 higher at $161.82, and June live cattle closed $0.57 higher at $157.85. The cash cattle market saw some more trade reported in the South, and it was at higher money. Southern feedlots were able to move cattle throughout the day for $156, which is $1 higher than Thursday's trade and $1 higher than last week's weighted average. There wasn't much more action seen in the North, but on Thursday, Northern dressed cattle sold for mostly $249, which was also $1 higher than last week's weighted average. Choice boxed beef prices ran to $271.95, which is the highest the market has traded since July.
Friday's slaughter is estimated at 104,000 head -- 15,000 head less than a week ago and incomparable to a year ago. Saturday's slaughter is projected to be around 3,000 head. Thursday's cattle slaughter was revised to 109,000 head. This week's slaughter is estimated at 562,000 head -- 63,000 head less than a week ago and 75,000 head more than a year ago.
Boxed beef prices closed higher: choice up $6.74 ($271.95) and select up $3.66 ($245.47) with a movement of 73 loads (46.10 loads of choice, 5.78 loads of select, 3.51 loads of trim and 17.85 loads of ground beef). The choice/select spread sits at $26.48. Throughout the week, choice cuts averaged $266.18 (up $10.35 from a week ago) and select cuts averaged $239.21 (up $10.85 from a week ago) and the week's total movement of cuts, grinds and trim totaled 463 loads.
TUESDAY'S CATTLE CALL: Higher. Given that packers are as short bought as they are and that showlists are current, packers will likely need to participate in next week's cash market to ensure they have enough cattle for the upcoming weeks.
FEEDER CATTLE:
The feeder cattle complex kept rallying through Friday's close and rounded out the week on a substantially higher note, as the market used this past week to its fullest to advance its position. Friday's Cattle on Feed report was largely supportive, but the only thing that was somewhat surprising to see is that placements came in at 1,925,000 head -- which was down 2% from last year. If you were to read that line in and of itself, you'd be led to believe that the report should find Friday's placement data bullish! There were fewer feeders placed this November than last year, for heaven's sake! But that's not how the Cattle on Feed report works. Before each COF report is released, a group of analysts are asked to project where they see the report's numbers landing and how close or how far away the actual numbers are from analysts' projections is what determines how the report will be viewed. Analysts believed that placements could land anywhere from 91.8% to 98.0% of a year ago, with the consensus being that Friday's data would be somewhere close to 95.7% of a year ago. When the COF report was released, we saw placement down just 2% from a year ago, equating to 98%. It will be interesting to see how traders react early next week, as they could either see the report as lukewarm because placements were higher than projected, or they could view the report as a whole and conclude its findings are supportive given that on-feed numbers were lighter than a year ago, placements too were lighter than a year ago, and marketings were extremely aggressive. Unfortunately, we'll have to wait and see how things shake out next week to know the answer to that question. January feeders closed $0.02 higher at $184, March feeders closed $0.30 higher at $186.75 and April feeders closed $0.35 higher at $190.25. The CME feeder cattle index 12/22/2022: down $1.08, $176.75.
LEAN HOGS:
The lean hog complex grew anxious ahead of Friday's close and ended up closing slightly lower in its nearby contracts, but the deferred contracts were still able to keep a slightly higher price point before the day's end. USDA's release of the most recent quarterly Hogs and Pigs report showed lighter supplies of all weight divisions in the marketing category, and a steady number of breeding sows for the December-through-February time frame. All in all, the report is supportive of the market, as its supply isn't overbearing to the complex. February lean hogs closed $1.22 lower at $87.82, April lean hogs closed $0.65 lower at $95.37 and June lean hogs closed $0.20 lower at $108.75. Pork cutouts totaled 208.18 loads with 194.20 loads of pork cuts and 13.97 loads of trim. Pork cutout values: up $3.30, $92.06. Friday's slaughter is estimated at 96,000 head -- 353,000 head fewer than a week ago and 49,000 head more than a year ago. Saturday's kill is projected to be around 3,000 head. Thursday's hog slaughter was revised to 252,000 head. The CME lean hog index 12/21/2022: down $0.90, $79.67.
TUESDAY'S HOG CALL: Higher. Given that packers barely supported the cash market at all this week, it's most likely that they'll need to be more aggressive next week even though throughput won't likely reach normal speeds until after the New Year.
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