USDA Jan. 1 Cattle Inventory Report - Cattle Inventory Down 3%

OMAHA (DTN) -- All cattle and calves in the United States as of Jan. 1, 2023, totaled 89.3 million head, 3% below the 92.1 million head on Jan. 1, 2022, USDA NASS reported on Tuesday.

All cows and heifers that have calved, at 38.3 million head, were 3% below the 39.4 million head on Jan. 1, 2022. Beef cows, at 28.9 million head, were down 4% from a year ago. Milk cows, at 9.40 million head, were up slightly from the previous year.

All heifers 500 pounds and over as of Jan. 1, 2023, totaled 19.2 million head, 4% below the 19.9 million head on Jan. 1, 2022. Beef replacement heifers, at 5.16 million head, were down 6% from a year ago. Milk replacement heifers, at 4.34 million head, were down 2% from the previous year. Other heifers, at 9.67 million head, were 3% below a year earlier.

Steers weighing 500 pounds and over as of Jan. 1, 2023, totaled 16.1 million head, down 3% from Jan. 1, 2022.

Bulls weighing 500 pounds and over as of Jan. 1, 2023, totaled 2.03 million head, down 4% from Jan. 1, 2022.

Calves under 500 pounds as of Jan. 1, 2023, totaled 13.6 million head, down 3% from Jan. 1, 2022.

Cattle and calves on feed for the slaughter market in the United States for all feedlots totaled 14.2 million head on Jan. 1, 2023. The inventory is down 4% from the Jan. 1, 2022, total of 14.7 million head. Cattle on feed in feedlots with capacity of 1,000 or more head accounted for 82.5% of the total cattle on feed on Jan. 1, 2023, up 1% from the previous year. The combined total of calves under 500 pounds and other heifers and steers over 500 pounds (outside of feedlots) at 25.3 million head, was 3% below Jan. 1, 2022.

CALF CROP DOWN 2%

The 2022 calf crop in the United States was estimated at 34.5 million head, down 2% from the previous year's calf crop. Calves born during the first half of 2022 were estimated at 25.3 million head, down 2% from the first half of 2021. Calves born during the second half of 2022 were estimated at 9.16 million head, 27% of the total 2022 calf crop.

REVISIONS

All inventory and calf crop estimates for July 1, 2021, Jan. 1, 2022, and July 1, 2022, were reviewed using calf crop, official slaughter, import and export data, and the relationship of new survey information to the prior surveys. Based on the findings of this review, Jan. 1, 2022, all cattle and calves increased by 0.2% and 2021 calf crop increased by 0.2%.

July 1, 2022, all cattle and calves decreased by 0.2% and 2022 calf crop decreased by 0.4%.

State-level estimates were reviewed and changes were made to reallocate inventory estimates to the United States total.

DTN ANALYSIS

"Tuesday's Jan. 1 Cattle inventory report revealed a reality the cattle market has never seen before -- a beef cow herd of 28.9 million head," said DTN Livestock Analyst ShayLe Stewart. "Cattlemen knew that there were going to be significantly fewer beef cows reported in Tuesday's report than compared to a year ago, as a lack of profitability and severe drought conditions pressured ranchers to cull their cow herds dramatically. But what Tuesday's report solidifies is that not only do we have 'fewer' beef cows in the industry than compared to years past, but also that we have the fewest beef cows ever recorded. That's a stark reality to stomach and a factor that should send the cattle market soaring.

"The top 10 states with the most beef cows are Texas, Oklahoma, Missouri, Nebraska, South Dakota, Kansas, Montana, Kentucky, North Dakota and Florida. Only one of those states (Missouri) had the same number of beef cows as compared to a year ago, and the other states saw decreases in their beef cow herds anywhere from 1% to 7%.

"The Cattle Inventory Report also disclosed a smaller calf crop than compared to a year ago, which is logical when there are simply fewer cows in the market.

"In conclusion, Tuesday's report comes as an extremely bullish factor to the cattle market and the beef industry. Tight supplies amid strong demand beckon for prices to become stronger, and stronger prices will likely be the theme of the market over the next two to potentially three years until the market sees substantial build back."

 

Tuesday Closing Livestock Market Update - Cattle Inventory Report Didn't Disappoint

GENERAL COMMENTS

The market's main focus throughout all of Tuesday's trading hours was the Cattle Inventory Report and it came out extremely bullish. Come Wednesday both the live cattle and feeder cattle contracts are expected to trade significantly higher. Hog prices closed higher on the Daily Direct Afternoon Hog Report, up $0.77 with a weighted average of $70.85 on 7,747 head. March corn is down 4 cents per bushel and March soybean meal is down $4.50. The Dow Jones Industrial Average is up 324.56 points.

LIVE CATTLE:

Tuesday's live cattle market may have closed mixed leading up to this afternoon's Cattle Inventory report, but I doubt that will be the case come Wednesday afternoon. Tuesday's cattle inventory report shared that currently, the US beef cowherd sits at 28.9 million head -- which is the fewest number of beef cows ever recorded. This information alone is enough to send the live cattle and feeder cattle markets rallying, let alone the fact that it's unlikely that liquidation has fully subsided. February live cattle closed $0.10 higher at $158.85, April live cattle closed $0.32 lower at $163.02 and June live cattle closed $0.32 lower at $159.15. The cash cattle market didn't see any trade and won't likely see any trade develop until Thursday or Friday. Asking prices in the South are noted at $158 plus but are still undeveloped in the North. February live cattle closed $0.10 higher at $158.85, April live cattle closed $0.32 lower at $163.02 and June live cattle closed $0.32 lower at $159.15. 

Tuesday's slaughter totaled 127,000 head, even with last week, but 4,000 greater than a year ago.

Boxed beef prices closed mixed: choice down $2.01 ($266.09) and select up $1.40 ($252.92) with a movement of 118 loads (82.68 loads of choice, 10.62 loads of select, 15.43 loads of trim and 9.58 loads of ground beef).

WEDNESDAY'S CATTLE CALL: Higher. Given that packers have only meekly supported the cash market over the last month, it's likely that they'll need to buy more cattle this week to avoid becoming short bought.

FEEDER CATTLE:

The feeder cattle market couldn't contain its excitement for the afternoon's Cattle Inventory Report and closed anywhere from $0.92 to $2.22 higher. Yes, corn prices are still high along with all other inputs, but the feeder cattle market leaned on the fact that today's Inventory Report was going to be strong, and it isn't left disappointed as the report showed that the U.S. has the smallest beef cowherd ever, and that the calf crop is down by 2% as well. Needless to say, Wednesday will likely see starkly higher prices for the feeder cattle market as traders finally get the opportunity to trade the report's findings. March feeders closed $2.22 higher at $186.15, April feeders closed $1.77 higher at $190.05 and May feeders closed $1.25 higher at $193.97. At Russell Livestock Auction in Russell, Iowa compared to last week steers weighing 550 to 600 pounds sold $3.00 higher, while steers weighing 600 to 700 pounds traded $3.00 to $4.00 lower. Heifers sold steady to somewhat higher. Feeder cattle supply over 600 pounds was 57%. The CME feeder cattle index 1/30/2023: up $0.54, $180.42.

LEAN HOGS:

It wasn't a great day for the lean hog complex as the market saw very little technical interest from traders and saw mixed signals from the market's fundamentals. February lean hogs closed $0.27 lower at $74.87, April lean hogs closed $0.10 lower at $86.42 and June lean hogs closed $0.10 lower at $103.05. The market did see mild support in the cash sector as packers bought 7,747 head at slightly higher prices. It's likely that packers could show Wednesday's more interest again. Pork cutouts totaled 319.83 loads with 282.54 loads of pork cuts and 37.28 loads of trim. Pork cutout values: down $0.03, $80.25. Tuesday's slaughter is estimated at 483,000 head - 1,000 head more than a week ago and 5,000 head more than a year ago. Monday's hog slaughter was revised to 475,000 head. The CME lean hog index 1/27/2023: up $0.05, $72.71.

WEDNESDAY'S HOG CALL: Higher. Given that packers have only shown the market limited interest, they could be active in the cash market again on Wednesday.

Tuesday Midday Livestock Market Update - Cattlemen Anxious for Cattle Inventory Report

GENERAL COMMENTS:

The livestock complex is trading mixed into Tuesday's afternoon with both the live cattle and feeder cattle contracts trading mostly higher as traders anticipate a support Cattle Inventory report Tuesday afternoon, but the lean hog market is again trading lower. March corn is up 3/4 cent per bushel and March soybean meal is down $4.30. The Dow Jones Industrial Average is up 144.20 points.

LIVE CATTLE:

The live cattle complex is trading hesitantly as the market braces for Tuesday afternoon's Cattle Inventory report. After charging to new contract highs throughout Monday's market, traders are seeming to hold their breath until Tuesday afternoon's report is unveiled. The question isn't whether or not the report will be favorable to the market, but rather just how favorable the report will be. There's a strong likelihood that the report shares that the U.S. beef cowherd is the smallest on record; at which point the market will likely storm higher. February live cattle are up $0.10 at $158.85, April live cattle are down $0.35 at $163.00 and June live cattle are down $0.32 at $159.15. The cash cattle market won't likely trade until late Thursday or Friday of this week. Asking prices in the South are noted at $158-plus but are still unestablished in the North.

Boxed beef prices are mixed: choice down $1.52 ($266.58) and select up $1.54 ($253.06) with a movement of 66 loads (53.17 loads of choice, 7.42 loads of select, zero loads of trim and 5.78 loads of ground beef).

FEEDER CATTLE:

Despite the fact that the corn complex is posting a mild rally into Tuesday's noon hour, the feeder cattle market is charging full steam ahead into the day's afternoon as it anxiously awaits the Cattle Inventory report. With the spot March contract gapping higher at Tuesday's start, it's safe to assume that traders are coming to terms with the market's bullish fundamental outlook. The question that remains on everyone's mind leading up to the report's reveal is: How high is this bullish train going to run? March feeders are up $1.75 at $185.72, April feeders are up $1.42 at $189.70 and May feeders are up $1.07 at $193.80.

LEAN HOGS:

Even though the lean hog complex closed higher Monday afternoon, the market is trading modestly lower into Tuesday's noon hour as the cattle contracts are keeping traders busy. February lean hogs are down $0.25 at $74.90, April lean hogs are down $0.25 at $86.27 and June lean hogs are down $0.30 at $102.85. It is important to note that both cash prices and pork cutout values are higher at noon, which could potentially mean that the market's fundamentals stand a chance at closing higher as well.

The projected lean hog index is delayed from the source. Hog prices are higher on the Daily Direct Morning Hog Report, up $0.08 with a weighted average of $70.33, ranging from $70.00 to $73.00 on 4,297 head with a five-day rolling average of $71.05. Pork cutouts total 154.09 loads with 140.80 loads of pork cuts and 13.29 loads of trim. Pork cutout values: up $2.84, $83.12.

Tuesday Morning Livestock Market Update - Trading Dominated By Positioning Ahead of Report

GENERAL COMMENTS:

Cattle futures found strength with live contracts leading the charge. The push was mostly due to the bullish anticipation of the upcoming Cattle Inventory report. The average trade expectation is that the beef herd will be down 4.2%. If so, the beef herd on Jan. 1 would be down 1.265 million head from a year ago at 28.860 million head, which would be the lowest beef cow herd on record. The calf crop is expected to be down 2.8% or a decrease of 1 million head from a year ago. The expectation is for a downward revision to the 2022 calf crop. There was no interest in posting bids or offers in the cash market Monday with feedlots hoping for higher prices due to the strength of futures. Boxed beef showed strength Monday with choice up $0.34 and select up $0.98.

It was a disappointing day for hogs as early strength slowly eroded throughout the day. Front-month February continued to exhibit the greatest weakness as it converges to cash. Cash has yet to find solid support with the National Direct Afternoon Hog report down $0.30. February futures have fallen to the lowest level since Oct. 28, 2021. That is a very difficult pill to swallow. And yet, there are plenty of hogs available to the market with packers not having to be aggressive except when they need to and only for a brief period. Cutouts gained $1.03 Monday, which may provide some delayed support to Tuesday's activity.

	BULL SIDE		BEAR SIDE
1)	The expectations are for a bullish Cattle Inventory report Tuesday, keeping support under the market.	1)	Cattle futures may have the inventory report already factored in and then some, which could keep a lid on further upside once the numbers are known.
2)	New contract highs in live cattle may trigger further short-covering and bring in new buying interest.	2)	There are some ideas floating around that cash might be no better than steady this week with the potential of lower trade. The concern is the Federal Reserve decision on interest rates Wednesday.
3)	Hogs are very oversold with funds holding net-short positions. This combination could trigger short-covering.	3)	Hogs just keep coming to the market leaving packers with little reason to be aggressive. Strong slaughter pace is being met without difficulty.
4)	Hog slaughter remains strong and is keeping marketings current. This will keep supply from backing up in the market.	4)	February hogs continue to hold a premium to the index, which will need to converge over the next two weeks.

Monday Closing Livestock Market Update - Lower Temperatures Usher in New Highs for Live Cattle

GENERAL COMMENTS

Active futures contracts were higher for live cattle and feeders Monday, supported by the anticipated stress of bitter cold weather this week and by the anticipation of USDA getting ready to report a smaller U.S. cattle herd Tuesday afternoon.

April lean hogs tried to trade higher Monday after a lower start, but ended up just 0.07 at 86.52, anchored down by what appears to be a plentiful supply of available hogs. March corn was up 3/4 cent per bushel and March soybean meal was up $15.20 to a new contract high of $488.70. The Dow Jones Industrial Average was down 261 points Monday afternoon.

LIVE CATTLE:

April cattle closed up $2.52 at a new contract high of $163.35 Monday, finding support from bitter cold weather stressing livestock in the northern and western U.S. Plains and from the anticipation of seeing a lower inventory number from USDA in Tuesday afternoon's Cattle Inventory report. Traders will also be watching Tuesday's report to see if the number of beef cows falls below the 50-year low of 29 million, a record set in 2014. Anything close to the record is a strong argument for higher cattle prices down the road, but to see greater profitability for producers, the western Plains are going to need some rain in 2023 and an opportunity to stop the liquidation of beef cows to build a herd.

Monday's weekly slaughter summary showed a national weighted average of $155.31 for live steers, down 9 cents from the previous week. National dressed steers brought an average of $247.71, 55 cents lower than the previous week. For much of January, packers showed little need for negotiated trade, posting volume of 71,178 for the week ending Jan. 29.

USDA's comprehensive boxed beef prices were unsurprisingly lower for the week Jan. 27, but also showed 7.305 loads reported, an encouraging increase in retail demand. Monday's cattle slaughter was estimated at 126,000, up 2,000 from last week.

TUESDAY'S CATTLE CALL: Steady to lower with cautious trading ahead of Tuesday afternoon's inventory report.

FEEDER CATTLE:

March feeder cattle traded higher most the day and finished up 45 cents at $183.92 Monday, continuing to get a nice bounce of support off the three-month low that was tested on Jan. 19. Monday's feeder prices were helped by the encouragement of a new contract high in live cattle as well as the stress put on all livestock by this week's bitter cold weather. It also helped feeders for corn to have a quiet day of trading and while the stock market traded lower, it did not have much bearish influence on Monday's commodity prices. Feeder cattle prices remain limited by this year's high feed costs but do have a chance to benefit later this year if a diminishing La Nina gives way to more normal rainfall patterns. Even with high feed costs, however, it is difficult to see too much downside risk in feeder cattle prices after so much liquidation has taken place. So far, economic worries have been larger than actual problems. The CME Feeder Index showed $179.57 for Thursday, up $2.54 from a week ago.

LEAN HOGS:

April lean hogs traded lower after the open, reversed higher a short time later and ended Monday up just 7 cents at $86.52, a lot of wasted effort in a day. While futures prices have been continuously optimistic for hogs and even now are making a case for support from its lowest level in three months, the cash market seems stubbornly bearish. Monday afternoon's pork carcass edged up $1.03 to $80.28, helped by modest gains in picnics and ham, but still couldn't budge cash prices far from recent lows. USDA's national cash average price for cash hogs ended in the dumps again at $70.08 Monday, a little less than the swine/pork formula price of $71.12.

The stubbornly low prices and lack of strain on packers' part continue to suggest hogs are easily available for slaughter needs and are likely more plentiful than USDA estimated in December. We can't blame a lack of slaughter. Last week's slaughter was slightly higher than the previous week and Monday started with an estimate of 491,000, 2,000 more than last week and 14,000 more than a year ago.

Concerns about the economy are always hanging over livestock prices and could rise up again this week with a rate hike expected Wednesday and an unemployment report due on Friday. For the moment however, hog supplies appear to be the main bearish influence so it will be interesting to see if last Thursday's low of $83.70 will hold as support. The CME Hog Index projected $72.21 for Friday, up 8 cents on the week.

TUESDAY'S HOG CALL: Steady, with a quiet outside market expected Tuesday.

Monday Midday Livestock Market Update - Prices Start Higher in Cold Week

GENERAL COMMENTS:

Livestock prices are starting higher Monday with traders anticipating USDA to publish lower numbers of Jan. 1 cattle inventory on Tuesday afternoon. Prices also continue to benefit from last week's report of higher export sales and calmer market view of the rate hike expected Wednesday.

LIVE CATTLE:

Live cattle futures are higher at midday Monday with the April contract up $2.22 at $163.05, pushing into new high territory. After colder air descended into the western Plains Sunday, Monday morning temperatures were below zero in the Northern Plains and down to single digits as far south as Kansas. Those lower temperatures are expected to hang around most of the week, turning gradually warmer by the weekend. The cold makes travel difficult and will keep weights down, possibly spurring higher packer bids.

Last week's cash trade was roughly steady to a dollar higher in the South and steady in the North. Fairly soon Monday, USDA will release its weighted averages for the week. So far this month, packers haven't shown much need for negotiated trade, but there is no question supplies of available cattle are down from a year ago. Tuesday afternoon's inventory report will back that up, possibly showing U.S. cattle inventory down 3% or 4% from a year ago on Jan. 1.

The slaughter pace was slightly higher last week, up 13,000 to 659,000 and remains active with Dow Jones estimating 125,000 cattle Monday, down 2,000 from last week. Choice boxed beef prices were up $0.07 at $267.83 early Monday after finishing down $3.96 last week at $267.76. Selects were up $1.14 to $251.68 early Monday after finishing down $5.89 last week at $250.54. USDA reported 36 loads early Monday. Thursday's USDA report of 25,100 mt of beef export sales for the previous week was an encouraging sign of international demand, despite concerns in the news headlines.

FEEDER CATTLE:

March feeder cattle are up 77 cents at $184.25 at midmorning Monday after having pivoted off the three-month low of $179.17 on January 19, a distinct change in short-term momentum. March corn is roughly steady Monday after Argentina got some beneficial rain over the weekend, but chances remain limited in the week ahead. The new burst of cold air invading the northern and western Plains is obviously stressful to cattle and will make conditions difficult this week before more moderate temperatures are expected to return by the weekend. As with live cattle, the feeder trade will pay attention to Tuesday afternoon's inventory report for guidance on just how much liquidation has taken place over the past year. Overall, feeder prices remain well-supported despite high feed costs and would be most helped by better prospects for precipitation in 2023 -- a possibility as the La Nina influence is expected to turn neutral by April. The CME Feeder Index posted $179.57 for Friday, Jan. 27, up $2.54 from a week ago.

LEAN HOGS:

At midmorning Monday, April hog futures are trading a little higher, up 35 cents at $86.80 after a lower start. Hog futures are still showing signs of support after Thursday's bullish price reversal responded to prices testing their lowest levels since early October. Part of Thursday's buying enthusiasm was likely triggered by USDA's report of 44,700 mt of pork export sales to Mexico, China and others. China's interest in U.S. pork at a time when China's hog prices are depressed is curious but may have to do with distribution problems in the country, while COVID-19 infections remain high.

Also adding to the bullish change of heart, USDA's morning pork report posted Monday's cutouts up $2.21 at $81.46 with help from an $8.64 gain in hams. USDA reported 155.43 loads of pork cuts and 30.88 loads of trim. Of course, morning carcass reports are notoriously flighty and Monday morning's Daily Direct Hog report from USDA was not so encouraging. USDA's report showed a national negotiated price of $70.25 on scant trade, still a depressed level and below the swine formula base of $71.64. Hog slaughter remains active and was slightly higher last week at 2.54 million head. On Monday, Dow Jones estimates 488,000 head, down 2,000 from last week. CME's Lean Hog Index was projected at 72.21 for Friday, up 8 cents from a week ago. Despite futures prices finding support, the recent cash trade in U.S. hogs suggests inventory is easily available for packers, regardless of what USDA's December inventory report said.

Monday Morning Livestock Market Update - Mixed Trading Ahead of Tuesday's Report

GENERAL COMMENTS:

It paid for feedlots to hold out last week with Northern cattle trading steady while Southern cattle traded $1.00 higher than the previous week. That victory will increase their resolve again this week. However, the beginning of the week shows higher grain prices. Traders will be looking ahead to the Cattle Inventory report to be released Tuesday. This may keep price movement subdued Monday and Tuesday. There is widespread belief the cow herd will be lower on the report. A polling of some analysts showed the expectation that the beef herd will be down 4.2%. If so, the beef herd on Jan. 1 would be down 1.265 million head from a year ago at 28.860 million head, which would be the lowest beef cow herd on record. The calf crop is expected to be down 2.8% or a decrease of one million head from a year ago. This would continue to support cattle prices. The level of that support will be up to demand. Boxed beef has been slipping over the past two weeks with both choice and select down $0.99 and $0.94, respectively, on Friday. The Commitment of Traders report showed funds as net sellers of 9,456 futures contracts, bringing their net-long futures position to 75,165 contracts.

February hogs began moving more aggressively in line with cash on Friday, posting a decline of $1.15 with April feeling some of the pressure. Later contracts were higher with some optimism growing. The National Direct Afternoon Hog report was down $0.30 with a weighted average of $70.63. The index moved up $0.20 to $72.52. Futures continue to hold a premium. Cutouts were down $1.21. Slaughter continues to outpace a year ago. The Commitment of Traders report showed funds as net sellers of 14,130 contracts, moving their positions to a net short of 5,240 futures contracts.

	BULL SIDE		BEAR SIDE
1)	Steady to higher cash last week will keep the resolve of feedlots alive and well this week. They know packers need cattle to keep a strong slaughter pace.	1)	It is expensive to feed cattle and feedlots may be less willing to hold for much higher cash prices and would rather move them when ready for the market.
2)	The Cattle Inventory report is anticipated to be bullish, which should provide support to the market.	2)	Higher grain prices overnight might increase selling pressure on feeder cattle, turning the market lower.
3)	Hog futures bounced in deferred contracts last week and were able to hold gains Friday. This could trigger futures buying interest in an oversold market.	3)	February hog futures continue to hold a premium to the index with about two weeks of trading remaining.
4)	Strength of cutouts Monday and this week could cause traders to become more friendly to the market in the longer term.	4)	Funds continue to sell hog futures with their position moving to a net short, which has not been seen for quite some time.

Friday Closing Livestock Market Update - Southern Feedlots Gain $1.00

GENERAL COMMENTS

The complex faced some pressure early on, but by Friday's end, most of the livestock contracts close higher. Hog prices closed lower on the Daily Direct Afternoon Hog Report, down $0.30 with a weighted average of $70.63 on 6,789 head. March corn is up 1/2 cent per bushel and March soybean meal is down $3.60. The Dow Jones Industrial Average is up 28.67 points.

From Friday to Friday the livestock contracts scored the following changes: February live cattle up $0.10, April live cattle up $0.90; March feeder cattle up $2.50, April feeder cattle up $1.78; February lean hogs down $1.95, April lean hogs up $0.73; March corn up $0.07, May corn up $0.05.

LIVE CATTLE:

There are good weeks in the cattle market and then there are weeks like this. It may not seem significant that prices in the Southern Plains increased by $1.00 -- but it is. It's the psychological shift and change made my feedlots that allowed the market to indeed trade higher. It would have been easy for any feedlot managers/owners who waited to market cattle until Friday afternoon to nod their heads and accept the lower Monday offered on Wednesday/Thursday of this week, but that's not how the West was won and that's not how markets achieve true price discovery. Next week will likely be pivotal for the markets as Tuesday's cattle inventory report could send the market soaring higher. The futures contracts are waiting for the market's fundamentals to strengthen and agree that higher prices should be obtained, which could begin to happen as early as next week. February live cattle closed steady at $156.72, April live cattle closed $0.30 higher at $160.82 and June live cattle closed $0.40 higher at $157.77. By Friday afternoon, Southern live cattle traded for $156, which is $1.00 higher than last week's weighted average, and earlier in the week Northern dressed cattle traded for $248, which is fully steady with the previous week's weighted average.

Friday's slaughter is estimated at 124,000 head, 1,000 head more than a week ago and 6,000 head more than a year ago. Saturday's slaughter is projected to be around 31,000 head.

Boxed beef prices closed lower: choice down $0.99 ($267.76) and select down $0.94 ($250.54) with a movement of 111 loads (74.61 loads of choice, 14.74 loads of select, 8.42 loads of trim and 12.87 loads of ground beef). The choice/select spread sits at $17.22.

MONDAY'S CATTLE CALL: Higher. This past week was a perfect example of how cash cattle prices can be worked higher with strategic marketing tactics. With packers running vigorous processing speeds, they're going to need to buy more cattle through the cash market to ensure they have enough cattle for their upcoming kills.

FEEDER CATTLE:

The strong fundamental tones that encompass the cattle complex outweighed the steady trade seen in corn prices throughout Friday's market. Traders and cattlemen alike are chomping at the bit to see what next Tuesday's cattle inventory report reveals, as there's a possibility that the report could show that we have the fewest number of beef cows on record. If that is indeed the case, feeder cattle prices will likely grow stronger next week as the market responds to that report. In the meantime, the complex will continue to look to the live cattle market for direction and being cautiously watching corn prices as inputs continue to remain a detriment. March feeders closed $0.62 higher at $183.47, April feeders closed $0.55 higher at $187.55 and May feeders closed $0.57 higher at $191.85. At Mitchell Livestock Auction in Mitchell, South Dakota compared to last week feeder steers weighing 600 to 700 pounds traded $6.00 to $12.00 higher, steers weighing 750 to 800 pounds traded $9.00 higher and steers weighing 800 pounds or more had a slightly stronger undertone. Heifers weighing 550 to 600 pounds sold $8.00 higher, heifers weighing 600 to 950 pounds traded $1.00 to $4.00 higher. Feeder cattle supply over 600 pounds was 87%. The CME Feeder Cattle Index for Jan. 26: up $0.77, $179.57.

LEAN HOGS:

The nearby lean hog contracts struggled to find footing in Friday's market but that didn't stop the deferred contracts from trading higher. February lean hogs closed $1.15 lower at $75.87, April lean hogs closed $0.55 lower at $86.45 and June lean hogs closed $0.35 higher at $103.40. This past week, the market firmly established and confirmed that it's found technical support in it' spot April contract above the $85.00 threshold, and if pork cutouts see any demand, that the contracts could indeed trade higher. Friday's market didn't see a strong close in cutouts, but the day's movement was sufficient. Pork cutouts totaled 323.52 loads with 299.64 loads of pork cuts and 23.88 loads of trim. Pork cutout values: down $1.21, $79.25. Friday's slaughter is estimated at 487,000 head, 2,000 head more than a week ago and 24,000 head more than a year ago. Saturday's slaughter is estimated at 95,000 head. The CME Lean Hog Index for Jan. 25: up $0.20, $72.52.

MONDAY'S HOG CALL: Steady. Packers usually give the market some time to show interest and demand before they begin supporting the cash complex.

Friday Midday Livestock Market Summary - Southern Feedlots Holding Their Ground

GENERAL COMMENTS:

It's been a long time since the cash cattle market has waited to trade until Friday afternoon, and Southern feedlots are pushing the market to do exactly that. With Southern feedlots unwilling to accept packers' current bids, its seeming as though they'd be willing to roll the cattle over into next week before they'd be willing to sell them for steady money. March corn is down 1 1/4 cents per bushel and March soybean meal is down $3.20. The Dow Jones Industrial Average is up 50.44 points.

LIVE CATTLE:

The standoff between feedlots in the South and packers has only intensified as we are about to enter into Friday's noon hour, and still, the cash cattle market in the South has yet to be traded. I commend the feedlots who are firm in their asking prices and are unwilling to waiver and sell cattle for steady prices. With supplies as thin as they are, feedlots know that they sit in the driver's seat of this market. The real question is: How aggressive are they going to drive this ship? Asking prices in the South remain firm at $157-plus and at $250-plus in the North. The futures complex is anxiously waiting to see who wins this round (because it's inevitable that this will become the market's norm throughout 2023) but, in the meantime, the futures complex is trading mildly higher. February live cattle are down $0.05 at $156.67, April live cattle are up $0.25 at $160.77 and June live cattle are up $0.30 at $157.67.

Boxed beef prices are lower: choice down $0.21 ($268.54) and select down $1.16 ($250.32) with a movement of 81 loads (51.53 loads of choice, 11.55 loads of select, 6.32 loads of trim and 11.45 loads of ground beef).

FEEDER CATTLE:

With the corn complex trading mostly steady, the feeder cattle complex is aiming to regain some position after closing mostly lower Thursday afternoon. March feeders are up $0.42 at $183.25, April feeders are up $0.25 at $187.25 and May feeders are up $0.25 at $191.52. The cash cattle market is still in a stiff stand off in the South as feedlots are unwilling to affect packers' current bids. If the South is indeed able to trade cattle higher this week, feeders will likely see that as a positive gesture.

LEAN HOGS:

The immediate lean hog contracts are trading lower but, from the June 2023 contract through the remainder of the 2023 calendar year, the contracts are all trading higher as the market sees greater demand. February lean hogs are down $1.02 at $76.00, April lean hogs are down $0.42 at $86.52 and June lean hogs are up $0.42 at $103.47. It is somewhat surprising to see cash hog prices slightly higher Friday morning as, typically, packers don't support the cash market late in the week, and especially not when they were aggressive early on. But given that packers were complacent in the cash market over the last three weeks, it's apparent that they need to secure more inventory this week.

The projected lean hog index is delayed from the source. Hog prices are higher on the Daily Direct Morning Hog Report, up $0.31 with a weighted average of $70.64, ranging from $63.00 to $73.00 on 5,594 head and a five-day rolling average of $71.04. Pork cutouts total 223.26 loads with 210.47 loads of pork cuts and 12.79 loads of trim. Pork cutout values: down $1.42, $79.04.

Friday Morning Livestock Market Update - Cash Will Set Futures Direction

GENERAL COMMENTS:

Cattle slid lower yesterday as there had been some disappointment with cash trade waiting until Thursday and then trading steady with last week. Trading activity was light in the North which was not enough to indicate what will transpire today, but it may have set the stage. Southern cattle have not yet traded with bids and offers about $3.00 apart yesterday. There is no doubt packers will need cattle to maintain a strong slaughter pace, but feedlots continue to see high feed prices and will need to move cattle that are ready for the market. Export sales were good at 25,100 MT but were unable to provide support. Boxed beef was mixed with choice up $0.47 and select down $0.32.

Hog futures found support but not until after lower lows were established early in the trading session. It seemed as if there was a delayed reaction to the strong weekly exports sales report which showed 44,770 MT of pork sold with China being the second largest buyer. Traders saw the making of stronger cutouts which settled $1.35 higher for the day. This may have triggered hope that cutouts may have finally found a bottom. If so, further short covering may unfold as futures are significantly oversold. The negative was that cash was weak with the National Direct Afternoon Hog report with a loss of $1.70. Saturday slaughter is estimated at 97,000 head.

	BULL SIDE		BEAR SIDE
1)	Cash trade has been delayed until today which many times is more bullish for cash prices. Packers may need to step up to procure the cattle they need.	1)	Traders became a bit disillusioned with light cash trading in the North at steady money with last week. This may have set the stage for cash today.
2)	Slaughter pace is still strong which indicates beef movement is good. Packers have not yet pulled back as some had anticipated.	2)	Beef packer margins are running well below last year and the 3-year average. Packers will want to improve those margins by paying less due to declining boxed beef.
3)	Traders bought into the market aggressively after first making new lows. Short covering in an oversold market could result in further follow through buying today.	3)	Cash hogs did not do well yesterday which may put some pressure back on the market. Lower cash is expected again today.
4)	There have been two weeks of strong export sales which should provide support under the market. China has been a somewhat consistent buyer recently.	4)	Stronger futures yesterday may have only been short covering and not new buying interest. That may leave the market vulnerable to further weakness once the short covering is finished.

Thursday Closing Livestock Market Update - Cash Cattle Steady in the North, Yet to Trade in the South

GENERAL COMMENTS

It was mostly a strong day for the livestock complex as the cash cattle market has only partially traded and with the lean hog complex able to see its futures contracts close higher amid strong pork cutout values. The feeder cattle contracts closed lower as corn prices were higher, but cattlemen did duly note the strong tone in the cash market given that prices in the North held steady. Hog prices closed lower on the Daily Direct Afternoon Hog Report, down $1.70 with a weighted average of $70.57 on 4,933 head. March corn is up 7 3/4 cents per bushel and March soybean meal is up $11.60. The Dow Jones Industrial Average is up 205.57 points.

LIVE CATTLE:

Some people love the anticipation and buildup of a movie's climax, and cattlemen love the anticipation in the cash cattle market when cattle wait to trade until Thursday afternoon and/or on Friday. It's a beautiful thing to see the market achieve full price discovery on a week in, week out basis and to see feedlot managers and owners working the market to its fullest potential. There was a thin movement of cattle traded in Iowa and Nebraska for mostly $248, which is fully steady with last week's weighted average. The big question moving forward is: What will cash cattle prices do on Friday in the South? And, for the feedlots in the North that opted not to sell Thursday, could they still see higher prices? To answer the second question, I tend to believe so, given that packers are in need of cattle. The futures market didn't close higher but largely that was because traders were dying to see what happened in the cash market and trade waited to develop until late in the day. February live cattle closed $0.87 lower at $156.72, April live cattle closed $1.02 lower at $160.52 and June live cattle closed $0.82 lower at $157.37. 

Thursday's slaughter is estimated at 126,000 head, 6,000 head more than a week ago and 5,000 head more than a year ago.

Thursday's actual slaughter data shared that for the week ending Jan. 14 steers averaged 914 pounds, which is 5 pounds less than the previous week and 8 pounds lighter than a year ago. For the same week, heifers averaged 833 pounds, which is 2 pounds heavier than the previous week but 18 pounds lighter than a year ago.

Beef net sales of 25,100 mt for 2023 were primarily for South Korea (10,00 mt), Japan (4,400 mt) and China (4,200 mt).

Boxed beef prices closed mixed: choice up $0.47 ($268.75) and select down $0.32 ($251.48) with a movement of 120 loads (77.28 loads of choice, 16.66 loads of select, 10.48 loads of trim and 15.19 loads of ground beef).

FRIDAY'S CATTLE CALL: $1.00 higher. I believe that feedlots know they can milk more money out of this market and that's why some have opted to wait until Friday to trade cattle.

FEEDER CATTLE:

As the corn market grew stronger throughout the day, the feeder cattle complex closed lower as the sight of the nearby corn contracts closed $0.06 to $0.07 higher was too much for the market to bear. The cash cattle market did see a thin movement of cattle trade in the North -- and prices were steady with last week's weighted average -- but that support wasn't enough to offset the pressure added by the corn complex. March feeders closed $0.90 lower at $182.85, April feeders closed $1.35 lower at $187.00 and May feeders closed $1.30 lower at $191.27. At Winter Livestock Auction in Pratt, Kansas, compared to last week, feeder steers weighing 450 to 900 pounds traded steady to $5.00 higher. However, steers weighing 550 to 600 pounds sold up to $10.00 higher. Feeder heifers weighing 400 to 900 pounds sold steady to $5.00 higher. Slaughter cows traded $10.00 higher. Feeder cattle supply over 600 pounds was 81%. The CME Feeder Cattle Index for Jan. 25: up $1.02, $178.80.

LEAN HOGS:

The momentum that the lean hog complex possessed early in the day stuck with the market through closing as traders drove the contracts higher early with the exciting nature of the day's export report and then kept the contracts trading higher as pork cutout values closed higher too. It's not surprising that cash hog prices closed lower as packers were aggressive early in the week and it's extremely unusual for packers to support the market early on and then later too -- they usually only do their buying early in the week when supplies are as available as they are. Pork cutouts were able to close higher as the market saw steady gains throughout the majority of the individual cuts, but the biggest day over day gain came from the loin which jumped $4.13 higher, and then by the ham which gained $3.20. February lean hogs closed $0.22 higher at $77.02, April lean hogs closed $1.67 higher at $87.00 and June lean hogs closed $1.25 higher $103.05. Pork cutouts totaled 257.36 loads with 219.87 loads of pork cuts and 37.50 loads of trim. Pork cutout values: up $1.35, $80.46. Thursday's slaughter is estimated at 491,000 head, 57,000 head more than a week ago and 17,000 head more than a year ago. The CME Lean Hog Index for Jan. 24: up $0.21, $72.32.

Pork net sales of 44,700 mt for 2023 were primarily for Mexico (17,700 mt), China (12,500 mt) and Japan (3,700 mt).

FRIDAY'S HOG CALL: Lower. Given that packers were supportive of the market early in the week, it's unlikely that they show Friday's market much interest. 

Thursday Midday Livestock Market Summary - Strong Exports Help Boost the Morale for Lean Hogs

GENERAL COMMENTS:

The cattle contracts are trading lower into Thursday's afternoon as cattlemen note the uptick in corn prices and anxiously wait to see what this week's cash cattle market does. The lean hog complex is trading higher as the market is thankful for the additional demand via exports and hopes that pork cutout values again close higher. March corn is up 5 3/4 cents per bushel and March soybean meal is up $8.50. The Dow Jones Industrial Average is up 58.92 points.

LIVE CATTLE:

As the live cattle market heads into Thursday's afternoon, feedlots are being strategically patient in waiting to trade cattle this week. The futures complex is trading slightly lower as the market is chomping at the bit to see how prices fare this week in the cash market, but thus far, feedlots seem uncompelled to let cattle trade at the bid prices being offered. Bids of $153 live and $245 to $246 dressed care being offered in Nebraska, and bids of $246 are noted in Iowa, but otherwise, the market sits idly. Bids and packer interest is expected to intensify later Thursday afternoon. February live cattle are down $0.47 at $157.12, April live cattle are down $0.55 at $161.00 and June live cattle are down $0.40 at $157.80.

Beef net sales of 25,100 mt for 2023 were primarily for South Korea (10,00 mt), Japan (4,400 mt) and China (4,200 mt).

Boxed beef prices are mixed: choice up $0.23 ($268.51) and select down $0.15 ($251.65) with a movement of 61 loads (36.19 loads of choice, 12.32 loads of select, 3.02 loads of trim and 9.86 loads of ground beef).

FEEDER CATTLE:

With corn prices fronting a $0.01 to $0.06 rally into Thursday's afternoon, it comes as no surprise that the feeder cattle complex is under pressure. March feeders are down $0.45 at $183.30, April feeders are down $0.82 at $187.52 and May feeders are down $0.92 at $191.65. The cash cattle market is seeing bids develop, but there hasn't been a big movement of cattle yet to speak of. If cash cattle trade at least steady, that will be a positive win in feeder's eyes.

LEAN HOGS:

With strong export sales to start the day off on the right foot, the lean hog complex has been rallying into Thursday's noon hour from the get-go. It's not surprising to see cash hog prices lower as packers were aggressive in the cash market early this week. However, the market is seeing support as pork cutouts are higher. It's too early to say whether or not afternoon pork cutout values will close higher or not, but if the do the market stands an excellent chance at rallying into Friday as support has been ample throughout Thursday's trade. February lean hogs are up $0.37 at $77.17, April lean hogs are up $1.82 at $87.15 and June lean hogs are up $1.40 at $103.15.

The projected lean hog index for Jan. 25 is up $0.20 at $72.52 and the actual index for Jan. 24 is up $0.22 at $72.32. Hog prices are lower on the Daily Direct Morning Hog Report, down $1.94 with a weighted average of $70.33, ranging from $67.00 to $72.50 on 3,858 head and a five-day rolling average of $71.04. Pork cutouts total 134.64 loads with 118.40 loads of pork cuts and 16.24 loads of trim. Pork cutout values: up $2.74, $81.85.

Pork net sales of 44,700 mt for 2023 were primarily for Mexico (17,700 mt), China (12,500 mt) and Japan (3,700 mt).

Lawsuit Against FDA Targets Antibiotics Use in Livestock

Public health advocacy groups filed a lawsuit against the Food and Drug Administration this week. The groups say the lawsuit challenges the refusal to phase out unnecessary uses of antibiotics in animal agriculture. The groups include the Alliance of Nurses for Healthy Environments, the Natural Resources Defense Council, Food Animal Concerns Trust, Public Citizen and Earthjustice. They allege that approximately two-thirds of medically important antibiotics sold in the U.S. are for use in food-producing animals and are often administered to healthy animals to compensate for the higher risk of infections typically caused by cramped, unsanitary or stressful conditions. The lawsuit claims that the misuse of these medicines has contributed to the rise and spread of antibiotic-resistant bacteria. Steven Roach of Food Animal Concerns Trust says, "The FDA has allowed giant meat companies to habitually overuse antibiotics putting everyone's health at risk," adding, "This is absolutely unnecessary as animals raised under healthy conditions do not need routine antibiotics."

Thursday Morning Livestock Market Update - Export Sales to Set Direction

GENERAL COMMENTS:

Cash has not yet traded this week which is not surprising. Feedlots have put out offers only in the South with Northern offers anticipated to be higher. Packers have not yet tipped their hand with bids. With weakening boxed beef prices, packers will not want to purchase at higher prices than last week. Boxed beef showed choice down $1.36 and select down $0.59. Cattle futures have been regaining some of the recent losses supported by lower cattle numbers and the projection for tightening supply. Of course, the potential for cattle prices will be up to demand. The December Cold Storage report showed total beef in storage at 544.0 billion pounds and 7% above a year ago. Inventory increased 4% from November as slaughter remained strong. Weekly exports sales will provide early market direction. Today is the final day to trade January feeder cattle futures and options.

Hogs made a valiant effort to hold support yesterday. If support can hold and cutouts begin to show consistent strength, futures may make a retracement. The National Direct Afternoon Hog report showed a gain of $1.10 as packers wanted to procure hogs for the week. The positive aspect of higher cash was offset by cutouts down $0.95. Slaughter continues to remain brisk. Hog weights decreased 0.9 pounds last week from the previous week and are running 2.4 pounds below a year ago suggesting marketings are current. December Cold Storage showed total pork inventory up 16% from a year ago at 458.1 million pounds with belly stocks up 66% totaling 63.1 million pounds. Weekly exports sales are anticipated to be good, which could provide some fundamental support.

	BULL SIDE		BEAR SIDE
1)	Cattle have been developing an uptrend as traders remain friendly to the market.	1)	The choice/select spread is running significantly lower than a year ago which may indicate demand for higher cuts of beef is slowing.
2)	Feedlots want higher cash and will hold to get it. Offers have yet to be posted in the North with lighter showlists.	2)	Feedlots might not be willing to hold cattle over to next week. It remains expensive to feed them longer than necessary.
3)	Hog futures seem to be building support with cutouts potentially near the lows as prices become choppier.	3)	Hogs have not been able to rebound as cutout prices remain choppy.
4)	Hog futures remain oversold and with funds having liquidated long positions, the market is ripe for a bounce.	4)	There is plenty of pork in freezers and available for demand. Continued strong slaughter pace will keep demand satisfied and then some.

Wednesday Closing Livestock Market Update - Stronger Tones Stay With Complex

GENERAL COMMENTS

It was another strong day for the livestock complex as all three of the markets were able to close mostly higher. Come Thursday, cattlemen will be paying close attention to any bids that develop from packers as the cash market has yet to really trade. Hog prices closed higher on the Daily Direct Afternoon Hog Report, up $1.10 with a weighted average of $72.27 on 14,308 head. March corn is down 2 1/4 cents per bushel and March soybean meal is up $5.70. The Dow Jones Industrial Average is down 49.60 points. Wednesday's Cold Storage report shared that total red meat supplies in freezers were up 2% from last and up 11% from a year ago. Total pounds of beef in freezers were up 4% from last month and up 7% from last year. Frozen pork supplies were up 1% from the previous month and up 16% from last year. Stocks of pork bellies were up 16% from last month and up 66% from last year.

LIVE CATTLE:

The live cattle market performed rather well throughout Wednesday's market as the complex traded higher in its futures contracts, and the cash cattle market remains undeveloped for the week as feedlots have their eyes set on higher prices while packers would obviously like to see the market regress. February live cattle closed $0.25 lower at $157.60, April live cattle closed $0.25 higher at $161.55 and June live cattle closed $0.35 higher at $158.20. The cash cattle market could begin to trade on Thursday, but it's just as likely that the market holds out and waits to trade on Friday. Feedlots are liking the support that's building in the market's technical arena, and hope to carry that over to the market's fundamental side later this week. It's normal for boxed beef prices to wane from now through February, which consequently cuts in packer margins and makes them even more determined to hold the cash market steady. Asking prices in the South are noted at $157 but are still not established in the North. 

Wednesday's slaughter is estimated at 127,000 head, 7,000 head more than both a week and year ago.

Boxed beef prices closed lower: choice down $1.36 ($268.28) and select down $0.59 ($251.80) with a movement of 137 loads (84.78 loads of choice, 28.38 loads of select, 6.35 loads of trim and 17.28 loads of ground beef). The choice/select spread sits at $16.48.

THURSDAY'S CATTLE CALL: Steady to $1.00 higher. Feedlots know that packers need cattle and it's likely that they use the momentum that's building on the board to help keep prices at least steady, if not advance them mildly.

FEEDER CATTLE:

It was a good day for the feeder cattle complex as the market saw mostly strong demand throughout the countryside which was complimentary to the action seen on the board as the feeder cattle contracts closed anywhere from $0.07 to $0.45 higher. The spot March contract was able to close above its 100-day moving average and could (like the rest of the contracts) continue to skate higher so long as corn doesn't pose a threat. The cash cattle market is expected to begin to trade Thursday, and if prices hold at least steady, then feeders will likely take that as a positive sign and could potentially keep with their upward momentum. March feeders closed $0.15 higher at $183.75, April feeders closed $0.42 higher at $188.35 and May feeders closed $0.60 higher at $192.57. At Philip Livestock Auction in Philip, South Dakota, compared to two weeks ago, feeder steers under 600 pounds traded steady, steers weighing 600 to 750 pounds traded steady to $2.00 higher. Heifers weighing 450 to 600 pounds traded $2.00 to $3.00 lower, heifers weighing 600 to 700 pounds sold steady to $2.00 lower. Feeder cattle supply over 600 pounds was 77%. The CME Feeder Cattle Index for Jan. 24: up $0.24, $177.77.

LEAN HOGS:

The lean hog complex had a mostly successful day as cash prices closed higher and other than the immediate nearby contracts, the futures market closed mostly higher too. February lean hogs closed $0.30 lower at $76.80, April lean hogs closed $0.05 lower at $85.32 and June lean hogs closed $0.12 higher at $101.80. Packers have shown this week more support in the cash market than they have over the last month as once again prices closed higher, up $1.10 with a total movement of 14,308 head. As packers look to the upcoming months, they know the promise of better demand exists and they want to have the product necessary to sell. Pork cutouts totaled 269.21 loads with 222.33 loads of pork cuts and 46.89 loads of trim. Pork cutout values: down $0.95, $79.11. Wednesday's slaughter is estimated at 490,000 head, 9,000 head more than a week ago 14,000 head more than a year ago. The CME Lean Hog Index for Jan. 23: down $0.02, $72.11.

THURSDAY'S HOG CALL: Lower. Given that packers have been fairly aggressive in the market early this week, it's likely that they'll be aggressive in the later half of the week.

Wednesday Midday Livestock Market Summary - Stronger Tones Noticed in the Arena

GENERAL COMMENTS:

The livestock complex is trending mostly higher into Wednesday's noon hour as the corn complex is posing little to no threat as it trades steady, and as the markets have found some technical support. No cash cattle bids have developed at this point, and it's likely that the week's business waits to develop until Thursday. March corn is up 1/4 cent per bushel and March soybean meal is up $2.10. The Dow Jones Industrial Average is down 223.51 points.

LIVE CATTLE:

The live cattle market is keeping with its ascend as the complex patiently awaits to see what the cash cattle market does this week. The contracts are trading mostly higher into Wednesday's afternoon as the market has gained more technical support and anticipates cash cattle to trade at least steady if not slightly higher given that packers need cattle. February live cattle are down $0.32 at $157.52, April live cattle are up $0.02 at $161.32 and June live cattle are up $0.10 at $157.95. The cash cattle market hasn't seen any bids develop at this point and while the market could see some bids develop this afternoon, it's more likely that the week's trade holds off until Thursday or Friday to develop. Asking prices in the South are noted at $157, but are still not established in the North.

The Fed Cattle Exchange Auction held today reported 6 lots (all lots in Texas), totaling 986 head of cattle, none of which sold. Opening prices were at $154 to $155, there were no bids, reserve prices were $156.50 to $157.50.

Boxed beef prices are lower: choice down $1.42 ($268.22) and select down $1.87 ($250.52) with a movement of 88 loads (52.91 loads of choice, 19.27 loads of select, 2.91 loads of trim and 12.73 loads of ground beef).

FEEDER CATTLE:

With Wednesday's corn market trading mostly steady, the feeder cattle contracts are mildly rallying into Wednesday's noon hour. Demand throughout sales were mixed last week but thus far this week buyers have been more aggressive and their eagerness to buy calves and feeders has lent some fundamental support to the feeder cattle market. If the cash cattle market is indeed able to trade higher, that too will boost the feeder cattle market's morale and likely help the contracts continue to trade higher so long as corn remains steady. March feeders are up $0.12 at $183.72, April feeders are up $0.17 at $188.10 and May feeders are up $0.30 at $192.27.

LEAN HOGS:

The lean hog complex is trading mostly higher into Wednesday's afternoon as the market has found technical support and appreciates seeing packer interest in the cash market. February lean hogs are down $0.12 at $76.97, April lean hogs are up $0.25 at $85.62 and June lean hogs are up $0.30 at $101.97. The spot April contract has been able to hold above the support plane of $85.00 which is significant. If pork cutout values can trade mostly steady and packer interest remain noticeable in the market, the futures contracts stand a strong chance at continuing to trade higher as the market is seeing more well-rounded support.

The projected lean hog index for Jan. 24 is up $0.22 at $72.32 and the actual index for Jan. 23 is down $0.02 at $72.11. Hog prices are higher on the Daily Direct Morning Hog Report, up $2.21 with a weighted average of $72.27, ranging from $67.00 to $74.00 on 8,808 head and a five-day rolling average of $70.99. Pork cutouts total 152.10 loads with 124.00 loads of pork cuts and 28.10 loads of trim. Pork cutout values: up $0.57, $80.63.

Cattle Accounted for Largest Portion of US Animal Receipts in 2021

U.S. farm cash receipts from animals and animal products totaled $195.8 billion in 2021, led by receipts for cattle and calves at $72.9 billion, or 37 percent. USDA’s Economic Research Service reports that poultry and egg products made up the next largest share of 2021 cash receipts at $46.1 billion, or 24 percent, followed by dairy at $41.8 billion, or 21 percent, hogs at $28.0 billion or 14 percent, and other animals and animal products at $7.0 billion, at four percent. As part of its Farm Income and Wealth Statistics data product, in late August or early September each year, the Economic Research Service releases estimates of the prior year’s farm sector cash receipts from agricultural commodity sales. The data provided includes cash receipt estimates by type of commodity, which can help in understanding the U.S. farm sector. The estimates may be revised as new information becomes available.

Wednesday Morning Livestock Market Update - Cattle Search for Direction

GENERAL COMMENTS:

Cattle futures are searching for direction and that direction seems to be a continuation of the overall trend higher. Futures have a way to move back to new highs, but there certainly seems to be support under the market. The fact that both feeder and live cattle held well despite the surge of corn speaks volumes of the overall attitude. Cash has not yet traded this week and is not expected to trade today as asking prices in the South have been revealed while bids are not yet posted. The concern for the week will be continued weakness of boxed beef with choice down $1.80 and select down $2.10. Although futures held even with higher corn prices, those higher prices may actually be negative to cash this week as feedlots may not want to hang onto cattle any longer than necessary.

Hog futures looked dismal for a period yesterday with February challenging the low with the rest of the contracts making fresh lows. However, contracts were able to find footing as some short covering took place. Futures are significantly oversold but have not been able to find technical or fundamental support. Cash was higher with the National Direct Afternoon Hog report up $0.55, but that was overshadowed by another loss of $0.86 for cutout values. There is strong potential for cash to advance again today as packers will want to get as much business done today as they can rather than wait.

	BULL SIDE		BEAR SIDE
1)	The cattle complex was able to hold and advance in the face of higher corn prices. The overall uptrend in live cattle is intact.	1)	Strong corn prices may leave feedlots less willing to hold onto cattle any longer than necessary. They may not hold out for higher cash.
2)	The neutral Cattle of Feed report and the numbers showing a continued contraction of the herd should keep traders overall bullish on prices.	2)	Boxed beef weakness is causing concern over a slowing of demand. The price of select cuts is running below a year ago.
3)	Hog futures are significantly oversold which could result in some short covering at any time. Traders are waiting for a catalyst to trigger the move.	3)	Pork cutouts have not yet found solid support. Futures may remain weak until that is accomplished.
4)	The rebound of hogs of the lows yesterday may indicate traders could be unwilling to press the downside much more.	4)	The lean hog index continues to decline, keeping pressure on the market. February continues to carry a premium to the index and cash.

12-month outlook for cattle suggests slightly profitable returns for cow/calf producers and breakeven returns for cattle feeders in 2023

A tighter beef supplies supports strong cattle prices with the USDA forecasting an 8% increase in fed-steer prices. Persistent drought has created national headwinds for the cattle industry. Improvements in moisture conditions will benefit Northwest cattle producers. 

12-Month Profitability Outlook

Industry drivers 

Winter weather causes feed challenges

An early snowstorm in eastern Montana filled feedlots with cattle and left producers concerned about their feed supply. Producers have carefully planned winter feed (due to lingering drought and expensive feeder hay prices) with little room for additional use. If the winter is harsher than expected, producers might have to liquidate cattle to adjust for available feed. December and January weather will determine winter feed use. If the winter is mild, bred cattle sale prices should improve. 

Cattle liquidation slows

Nationally, 13% of the U.S. beef cow herd was slaughtered in 2022. This is the same rate as in 1984; however, the herd was already 10 million head smaller than in 1984. Furthermore, 53% of heifers greater than 500 lbs. have been slaughtered, which is the highest percentage of this category since 2003.

In October, cattle on feed slowed to 2.11 million head, down 6% year over year and the lowest level of placements in 20 years. Producers who liquidated will need 2-3 years to rebuild herds, which will support higher cattle prices until 2024.   

Regional droughts continue

Additional headwinds are expected as regional cattle liquidations are continue, albeit at a slower pace, for the fourth consecutive year. In the High Plains, soil moisture deficits continued to worsen with 85% of Nebraska (2nd largest cattle producing state) and 70% of Kansas (3rd largest) in severe to exceptional drought. Collectively these states account for 15% of U.S cattle production and will experience the most serve liquidations this year if precipitation issues continue. Total beef cow inventory is expected to decline by 1 million head in 2022 with the largest liquidations in the High Plains. 

La Niña conditions are expected to occur for a third winter in a row, leading to wetter winter conditions for the Northwest. As shown in the seasonal drought outlook, Northwest cattle producers will benefit from improvements or likely removal of drought across the entire region.  Continued drought in Kansas and Nebraska will cause feed costs in the most affected regions to remain high until moisture conditions improve. Kansas and Nebraska feedlots are the ultimate destination for many of the feeder cattle coming out of the Northwest.  Northwest cattle producers will face headwinds as feedlots in the Great Plains might be bearish in what they are will be willing to pay for feeder cattle.

Domestic availability to decline

Beef availability is forecasted to decline sharply throughout 2023. As a result, domestic per-person consumption is projected 5.6% lower. Beef demand faces headwinds from inflation and greater competition in grocery stores as more pork, chicken and turkey will be available. Looming economic uncertainty does not bode well for restaurant demand, historically during economic downturns consumers cut back on the number of visits to fine dining establishments and swap meat dishes for carb-based options.

Record exports slow amidst a strong U.S. dollar

Despite a historically strong U.S. dollar, 2022 beef exports set a record at $10.8 billion dollars. Chinese beef demand grew 32% throughout 2022 becoming the 2nd largest export destination. Throughout 2023, U.S. beef exports will decrease primarily due to less beef production and some influence from U.S. beef exports being relatively more expensive than other countries, particularly South America. 

Profitability

Winter sales prices have been strong across the Northwest. On Dec. 9, 750 lb. feeder steers in Montana averaged $0.21 per lbs., up 25% from a year ago. Tighter beef supplies have producers optimistic that strong cattle prices will stay. The USDA forecasts fed-steer prices up 8% higher year over year. Improving drought conditions and strong prices have Northwest cattle producers positioned to make a profit. 

Feedlots are bullish having experienced some relief from persistent labor issues, but feed costs remain high. Feedlot margins have steadily declined in 2022. While feedlots might have some relief from lower commodity prices in 2023, analysts predict higher cattle prices and inflation will squeeze feedlot margins. Packer margins have also tightened considerably in 2022, and some may experience losses in 2023. If packer profitability is negative, they will likely become more careful buyers, which will place downward pressure for fat and feeder cattle prices.

Tuesday Closing Livestock Market Update - Despite Higher Corn Prices, Live Cattle Find Support

GENERAL COMMENTS

Before the noon hour Tuesday, it looked as though all the livestock markets were going to close lower as the contracts couldn't seem to gain any support and as the corn complex was weighing heavily on all the markets. However, as the day traded into Tuesday's afternoon, the live cattle market grew stronger and was able to close fully higher despite the corn market's surge. The lean hog and feeder cattle markets both closed mostly lower. Hog prices closed higher on the Daily Direct Afternoon Hog Report, up $0.55 with a weighted average of $71.17 on 9,253 head. The Dow Jones Industrial Average is up 95.00 points.

LIVE CATTLE:

The live cattle complex performed exceptionally well throughout Tuesday's afternoon as the market originally looked like it was going to follow in line with the rest of the livestock contracts and close lower, but support was found in the complex ahead of the market's closing bell. February live cattle closed $0.37 higher at $157.85, April live cattle closed $0.75 higher at $161.30 and June live cattle closed $0.55 higher at $157.85. It's important to note that the spot April contract has been able to close above its 40-day moving average for two consecutive days in a row now. Given that the market faced some pressure from the corn complex and that the cash cattle market lent no support as it hasn't traded yet, it's evident that traders are regaining their footing in the market. It's unlikely that any cash cattle trade will develop on Wednesday as feedlots are going to try to advance the cash market and know that waiting the week out favors their position. If the board can indeed trade higher again on Wednesday, however, that will likely give feedlots more confidence and help them keep the market at least steady. Asking prices in the South are noted at $157, but are still undeveloped in the North.

Tuesday's slaughter is estimated at 127,000 head, 1,000 head less than a week ago and 6,000 head more than a year ago.

Boxed beef prices closed lower: choice down $1.80 ($269.64) and select down $2.10 ($252.39) with a movement of 138 loads (87.63 loads of choice, 22.97 loads of select, 12.71 loads of trim and 14.40 loads of ground beef). The choice/select spread now sits at $17.25.

WEDNESDAY'S CATTLE CALL: Steady to $1.00 higher. It's unlikely that any cash cattle trade develops on Wednesday as feedlots are going to try to advance the market to the best of their abilities. Trade will likely develop on Thursday or even potentially on Friday.

FEEDER CATTLE:

The feeder cattle contracts had a mixed day as support throughout the countryside was strong, but the contracts couldn't look past the corn market's rally, which led the feeder cattle contracts to a lower close. The corn complex jumped higher as it welcomed a new export sale of 130,000 mt and corn exports thus far have been weak for the 2023 calendar year. If the corn complex doesn't pose much threat come Wednesday, the feeder cattle market may be able to trade higher as the live cattle complex grew stronger throughout Tuesday's market and could trade higher into Wednesday as well. March feeders closed $0.32 higher at $183.60, April feeders closed steady at $187.92 and May feeders closed $0.27 lower at $191.97.

At Sioux Falls Regional Cattle Auction in Worthing, South Dakota, compared to last week, feeder steers sold steady to $3.00 higher with instances of $11.00 higher, expect the 900- to 950-pound steers which sold steady to $1.00 lower. Feeder heifers traded steady to $2.00 higher with instances of $7.00 stronger. Several farmer feeders were noted to be at the sale. Slaughter cows and bulls sold steady to $2.00 lower. Feeder cattle supply over 600 pounds was 71%. The CME Feeder Cattle Index for Jan. 23: down $0.16, $177.53.

LEAN HOGS:

It was a mixed day for the lean hog complex as it struggled technically and saw all of its contracts close lower, and even though pork cutout values closed lower too, the market did see slightly higher prices in the cash sector. The lean hog contracts, much like the feeder cattle contracts, were unable to gain any momentum throughout Tuesday's market as the complex eyed and feared the $0.10 advance in the nearby corn contracts. The spot April contract was able to close above its support plane, however. February lean hogs closed $.47 lower at $77.10, April lean hogs closed $0.07 lower at $85.37 and June lean hogs closed $0.67 lower at $101.67. The cash hog market saw 9,253 head trade for a weighted average of price of $71.17, which was $0.55 higher than the week before. Pork cutouts totaled 360.27 loads with 321.27 loads of pork cuts and 38.99 loads of trim. Pork cutout values: down $0.86, $80.06. Tuesday's slaughter is estimated at 484,000 head, 3,000 head less than a week ago and 13,000 head more than a year ago. The CME Lean Hog Index for Jan. 20: down $0.52, $72.13.

WEDNESDAY'S HOG CALL: Slightly higher. Packers are appearing short bought on hogs and it's likely that they'll be active again in Wednesday's market.