GENERAL COMMENTS:
It was a busy day for the livestock complex, but thankfully for the cattle contracts, the day was rather supportive. The lean hog market didn't find the same support in Thursday's trade as cattle contracts did, but both markets were thankful to see strong export demand. Hog prices closed lower on the Daily Direct Afternoon Hog Report, down $1.31 with a weighted average price of $65.06 on 1,122 head. March corn is down 1 cent per bushel and March soybean meal is down $4.10. The Dow Jones Industrial Average is up 32.39 points.
Beef net sales of 20,600 metric tons (mt) for 2024 were primarily for South Korea (8,500 mt), China (3,400 mt) and Japan (3,000 mt). Pork net sales of 39,200 mt for 2024 were primarily for China (10,900 mt), Mexico (10,200 mt) and South Korea (6,900 mt).
LIVE CATTLE:
What an exciting time it is for the live cattle market right now. The market seems committed to trading higher and representing its strong fundamental footing, which is what we saw again today in Thursday's market. Even though the cash cattle market has yet to trade cattle, traders find it encouraging that feedlots are willing to wait the week out to secure higher prices for their cattle. Asking prices for cattle in the South are noted at $182-plus and in the North at $290 but bids were elusive throughout the day.
It's likely that by Friday's morning bell, packers will be actively seeking cattle and trade could begin to happen at any time. With the continued decline in carcass weights, packers can't afford to be too short bought given that weekly tonnage is lighter than hoped. February live cattle closed $1.55 higher at $183.77, April live cattle closed $1.77 higher at $186.57 and June live cattle closed $1.52 higher at $183.72. Thursday's slaughter is estimated at 125,000 head -- 1,000 head less than a week ago and 2,000 head more than a year ago.
Thursday's actual slaughter data shared that for the week ending Jan. 27, steers averaged 912 pounds, six pounds less than the previous week but two pounds more than a year ago. During the same week, heifers averaged 833 pounds, eight pounds less than the previous week but still 13 pounds more than a year ago.
Thursday's WASDE report was encouraging for the cattle and beef markets in 2024. Beef production for 2024 was increased by 75 million pounds from a month ago as the second half of the year's slaughter pace is expected to be more aggressive than originally thought. Quarterly steer prices were encouraging as all four quarters of 2024 saw a price increase from January's report. Steer prices in the first quarter are now expected to average $176, $1 higher than a month ago. The second quarter is expected to average $180, $3 higher than a month ago and third quarter prices are expected to average $180, $2 higher than a month ago. The fourth quarter is expected to average $184, $1 higher than last month's prediction. Imports for 2024 were raised by 355 million pounds as the reduced cow herd leaves fewer cattle to be marketed from our domestic herd. Oceania is expected to supply more imports. Exports for 2024 remained unchanged from January's data.
Boxed beef prices closed mixed: Choice up $0.03 ($295.01) and select down $1.30 ($284.12) with a movement of 133 loads (88.96 loads of choice, 19.50 loads of select, 6.79 loads of trim and 17.42 loads of ground beef).
FRIDAY'S CATTLE CALL: Higher. Given that feedlots have opted to wait this long to trade cattle, it's likely they're committed to getting higher prices as opposed to letting cattle trade lower.
FEEDER CATTLE:
It was another strong day for the feeder cattle complex as the nearby contracts managed to close higher once again. The market has yet to see any fat cattle trade develop, which is helping embolden the feeder cattle complex as stronger fat cattle prices help keep countryside cattle buyers eager. March feeders closed $1.30 higher at $246.85, April feeders closed $0.72 higher at $251.92 and May feeders closed $0.40 higher at $256.30.
At Winter Livestock Auction in Pratt, Kansas, at their midsession point, feeder steers weighing 500-950 pounds were trading $4 to $6 higher compared to last week. Feeder heifers weighing 775-1,000 pounds were selling $4 to $5 stronger. Feeder cattle supply over 600 pounds was 93%. The CME feeder cattle index Feb. 7: up $1.49, $242.11.
LEAN HOGS:
After receiving supportive news from both today's WASDE and export reports, one would have naturally suspected the lean hog market would trade at least steady as opposed to lower. Thankfully, the market didn't close as low as it traded at times earlier in the day. Traders acknowledged the supportive nature of today's reports but the back-and-forth of current cutout prices and the thinly traded cash market made it hard for traders to get overly supportive following last week's surge.
February lean hogs closed $0.07 lower at $73.30, April lean hogs closed $0.75 lower at $80.35 and June lean hogs closed $0.70 lower at $94.87. Pork cutouts totaled 268.84 loads with 229.38 loads of pork cuts and 39.46 loads of trim. Pork cutout values: Up $2.37, $86.36. Thursday's slaughter is estimated at 491,000 head -- 9,000 head more than a week and year ago. The CME lean hog index Feb. 6: up $0.16, $74.06.
Thursday's WASDE report was favorable to both the lean hog and pork markets. Pork production in 2024 was reduced by 90 million as processing speeds have been slower than originally expected. Quarterly price projections were favorable for the market as all 2024 quarters saw price increases from what was anticipated in January's WASDE report. First-quarter prices are expected to average $55, $4 higher than a month ago. Second-quarter prices are expected to average $62, $2 higher than a month ago and third-quarter prices are expected to average $66, $1 higher than a month ago. The fourth quarter is expected to average $56, $1 higher than a month ago. Pork imports dropped by 20 million pounds from a month ago, while 2024 pork exports grew by 210 million pounds.
FRIDAY'S HOG CALL: Lower. Packers don't do much business in the cash hog market on Fridays and that's not likely to change this week.
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