GENERAL COMMENTS
Feedlots had to work to keep the cash market steady to $0.50 higher, but with just a little bit of commitment, they were able to get the job done. More trade will need to develop on Friday as the week's movement is thin, and prices could still trend higher. Hog prices closed higher on the Daily Direct Afternoon Hog Report, up $0.92 with a weighted average $74.39 on 11,225 head. March corn is down 1 cent per bushel and March soybean meal is up $2.20. The Dow Jones Industrial Average is down 339.69 points.
LIVE CATTLE:
Besides the spot February live cattle contract, the rest of the market closed mostly lower as the complex grew timid throughout Thursday's trade. After rallying late last week to new contract highs, the market has cascaded sideways to somewhat lower as it longs for confirmation that the move was indeed a sound decision. Thursday's cash cattle trade confirmed that Southern live cattle have traded steady with last week's weighted average at $157, and Northern dressed cattle traded mostly at $252 with is roughly $.50 higher than last week's weighted average. Throughout 2023, we are going to consistently see a theme of toe to toe action between packers and feedlots. Feedlots know that the time to push the cash cattle market higher is now as supplies are thin and demand is strong, but packers will fight them every step of the way as every dollar that feedlots gain is a risk to packers' bottom line. February live cattle closed $0.07 higher at $157.35, April live cattle closed $0.15 lower at $161.27 and June live cattle closed $0.07 lower at $157.27.
Thursday's slaughter is estimated at 127,000 head, 1,000 head more than a week ago and 15,000 head more than a year ago.
Thursday's actual slaughter data shared that for the week ending Dec. 24, 2022, steers averaged 920 pounds, which was 7 pounds lighter than the previous week and 5 pounds less than a year ago. For the same week, heifers averaged 844 pounds, which was 2 pounds less than the previous week but 6 pounds lighter than a year ago.
Boxed beef prices are mixed: choice down $1.26 ($281.63) and select up $0.55 ($256.95) with a movement of 132 loads (89.13 loads of choice, 23.41 loads of select, 7.88 loads of trim and 11.35 loads of ground beef). The choice/select spread sits at $24.68.
FRIDAY'S CATTLE CALL: Steady to $1.00 Higher. Thursday's movement of cash cattle was thin, which will mean more cattle will need to trade on Friday. Feedlots aren't eager to let cattle move at steady prices, so in order to get the cattle that they need, packers may have to up their bids.
FEEDER CATTLE:
The feeder cattle contracts closed lower Thursday afternoon despite the fact that the corn prices again traded lower. The feeder cattle market had all the fundamental support it needed in order to trade higher, but given that traders posted a strong, breakout move Wednesday, some traders opted to trade the market hesitantly on Thursday as they look for reassurance that the move was indeed the right decision. And with feeder cattle sales as strong as they are in the countryside, combined with cheaper corn prices, it's safe to saw that feeders did indeed make a sound decision in advancing the market boldly on Wednesday. So long as the cash cattle market continues to trade cattle steady to $0.50 higher and corn prices continue to drift lower, the feeder cattle complex stands an excellent chance at trading higher on Friday. January feeders closed $1.42 lower at $183.80, March feeders closed $1.67 lower at $186.55 and April feeders closed $1.17 lower at $190.52. At Bassett Livestock Auction in Bassett, Nebraska, compared to the last sale held in December, 500-, 600- and 700-pound steers traded $3.00 to $10.00 higher while the steers weighing 650 pounds traded $3.00 lower. Heifer offerings weighing 450 to 550 pounds traded $2.00 to $15.00 higher. Feeder cattle supply over 600 pounds was 63%. The CME Feeder Cattle Index for Jan. 4: down $0.42, $180.31.
LEAN HOGS:
It was another day of technical hardship for the lean hog complex as the market faced a 22- to 155-point decline throughout the contracts, and witnessed yet again another weaker close in pork cutout values. February lean hogs closed $1.55 lower at $82.52, April lean hogs closed $1.37 lower at $91.52 and June lean hogs closed $1.20 lower at $106.00. It was encouraging to see another large volume of pork sold as packers are obviously using the market's cheap prices as a way to liquidate some inventory. In the months ahead, this could be positive as tighter supplies will hopefully lead to strong pork prices. Yes, the afternoon's cash hog market was higher, but given that the week's volume is still incredibly thin, it's mindboggling to see how abrasive packers are to the cash market and they're obviously not worried about running out of supplies in the near future. Pork cutouts total 371.07 loads with 338.19 loads of pork cuts and 32.88 loads of trim. Pork cutout values: down $1.51, $84.32. Thursday's slaughter is estimated at 490,000 head, 10,000 head more than a week ago and 28,000 head more than a year ago. The CME Lean Hog Index for Jan. 3: down $0.39, $79.06.
FRIDAY'S HOG CALL: Lower. Packers very rarely show interest in the cash hog market on Fridays, and it's not likely that they'll change their ways this week.
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