GENERAL COMMENTS:
Livestock futures traded higher Friday and received further support after cash cattle trade was reported higher later Friday morning. Lean hog futures also had a good week with improving signs of demand.
From Friday to Friday, livestock futures scored the following changes: April live cattle up $0.35; June live cattle up $1.05; April feeder cattle up $6.42; May feeder cattle up $6.45; April lean hogs up $1.97, June lean hogs up $1.62; March corn down $0.16 3/4, May corn down $0.16.
LIVE CATTLE:
April live cattle closed up $1.35 at $187.90 Friday, erasing Thursday's $1.15 loss with help from higher cash trade. Late Friday morning, DTN reported trade starting to appear near $183 in the South, $3 higher on the week. Northern trade was reported near $292, $4 higher than a week ago. At 2 p.m. CST, USDA said there were 11.797 million head of cattle on feed as of Feb. 1 -- 133,000 less than a month ago, but 0.4% higher than a year ago and slightly more than expected. January placements totaled 1.792 million, down 7.4% from a year ago, but were more than expected. Marketings at 1.844 million head were nearly even with a year ago and as expected. Among the states, it was interesting to see a monthly decline of 90,000 head on feed in Kansas and a decline of 40,000 in Texas.
On the demand side, choice boxed beef finished at $300.61 Friday afternoon, up $4.41 on the week, while selects were down 35 cents at $286.31. USDA estimated this week's slaughter at 593,000, down 15,000 from the previous week, but that is not much of a concern in a week where cash cattle are trading higher. As long as the available supply of cattle remains limited and retail demand holds up, the price outlook remains bullish for live cattle and outweighs the bearish warning from Thursday's reversal.
MONDAY'S CATTLE CALL: Steady to lower Monday after Friday afternoon's on-feed report was only slightly bearish.
FEEDER CATTLE:
April feeder cattle closed up $3.27 at $259.97 Friday, the highest close in four months. The contract also showed the largest weekly percentage gain for the livestock sector, climbing $6.42. Ever since USDA counted 13.28 million calves in January, the lowest total since 1941, there has been little doubt that more calves will be needed in 2024.
The CME Feeder Index was $245.00 for Thursday, February 22, $14.97 below the April futures price a steep discount, but not out of line for a market with tight supplies. Technically speaking, April feeder cattle have closed up 10 of the past 11 weeks and prices show no sign of turning around yet.
LEAN HOGS:
April lean hogs were unchanged Friday, but finished up $1.97 on the week and posted their highest weekly close in seven months, thanks to increasing demand for cash hogs since the start of the new year. Friday afternoon's cut-outs ended the week at $91.16, a 59-cent gain from last Friday. Cut-outs remain well above cash hog prices, a good situation for packers still benefiting from active retail demand. The new twist is that since 2024 began, cash hog prices are also climbing.
Negotiated national cash hog prices ended at $71.49 Friday, $6.87 below the swine formula price of $78.27. Negotiated prices are up $25 since the first of the year, a significant improvement and a strong indication of how much packer demand has improved for pork, in general.
USDA estimated 2.578 million hogs were slaughtered this week, up slightly from the previous week. Thursday's report of average weights showed barrows and gilts down a pound on the week at 214 pounds, while sows gained 2 pounds to 300 pounds. The CME Hog Index was projected at $79.10 as of Thursday, Feb. 22, $8.10 below the April close.
Earlier Friday, USDA said 28,900 mt of pork were sold for export last week, thanks to leading purchases from Mexico and Japan. USDA also revised the previous week of pork sales from 71,900 mt to 33,736 mt, explaining that 38,164 mt of sales reported for China and Mexico were incorrectly reported last week.
MONDAY'S HOG CALL: Steady to lower in April hogs with traders possibly leery about prices near seven-month highs and some early bearish influence possible from cattle.
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