GENERAL COMMENTS:
From Friday to Friday, livestock futures scored the following changes: February Live cattle off $3.10, April Live cattle up $1.15; January Feeder cattle up $0.82, March Feeder cattle up $1.05; February Lean hogs up $2.03, February Lean hogs up $2.03; February Pork cutout up $1.18, February Pork cutout off $0.00.
Livestock futures closed higher for the week in most livestock contracts as hog and cattle markets seemed to focus on a completely different strategy to accomplish this upward movement. Cattle trade posted aggressive early week gains, but quickly pulled back from this buyer support in the last half of the week. On the other hand, lean hog trade posted additional pressure early in the week, only to roar back with active triple-digit gains the past two trading sessions. Next week will be the first full week of trade since the holiday season, which will likely help set the tone for increased trade activity during early January.
Hog prices closed lower on the Daily Direct Afternoon hog report, down $0.75 with a weighted average of $44.56 on 3,830 hogs. March corn closed down 5 3/4 at $4.608 and March soybean meal closed down $6.80 at $369.4. The Dow Jones Industrial Average is up 25.77 at 37,466.11.
LIVE CATTLE:
Live cattle futures traded lower Friday, following the developing pressure seen Thursday and strong underlying losses seen in feeder cattle trade. February futures closed lower for the week as traders focused on the February contracts now being the official spot month contract following December contract expiration at the end of the month.
The overall lack of buyer interest in the last half of the week is somewhat surprising, although at current price levels, market prices remain well confined within a sideways trading range.
In the first weekly export sales report of 2024, net sales of 9,500 mt for 2023 were up noticeably from the previous week and up 69% from the prior four-week average. Increases primarily for China (3,200 mt, including decreases of 100 mt), Japan (2,200 mt, including decreases of 900 mt), Mexico (2,100 mt), Canada (900 mt), and South Korea (500 mt, including decreases of 1,100 mt). Exports of 17,000 mt were up 29% from the previous week and 17 percent from the prior four-week average. The destinations were primarily to South Korea (4,800 mt), Japan (3,300 mt), China (3,000 mt), Mexico (2,100 mt), and Canada (1,400 mt).
Cash cattle trade remains generally quiet with only a few deals reported at this time. It is likely that some additional movement will be seen before the end of the day, although these may not be fully reported until early next week. Trade of $173 is seen in the North on a live basis, although bids of $173 live in the South and $273 dressed in the North are still being passed by feeders. Higher trade earlier in the week may limit the interest to sell significant amounts of cattle at current bided price levels.
February live cattle closed $0.55 lower at $170.575, April live cattle closed $0.90 lower at $173.4 and June live cattle closed $1.00 lower at $170.55.
Friday's slaughter is estimated at 124,000 head, 1,000 head less than a week ago and 22,000 head less than a year ago. Saturday slaughter is estimated at 52,000 head. This will bring weekly estimated slaughter totals to 556,000 head.
Boxed beef prices closed higher: choice up $1.26 ($277.16) and select up $0.71 ($259.53) with a movement of 106.23 loads (60.81 loads of choice, 17.97 loads of select, 5.62 loads of trim and 21.83 loads of ground beef).
MONDAY'S CATTLE CALL: Steady. Limited activity is expected early next week with show list distribution and inventory taking consuming most of Monday's activity.
FEEDER CATTLE:
Feeder cattle futures led the complex lower with consistent and active losses developing Friday. Although firm pressure was seen through the entire session, additional late-day pressure flooded the market in the last hour of trade. January through May contracts all posted losses of $1.50 to $1.55 per cwt, creating unusual consistency of price movements not usually seen in any futures market, let alone the feeder cattle market. January feeders closed $1.55 lower at $223.125, March feeders closed $1.50 lower at $224.15 and April feeders closed $1.50 lower at $229.775. The CME Feeder Cattle Index for Jan. 3: down $0.56, $228.09.
LEAN HOGS:
Lean hog futures posted strong gains for the second consecutive trading session, helping to build even more confidence that Thursday's market shift higher was more than just short covering activity. This helped to post a strong weekly close through lean hog futures trade, helping to bring additional interest back to the complex.
In the weekly export sales report, which was released Friday morning due to Monday's holiday, net sales of 17,800 mt for 2023 were down 25% from the previous week and 35% from the prior four-week average. Exports of 22,000 mt were down 24% from the previous week and 33% from the prior four-week average. The destinations were primarily to Mexico (8,400 mt), South Korea (3,200 mt), Japan (2,500 mt), China (2,300 mt), and Colombia (1,400 mt).
February lean hogs closed $0.95 higher at $70., April lean hogs closed $1.43 higher at $76.375 and May lean hogs closed $1.35 higher at $83.15. Friday's hog slaughter is estimated at 489,000 head, 10,000 head higher than a week ago and 27,000 head more than a year ago. Due to plants being closed last Monday, Saturday slaughter is estimated at 440,000 head. This will move the estimated weekly slaughter to 2.38 million head, 160,000 head above week ago levels. Pork Cutouts totaled 313.04 loads with 280.59 loads of pork cuts and 32.45 loads of trim. Pork cutout values are down $0.30 at $84.20. The CME Lean Hog Index for Jan. 3: up $0.67, $65.86.
MONDAY'S HOG CALL: Steady to $1 higher. With a full week of plant activity ahead, following two weeks of reduced procurement, and firming futures trade, packers are expected to start the week with steady to higher cash bids.
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