GENERAL COMMENTS
It was an extremely positive day for the livestock complex as the futures market saw higher closes and began to see a light trade develop in the North for $2.00 higher in the cash market. Currently, cattle have still not sold in the South and, unless trade happens later Friday, feedlots could be looking at rolling over cattle, which consequently means that packers got very few bought this week. Hog prices closed lower on the Daily Direct Afternoon Hog Report, down $0.28 with a weighted average of $72.65 on 5,407 head. March corn is up 2 1/4 cents per bushel and March soybean meal is up $4.70. The Dow Jones Industrial Average is down 138.36 points.
From Friday to Friday, livestock futures scored the following changes: February live cattle up $3.55, April live cattle up $3.30; March feeders up $2.63, April feeders up $3.07; February lean hogs down $0.85, April lean hogs up $0.03; March corn down $0.05, May corn down $0.04.
LIVE CATTLE:
What a tremendous week it's been for the live cattle complex. From being blessed with an extremely bullish Cattle Inventory report, to seeing the spot April contract run to new contract highs on both Thursday and Friday, to now seeing feedlots be so bold that they're willing to roll cattle over into the next week as opposed to letting them trade steady. February live cattle closed $0.52 higher at $160.27, April live cattle closed $0.30 higher at $162.12 and June live cattle closed $0.27 higher at $160.27. By late Friday afternoon, the North finally began to see some cattle trade for $250, which is $2.00 higher than last week's weighted average. Meanwhile, the standoff between packers and Southern feedlots remains intense as neither are budging at this point.
Friday's slaughter is estimated at 122,000 head, 2,000 head less than a week ago and 8,000 head more than a year ago. Saturday's slaughter is projected to be around 19,000 head. This week's slaughter is estimated at 641,000 head, 18,000 head less than a week ago and 6,000 head more than a year ago.
Boxed beef prices closed lower: choice down $0.36 ($264.74) and select down $2.05 ($251.61) with a movement of 76 loads (49.18 loads of choice, 13.15 loads of select, 2.82 loads of trim and 10.78 loads of ground beef). Throughout the week choice cuts averaged $265.82 (down $3.35 from last week) and select cuts averaged $252.50 (up $0.36 from last week) and the week's total movement of cuts, grinds and trim totaled 536 loads.
MONDAY'S CATTLE CALL: Higher. With packers as short bought on cattle as they are, they're going to need to get aggressive in the cash market soon.
FEEDER CATTLE:
The feeder cattle complex had another strong day as all the contracts closed higher and the market is confidently trading above both its 40-day and 100-day moving averages again. March feeders closed $0.17 higher at $186.10, April feeders closed $0.55 higher at $190.62 and May feeders closed $0.52 higher at $194.77. Given that the market has had more time to absorb Tuesday's Cattle Inventory report and see feedlots advance the cash market again (at least in the North), feeders are optimistic as they see both sides of the market (technical and fundamental) working hand in hand. Monitoring inputs remains an uphill battle, but at least there's upside potential when it comes to selling both feeders and fats to help ease the input cost. The CME Feeder Cattle Index for Feb. 2: up $0.55, $181.45.
LEAN HOGS:
The lean hog complex finally found support throughout the futures complex after seeing a moderate export-sales report on Thursday. The spot April contract is holding above the support plane established at $85.00, which is substantial given that, if cash support continues, the futures complex could see some slightly higher trade. February lean hogs closed $0.32 lower at $75.02, April lean hogs closed $0.47 higher at $86.47 and June lean hogs closed $0.65 higher at $103.30. Pork cutouts totaled 295.28 loads with 266.68 loads of pork cuts and 28.60 loads of trim. Pork cutout values: down $2.41, $79.09. Friday's slaughter is estimated at 484,000 head, 3,000 head less than a week ago and 59,000 head more than a year ago. Saturday's slaughter is projected to be around 153,000 head. The CME Lean Hog Index for Feb. 1: up $0.34, $72.85.
MONDAY'S HOG CALL: Slightly lower. Packers very rarely support the cash market on Mondays as they look to see what demand does early in the week.
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