GENERAL COMMENTS:
The Labor Department's report of stronger-than-expected job growth in January offered some more good news in a week that is already having bullish influence on cattle prices.
LIVE CATTLE:
Live cattle futures are slightly higher at midmorning Friday with the April contract up a nickel at $163.90, staying close to new high territory. This has been a week of bitter cold weather for cattle in the Northern Plains and as far south as Kansas. Even Friday morning's map shows subzero readings throughout Iowa and single digits in Kansas, one last extra shot of cold before readings start to warm this weekend and usher in a mostly warmer February.
This week will also be remembered for Tuesday afternoon's inventory report, reporting the lowest U.S. cattle inventory since 2015 and the lowest number of beef cows on record going back over 50 years. Early Friday, the U.S. Labor Department said nonfarm payrolls increased by 517,000 in January, much more than expected and showing that the economy is doing better than many in the business news have been worrying about. For the most part, beef demand remains active and the slaughter pace is humming along.
Friday morning's report from USDA showed choice cuts down 20 cents at $264.90, down almost $3 on the week, so far. Selects were up 12 cents at $253.78, up over $3 from last Friday afternoon. Slaughter estimates have maintained an active pace this week and Dow Jones estimates Friday's cattle slaughter at 121,000, down 1,000 from a week ago. Saturday's slaughter is estimated at 30,000, up 3,000 from a week ago. Cash trade has been quiet this week and should get busy Friday afternoon. Emboldened by Tuesday's report and after every live cattle futures contract posted a new contract high Thursday, packers are likely to find a difficult market to bid into this week.
FEEDER CATTLE:
Just over a couple hours into Friday's trade, March feeder cattle are up 20 cents at $186.12, holding a modest gain for the week. March corn overcame a lower start and is now trading two cents higher, despite Thursday's 10-point increase in Argentina's good-to-excellent crop rating, now at 22%. Corn prices are on track, however, for a modestly lower close this week, offering slight help for feeder prices. As with live cattle, the influences on feeder prices have been mostly bullish this week. Stressful winter conditions throughout much of the western Plains, a historically bullish inventory report on Tuesday and good news on the jobs front on Friday morning offering a more promising outlook for beef demand.
Overall, feeder cattle prices remain well-supported despite the strain of high feed costs. The National Weather Service shows increased chances for precipitation in the western Plains in the six- to 14-day period, but DTN meteorologists say the more beneficial amounts are likely to lean east. Increased precipitation in the western Plains, if it could happen, would provide helpful relief for many cattle producers. The CME Feeder Index posted $180.90 for Thursday, Feb. 2, up $1.33 from a week ago.
LEAN HOGS:
At midmorning Friday, April hog futures are trading a little higher, up 20 cents at $86.20 after a slightly lower start. Hog futures are still showing signs of support after Wednesday's venture to new low ground was quickly rejected Thursday. Thursday's report from USDA showed 30,900 mt of pork export sales with Mexico named the top buyer, not horrible, but not enough to explain the new buying interest in hogs. Thursday's new highs in live cattle futures likely helped, but the most bullish encouragement came from a bounce in the prices of negotiated hogs. Negotiated prices that briefly fallen below $70 in mid-January were quoted at $72.65 in Friday morning's national Daily Direct Hog report, a modest bump for the week and possible sign of support.
USDA's morning pork report posted Friday's cutouts down $2.30 at $79.20, back near where price was a week ago and pressured by a $13.21 drop in bellies. USDA reported 156.57 loads of pork cuts and 17.69 loads of trim.
Hog slaughter remains active and was estimated by Dow Jones at 486,00 for Friday, down 1,000 from last week. Saturday's slaughter is estimated at 161,000, up from 87,000 last week. CME's lean hog index was projected at $73.05 for Thursday, up 41 cents from a week ago. With this week's bounce in cash hog prices coinciding with a successful test of support in the futures market, the outlook for hog prices is showing signs of improvement.
No comments:
Post a Comment