GENERAL COMMENTS
It was another mixed day for the livestock complex as both the live cattle and feeder cattle contracts found technical support while the lean hog complex traded lower throughout Thursday. Hog prices closed lower on the Daily Direct Afternoon Hog Report, down $3.57 with a weighted average of $81.11 on 4,149 head and a five-day rolling average of $83.40. March corn is up 1 1/4 cents per bushel and January soybean meal is up $7.40. The Dow Jones Industrial Average is up 183.56 points.
LIVE CATTLE:
"Wait and see" is what Thursday's market was all about for the live cattle complex as largely the cash sector has yet to trade cattle, but it looks like the waiting game is going to continue into Friday's market. The cash cattle market didn't see hardly any interest from packers, which could lead to two possibilities come Friday -- 1) Packers get aggressive and buy cattle, or 2), Packers avoid the market altogether and hope to get cattle bought even cheaper next week. I'm led to believe that that the first option is more likely to happen as fed cattle supplies are thin and even though packers are pulling back processing, they still need to procure cattle for upcoming kills. There were a few head that trade din the North for $247, which is $2.00 lower than last week's weighted average, and a few traded for $154 in the South, which is $1.00 lower than last week's weighted average. Seeing the board trade higher throughout the day did lend feedlots some confidence, and it also helped that boxed beef prices closed mixed as opposed to fully lower. December live cattle closed $0.50 higher at $152.42, February live cattle closed $0.37 higher at $153.92 and April live cattle closed $0.42 higher at $158.05. Thursday's slaughter is estimated at 126,000 head, 2,000 head less than a week ago and 4,000 head more than a year ago.
Thursday's actual slaughter data shared that for the week ending Nov. 26 steers averaged 927 pounds, which was three pounds less than the previous week but still 1 pound more than a year ago. For the same week, heifers averaged 850 pounds, which was 3 pounds less than the previous week but 3 pounds more than a year ago.
Beef net sales of 1,600 mt for 2022 primarily for China (4,800 mt, including decreases of 300 mt), Japan (1,600 mt, including decreases of 1,100 mt), Mexico (900 mt, including decreases of 100 mt), Canada (500 mt, including decreases of 200 mt), and Taiwan (400 mt, including decreases of 200 mt), were offset by reductions primarily for South Korea (7,900 mt). Net sales of 16,300 mt for 2023 were primarily for South Korea (13,100 mt), Japan (1,300 mt), Hong Kong (700 mt), China (300 mt), and Guatemala (300 mt). Exports of 16,900 mt were primarily to South Korea (5,100 mt), Japan (4,300 mt), Mexico (1,900 mt), China (1,600 mt), and Taiwan (1,300 mt).
Boxed beef prices closed mixed: choice down $1.68 ($247.28) and select up $0.78 ($220.55) with a movement of 146 loads (96.54 loads of choice, 17.42 loads of select, 7.00 loads of trim and 24.99 loads of ground beef). The choice/select spread sits at $26.73.
FRIDAY'S CATTLE CALL: Steady to $1.00 higher. The market will likely trade cattle come Friday. One may be led to believe that packers could sit this week's market out altogether, but with front-end supplies as thin as they are and with packers not having many cattle committed to the deferred delivery option -- I think we will see cattle trade come Friday.
FEEDER CATTLE:
Thursday's action in the feeder cattle arena was rather impressive given that corn prices closed $0.01 to $0.04 higher in the nearby contracts and that the cash cattle market still hasn't see much trade develop. Nevertheless, the spot January contract was able to rally 257 points which again pushed the contract beyond it's 100-day moving average. The question heading into Friday's market will be whether or not the complex can sustain Thursday's move. And unless some strong fundamental action happens either in the form of higher feeder cattle prices or stronger cash cattle trade, the market will likely be pressured to trade lower. January feeders closed $2.57 higher at $183.47, March feeders closed $1.80 higher at $185.05 and April feeders closed $1.75 higher at $188.35. At La Junta Livestock Commission in La Junta, Colorado, compared to last week steer calves under 500 pounds traded $5.00 to $8.00 stronger, with instances of up to $10.00 higher. Heifer calves traded steady to $1.00 higher. Feeder cattle supply over 600 pounds was 43%. The CME Feeder Cattle Index for Dec. 7: up $0.21, $179.23.
LEAN HOGS:
The lean hog market wasn't pleased with the day's export report, which pushed the complex to gap lower at the day's start and end with the same kind of doggish attitude that it started with. Unfortunately, we can't see Thursday's pork cutout close, but if the market kept with Wednesday's trend, it likely closed lower yet again once again. In Friday's market, the complex will likely try to preserve as much ground as possible ahead of the week's end as it seems like both technically and fundamentally the market has come under pressure. December lean hogs closed $0.37 lower at $82.00, February lean hogs closed $1.95 lower at $84.70 and April lean hogs closed $2.07 lower at $90.75. Pork cutout values are unavailable due to packer submission issues. Thursday's slaughter is estimated at 490,000 head, 2,000 head less than a week ago and 18,000 head more than a year ago. Wednesday's hog slaughter was revised to 484,000 head. The CME Lean Hog Index for Dec. 6: up $0.16, $82.78.
Pork net sales reductions of 7,900 mt for 2022 resulting in increases for Mexico (3,100 mt, including decreases of 4,000 mt), China (900 mt, including decreases of 300 mt), Honduras (200 mt), the Dominican republic (200 mt, including decreases of 200 mt), and Chile (100 mt), were more than offset by reductions primarily for Japan (4,400 mt), Australia (3,400 mt), South Korea (2,300 mt), and Canada (2,200 mt). Net sales of 2,400 mt for 2023 were primarily for Colombia (1,300 mt), Japan (500 mt), South Korea (200 mt), and Nicaragua (200 mt). Exports of 32,500 mt were primarily to Mexico (15,900 mt), China (4,700 mt), Japan (3,300 mt), South Korea (2,100 mt), and Canada (1,900 mt).
FRIDAY'S HOG CALL: Lower. Given that packers have already fulfilled their needs for the week, Friday's market isn't expecting to see much action.
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