Friday Closing Livestock Market Update - Mixed Tones Leave Livestock Complex Lackadaisical

GENERAL COMMENTS:

It was a mixed day for the livestock complex as the contracts were mostly pressured although some of the nearby live cattle and feeder cattle contracts were able to hold their slightly higher position through the day's end. A little bit of clean-up trade developed in the cash market, but prices remained steady with the trends set earlier in the week. March corn is up 9 3/4 cents per bushel and March soybean meal is up $2.80. The Dow Jones Industrial Average is up 334.70 points.

From Friday to Friday, livestock futures scored the following changes: February live cattle down $2.03, April live cattle down $1.97; January feeder cattle up $1.15, March feeder cattle down $1.35; February lean hogs down $1.43, April lean hogs down $0.35; March corn up $0.14, May corn up $0.14.

**The markets will be closed on Monday, Jan. 20 for Martin Luther King, Jr. Day. Regular DTN Market Commentary will resume on Tuesday, Jan. 21.**

LIVE CATTLE:

The live cattle complex rounded out Friday's trade mixed, with most of the nearby contracts able to maintain their slightly higher position, but the deferred contracts fell lower by the day's end. February live cattle closed $0.15 higher at $196.75, April live cattle closed $0.17 lower at $197.50 and June live cattle closed $0.22 higher at $192.20. The market seemed divided at Friday's end as trades felt somewhat pressured by the market's resistance that looms not far away ($198.50 in the February contract). However, there was plenty of fundamental support to note this past week as well with the mostly supported trade in boxed beef prices and the note of steady to $2.00 higher trade in the fed cash cattle market. I'd also like to note that there has been an increase in non-commercial positions which could be part of the futures complex's hesitancy as some are likely to capitalize on the market's current price and liquidate their position. Throughout the week Southern live cattle traded at mostly $201 which is steady to $1.00 higher than last week's weighted average, and Northern dressed cattle traded at mostly $322 which is $2.00 higher than last week's weighted average.

Friday's slaughter is estimated at 114,000 head -- 9,000 head more than a week ago but 5,000 head less than a year ago. Saturday's slaughter is projected to be around 1,000 head. The week's total slaughter is estimated at 603,000 head -- 14,000 head more than last week but 2,000 head less than a year ago.

Boxed beef prices closed higher: choice up $0.28 ($333.69) and select up $0.45 ($319.83) with a movement of 122 loads (81.08 loads of choice, 20.39 loads of select, 10.61 loads of trim and 9.46 loads of ground beef).

TUESDAY'S CATTLE CALL: Steady/somewhat higher. The direction of the fed cattle complex is largely going to be determined by how many cattle packers were able to get bought this past week.

FEEDER CATTLE:

The feeder cattle complex rounded out Friday's trade mixed as the nearby contracts maintained a slightly higher position while the deferred contracts closed lower. Traders were in a tough position throughout the day as it was hard to look past the corn market's $0.09 to $0.10 rally in its nearby contracts, all while knowing that the red-hot feeder cattle demand in the countryside deserved the same level of respect and acknowledgment. January feeders closed $0.05 higher at $273.50, March feeders closed $0.32 higher at $268.05 and April feeders closed $0.07 lower at $268.12. The Oklahoma Weekly Cattle Auction Summary shared that throughout the entire state and when compared to last week's trend, feeder steers over 800 pounds sold $1.00 to $5.00 lower but steers under 800 pounds traded $2.00 to $7.00 higher with six weight steers trading up to $10.00 higher. Feeder heifers over 850 pounds sold steadily, but higher under 850 pounds traded $1.00 to $5.00 higher and again six weight heifers saw special interest as they traded up to $12.00 higher. Steer and heifer calves sold $7.00 to $12.00 higher. Slaughter cows traded $3.00 to $4.00 higher and slaughter bulls sold $2.00 stronger. Feeder cattle supply over 600 pounds was 62%. The CME feeder cattle index 1/16/2025: not available at this time.

LEAN HOGS:

The lean hog complex rallied throughout the earlier part of the week but traders started to become skeptical of supporting the complex on Thursday, which only led to continued pressure throughout Friday's trade. February lean hogs closed $1.17 lower at $81.12, April lean hogs closed $2.22 lower at $88.32 and June lean hogs closed $2.10 lower at $101.82. Thankfully pork demand continues to be a supportive factor for the market as once again demand prevailed this afternoon and pork cutout values closed higher. Hog prices closed lower on the Daily Direct Afternoon Hog Report, down $1.74 with a weighted average price of $78.50 on 891 head. Pork cutouts totaled 262.13 loads with 235.00 loads of pork cuts and 27.13 loads of trim. Pork cutout values: up $0.21, $90.60. Friday's slaughter is estimated at 485,000 head -- 17,000 head more than a week ago and 8,000 head more than a year ago. Saturday's slaughter is projected to be around 213,000 head: up $0.09, $81.19.

TUESDAY'S HOG CALL: Steady. Packers were aggressive in this week's market which could hold prices steady at the start of next week's trade.

Friday Midday Livestock Market Summary - Weaker Tones Pressure Feeder Cattle and Lean Hog Markets

GENERAL COMMENTS:

Aside from the live cattle complex, both the feeder cattle and lean hog markets are trading lower into Friday's noon hour. No new cash cattle trade has developed, and it looks like the bulk of this week's trade is essentially done with. March corn is up 7 1/2 cents per bushel and March soybean meal is up $3.20. The Dow Jones Industrial Average is up 470.79 points.

LIVE CATTLE:

After enduring some pressure through Thursday's end, the live cattle complex is back to trading higher. The market is relieved not to be up against resistance pressure today and is thankful to see the continued support of stronger boxed beef prices. February live cattle are up $0.42 at $197.02, April live cattle closed $0.17 higher at $197.85 and June live cattle are up $0.62 at $192.60. No more cash cattle sales have been noted and although it's likely that some light movement may happen here or there in terms of clean-up sales, it's looking like the vast majority of the trade is done for this week. Asking prices for cattle left to sell are $202 plus in the South and $323 plus in the North. So far this week Southern live cattle have traded at mostly $201 which is steady to $1.00 higher than last week's weighted average, and Northern dressed cattle have sold at mostly $322 which is $2.00 higher than last week's weighted average.

Boxed beef prices are higher: choice up $0.41 ($333.82) and select up $2.07 ($321.45) with a movement of 83 loads (57.66 loads of choice, 15.25 loads of select, 3.02 loads of trim and 7.47 loads of ground beef).

FEEDER CATTLE:

Although you'd think that the support stemming from the live cattle complex in terms of higher trade on the futures board, stronger boxed beef prices and higher trends in this week's fed cash cattle market would be enough to encourage the feeder cattle complex to trade higher all the while demand in the countryside remains red-hot for feeder cattle -- the market seems to be gawking at the corn market's rally which is likely why most of the feeder cattle contracts are trading lower. January feeders are down $0.25 at $273.20, March feeders are up $0.35 at $268.07 and April feeders are mostly steady at $268.20. And given that traders are skeptical at this point in the day, it's unlikely that they'll grow much more supportive of the feeder cattle complex ahead of the day's close.

LEAN HOGS:

Even the lean hog complex is trading lower as traders have seemed to take on a skeptical approach to Friday's market in the entire livestock complex. It is positive however to still see pork cutout values trading higher as demand has partially been credited to the market's recent rally. February lean hogs are down $1.05 at $81.25, April lean hogs are down $2.00 at $88.55 and June lean hogs are down $1.52 at $102.40.

The projected lean hog index for 1/16/2025 is up $0.09 at $81.28, and the actual index for 1/15/2025 is up $0.09 at $81.19. Hog prices are lower on the Daily Direct Morning Hog Report, down $2.36 with a weighted average price of $78.08, ranging from $77.00 to $81.00 on 661 head and a five-day rolling average of $79.63. Pork cutouts total 188.37 loads with 169.45 loads of pork cuts and 18.93 loads of trim. Pork cutout values: up $1.30, $91.69.

Increasing prices and less beef predicted for 2025

Reflecting on 2024, cattle inventories continued to decline despite expectations that many producers might retain cattle and focus on rebuilding. Total 2024 beef production are forecasted to show an increase of 0.3% year over year, as opposed to initial estimates of a 3%-4% reduction. Beef production was bolstered by higher-than-expected slaughter rates and larger carcass weights. In 2024, carcasses averaged nearly 20 lbs heavier than the previous year. Despite ongoing concerns about reduced demand, retail beef prices increased by 3.5% year over year.

The ban on importing live cattle from Mexico into the U.S. due to New World Screwworm (NWS) remains ongoing as the two countries work to set up quarantine procedures. Highlighting the extent of the impact, USDA lowered their quarterly 2025 beef production forecast into Q4 2025. When cattle prices in the Southern Plains increased more than $15 per cwt during the month of December, the USDA also responded by increasing their 2025 cattle price forecast.

Beef production for 2025 is forecasted at 25.6 billion pounds, down 5% from the previous year. Cattle prices are forecasted to modestly increase, while domestic beef consumption is expected to decrease by 3.5% largely due to less beef production and higher prices.

Profitability

Cattle feeders: Profitable - Neutral 12-month outlook
Cow-calf producers: Profitable - Neutral 12-month outlook

Packers and feedlots will have to balance over-capacity against a continued tightening cattle supply. The cost of acquiring cattle will pose significant challenges for profitability. Scarcity may lead to intensified competition and higher prices, but lower feed costs will help mitigate high placement costs.

Historically high cattle prices and lower feed costs support long-term cow-calf profitability. However, consumer demand could pose headwinds if it doesn't keep pace with rising beef prices.

Friday Morning Livestock Market Update - More Cash Cattle Trade Expected

Live cattle futures are finding difficulty in breaking through and closing above the $200 price. The weakness on Thursday may be temporary as the cash cattle trade will unfold fully Friday. Cash trade in the South has been steady to $1.00 higher with Northern dressed trade at $2.00 higher. Trading activity has been light, but it does indicate cash will trade higher for the week. Weekly export sales were better than last week, but not exceptional at 9,700 metric tons (mt). Boxed beef prices closed mixed with choice down $0.73 and select up $1.34, moving the price spread to $14.03. Traders are watching boxed beef prices closely as the recent activity may indicate prices may be wavering and near consumer resistance. There is no confirmed date when the Southern border will be reopened for cattle imports to resume from Mexico.

Hog futures struggled Thursday but held the recent gains despite minor declines. Futures may have some difficulty moving higher unless there is continued support from pork cutouts. Cutouts slipped $0.44. It was surprising to see a gain of $0.03 in the cash price on Thursday even though the activity was light. It has been a supportive week for cash but packers are not expected to remain aggressive Friday. Stability in pork cutouts would go a long way in supporting the market and pushing futures higher. Saturday slaughter has been revised significantly higher with the current estimate of 206,000 head.

	BULL SIDE		BEAR SIDE
1)	Live cattle futures are poised to move above $200 as packers have increased slaughter to meet demand. They may need to remain aggressive.	1)	Traders may become more nervous at these lofty price levels and the record-long feeder cattle and near-record live cattle fund trader positions. This could trigger liquidation.
2)	There is still no indication of lifting the restriction on cattle imports from Mexico. It was expected to take place next week, but that is being delayed.	2)	Boxed beef prices may be wavering as consumers may have reached a threshold of what they are willing to pay for beef.
3)	Hogs are holding the recent gains and with cash holding well this week, futures may renew the upward trend.	3)	Pork cutouts have not been able to establish solid support. The increased slaughter pace leaves plentiful supplies of pork for the retail market.
4)	Even though hog weights are higher than a year ago, packers continue to hold the slaughter pace above a year ago. They need hogs to satisfy demand.	4)	Hog futures may have reached a level at which prices may move in a sideways range for the time being as traders assess demand moving forward. .