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.
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