GENERAL COMMENTS
It was a rough week for livestock prices weighed down by concerns of a slowing economy combined with lower U.S. stock prices. USDA's reports of increased export sales for beef and pork Friday morning helped give prices an end-of-the week lift, followed by an on-feed report that was largely in line with analyst expectations. Also on Friday afternoon, March corn was down a penny, March soybean meal was down $7.50 and Dow Jones futures were trading over 200 points higher.
LIVE CATTLE:
April cattle closed up 80 cents at $159.92 Friday, ending the week with a loss of 97 cents, which is not bad, considering the bearish performance of this week's stock market, still weighed down by concerns about the economy. Technically, April cattle held support above their one-month low and above the 100-day average at $158.50. Noncommercial traders let go of 5,851 net longs in the week ending Jan. 17, but are still making a significant bet on higher prices ahead. One of the factors helping Friday's cattle prices started with USDA's report of 17,300 mt of beef export sales last week, led by sales to China. Aside from the sales transferred in the first week of the year, it was the largest week beef sale since late-September.
On the cash side of the market, cattle slaughter remained active this week, but was estimated down 15,000 at 646,000. Choice boxed beef was down $4.90 for the week, ending at $271.72 Friday. Selects lost just 46 cents, ending at $256.43. The choice/select spread narrowed, but still suggests choice cuts are less available than usual, an outcome of herd liquidation.
Cash trade appears to be essentially done for the week, marked at $155 in the South, down a dollar from last week. Dressed trade in the North came in near $248, down $3 from last week. Friday's on-feed report said 11.682 million head of cattle were on feed as of Jan. 1, slightly more than expected, but a neutral report for Monday's prices.
MONDAY'S CATTLE CALL: Steady with ongoing influence from outside markets.
FEEDER CATTLE:
March feeder cattle bounced up 87 cents to $180.97 Friday, ending the week with a loss of $1.90 after reaching its lowest price in three months on Thursday. Not only are feeder prices susceptible to traders' larger concerns about the future of retail demand, they are highly susceptible to swings of confidence regarding future live cattle prices as feed costs remain high and they need a high finish price to pencil out. March corn did not help feeders this week, ending up 1 1/4 cents on the week after the Buenos Aires Grain exchange cut the good-to-excellent crop rating for corn from 7% to 5%. Thursday's CME Feeder Index was not available at the time of this writing, but ended down $1.22 Wednesday, at $177.87.
LEAN HOGS:
April lean hogs closed up $1.32 at $85.72 Friday, closing out the week with a loss of $1.55. Like cattle, outside market concerns about the possibility of a slower economy probably weighed some on this week's prices, but the bottom line appears to be more cash hogs available for slaughter than last month's inventory report suggests. USDA's national cash average price for cash hogs ended in the dumps at $70.90 Friday, even less than $70 in Iowa and Minnesota. The swine/pork formula price ended the week at $71.01, not much better.
Hog slaughter was down 153,000 last week, but remains active, no excuse for the lower cash prices if hog numbers actually were down from a year ago. So far in 2023, hog slaughter is up 2.8% from a year ago. The pork carcass raised hopes Friday morning with a posting of $82.87, but by the end of the session, the carcass eased back to $79.99, down $1.65 on the week. Friday's gain of $12.59 in bellies was largely offset by a loss of $7.28 in hams. CME's Lean Hog Index was projected at $72.65 Thursday, down $2.18 from a week ago.
Aside from the higher futures close, the bright spot in Friday's trade was USDA's export sales report, showing 34,100 mt of pork sold last week, including a 4,100 mt sale to China. China's low hog prices suggest a glut of pork in the country, but problems with a high number of COVID infections may be causing a disruption of supplies, much as we experienced in the U.S. in 2020.
MONDAY'S HOG CALL: Steady to lower, wary of the outside market's mood over the weekend.
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