GENERAL COMMENTS
Gains in the live cattle futures market Friday look impressive on a one-day basis but were mostly just a correction of previous losses. Feeder cattle and lean hog futures posted milder performances. In the cash cattle market, light trade was reported in parts of the South at $155 to $156, which was $1 to $2 higher than the rest of the week's business and fully steady to $1 higher than last week's weighted averages. Northern dressed business has been marked at mostly $247, which was $2 lower than last week's weighted averages. The National Direct Afternoon Hog Report showed purchased swine prices up $1.96 to a weighted average of $83.07 on 10,209 head. Prices ranged from $74 to $85, and the five-day rolling average is now $83.41. December corn moved up 2 3/4 cents to $6.34 3/4 per bushel and January soybean meal closed up $5.20 per ton to $471.60. The Dow Jones Industrial Average was down 305.22 points and the NASDAQ was down 74.17 points.
From Friday to Friday, livestock futures scored the following changes: December live cattle up $0.33, February live cattle up $0.32; January feeder cattle up $1.48, March feeder cattle off $0.18; December lean hogs off $0.85, February lean hogs off $6.43; December corn unchanged, March corn off $0.02.
LIVE CATTLE:
Live cattle futures posted impressive gains Friday as the December contract surged to correct earlier losses and get back in line with the physical market. The December contract closed up $1.25 at $153.675; the February contract closed up $1.625 at $155.55, and the April contract closed up $1.30 at $159.35. Owners of market-ready cattle were able to hold off trading long enough this week to call the packers' bluff and get some higher prices: southern live deals traded Friday afternoon at $155 to $156, which was $1 to $2 higher than the rest of the week's business and fully steady to $1 higher than last week's weighted averages. Northern dressed business traded earlier in the week at mostly $247, which was $2 lower than last week. Most of the beef headed for holiday tables will be already out in the supply chain and packers may find themselves willing to slow down their recent slaughter pace, particularly with beef prices continuing to sag. The rib primal, in particular, has been dropping now that grocery stores have brought in what they intend to sell this December. It's still expensive by historical terms, however! The value was $512.91 for the choice rib primal, or $1,119.78 weighted average for boneless light ribeyes in Friday afternoon's wholesale report. Therefore, the quantity demanded could suffer as consumers face inflation sticker stock and look for alternatives.
Boxed beef prices were higher Friday afternoon: choice up $1.65 ($248.93) and select up $0.71 ($221.26), with a movement of 98 loads (59.74 loads of choice, 11.67 loads of select, 7.5 loads of trim and 18.59 loads of ground beef).
MONDAY'S CASH CATTLE CALL: Steady to $1.00 lower. Packers have recently been determined to keep the lines moving at an aggressive pace, but seasonally may no longer feel compelled to do so in a sagging beef market.
FEEDER CATTLE:
The monthly crops supply-and-demand report passed Friday with barely any reaction in the feed markets, allowing the feeder cattle futures market to end Friday with a lightly higher tone and close the week almost unchanged. At the end of the session, the January contract was up $0.45 at $183.925, the March contract was up $0.05 at $185.10, and the April contract was up $0.25 at $188.60. USDA lowered its projection for corn export demand in the 2022-23 marketing year, which in theory makes the corn supply-and-demand table look a little more bearish with 75 million bushels more to leave in ending stocks (1.257 billion bushels). However, this isn't a serious shift in a market environment where feedlots are paying $6.55 per bushel for corn (the national average cash price), or as much as $8.00 per bushel at some sites near the panhandle of Texas. The feeder cattle market depends on its own tight supply situation to maintain futures hedging opportunities above $185 for spring 2023 contracts and above $200 for the fall of 2023.
LEAN HOGS:
A wild week of first higher, but ultimately lower prices fizzled out on Friday when most lean hog contracts traded both sides of unchanged. The December contract closed down $0.425 at $81.575; the February contract closed down $0.70 at $84.00; and the April contract closed up $0.25 at $91.00. December contract's last trading day will be next Wednesday, Dec. 14. Last week's losses gave futures speculators plenty of room on the chart to move lower and build bearish momentum, and recently dwindling cash prices for lean hogs have done nothing to counteract this. One spot of bullish interest popped up on Friday, however, with the value of the picnic primal surging over $17 in the afternoon cut-out report -- presumably a seasonal indication of retail demand. Grocery shoppers here and in Mexico may be willing to switch from pork to chicken in some situations, but demand for a Christmas ham may be a different thing altogether and much more inelastic. The afternoon pork cut-out showed the overall carcass value up $3.59 to $88.56. There were 236.58 total loads (223.91 loads of cuts and 12.67 loads of trim). The CME Lean Hog Index for Dec. 7: down $0.31, $82.47, and the projected Index for Dec. 8: down $0.48, $81.99.
MONDAY'S CASH HOG CALL: Steady to $1 lower. Volatility in the futures market gives packers cover to maintain the lower trend in prices.
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