Friday, January 22, 2021

Friday Closing Livestock Market Update - What Will Monday Bring?

GENERAL COMMENTS:

If you thought you were going to be able to skip into the weekend, happy-go-lucky, without a care in the world from the massive gains livestock futures made this past week think again friend! Good analysts make sure to give credit where credit is due but don't turn a blind eye to what's lurking around the corner. With both live and feeder cattle futures able to trade with expanded limits come Monday morning, there could be some volatility with the new week, unfortunately. Hog prices closed higher on the National Direct Afternoon Hog Report, up $0.56 with a weighted average of $55.46 on 4,960 head. March corn is down 23 3/4 cents per bushel and March soybean meal is down $16.60. The Dow Jones Industrial Average is down 179.03 points and NASDAQ is up 12.14 points.

From Friday to Friday livestock futures scored the following changes:

February live cattle up $3.95, April live cattle up $4.33; January feeder cattle up $2.68, March feeder cattle up $8.33; February lean hogs up $2.00, April lean hogs up $3.50.

LIVE CATTLE:

Live cattle futures were on the front line of Friday's important business as the market wanted to secure stronger trade and was waiting patiently for the Cattle on Feed Report to be shared. Live cattle contracts performed with robust support and led some months to new contract highs. The disappointing factors of this week come from the cash cattle market and Friday's Cattle on Feed Report. If feedlots would have been able to wait until Thursday to start marketing their cattle instead of selling out earlier in the week, they most likely could have pushed packers into paying at least $1.00 more as packing margins are exceptional with strong boxed beef prices. But this week's cash cattle business started Wednesday and ran through Thursday. Northern dressed cattle traded from $166 to $176, mostly from $172 to $173, which is steady to $1.00 lower than last week's trade. Southern live cattle traded from $108 to $111, mostly at $110, which is steady to slightly weaker than last week. Friday's slaughter is estimated at 119,000 head -- 4,000 head more than a week ago and 2,000 head less than a year ago. Saturday's slaughter is estimated at 69,000 head.

Friday's Cattle on Feed Report came as an utter surprise. Placements were projected to be 3% lighter than a year ago, but instead came in 1% greater. Cattle and calves on feed totaled 12.0 million head, which was slightly above year ago levels. Placements totaled 1.84 million head which was 1% above year ago levels. And marketings totaled 1.85 million head, 1% greater than a year ago. Click on the link here to read DTN's COF comments:

Beef net sales of 24,500 metric tons (mt) were reported for 2021, increases were primarily for Japan (4,900 mt, including decreases of 500 mt), China (4,300 mt, including decreases of 100 mt) and South Korea (3,500 mt, including decreases of 600 mt).

It was a stellar week for boxed beef prices! Choice cuts jumped $8.27 from last week to average $219.09 and select cuts jumped $9.23 to average $208.64. The week's total movement of cuts, grinds and trim totaled 664 loads.

Boxed beef prices closed higher Friday: choice up $1.62 ($222.82) and select up $3.06 ($213.34) with a movement of 143 loads (82.29 loads of choice, 21.57 loads of select, 22.21 loads of trim and 16.91 loads of ground beef).

MONDAY'S CASH CATTLE CALL: Steady. There's a lot that could happen with Monday's trade. Bears would like to push the relevance of Friday's Cattle on Feed Report and question how secure the market is with expanded limits. Meanwhile bulls will look at the market's continued support from boxed beef prices and will wait until later in the week to sell their cattle, knowing packers want to process cattle with their margins as strong as they are right now.

FEEDER CATTLE:

Friday was an exceptional day for the feeder cattle contracts and upon Monday's arrival expanded limits will be offered, allowing for the contracts to trade with a $7.50 range. There's a lot on the line this weekend and heading into Monday's trade and with the new contract limits being so wide. Volatility becomes a concern, depending on what the corn market does and simply given the fact that the contract can trade in such a large price span. Nevertheless, the feeder cattle contracts had an outstanding Friday and were able to secure noteworthy gains as the day's closing bell rang. Thankfully these gains weren't only absorbed throughout the futures market but also throughout the countryside as buyers continue to be aggressive despite higher feed costs than many had grown used to in the last couple of years. January feeders closed $1.37 higher at $137.25, March feeders closed $5.00 higher at $144.15 and April feeders closed $4.25 higher at $146.12. At Mitchell Livestock Auction in Mitchell, South Dakota, higher undertones were noted on steers weighing up to 550 pounds compared to a week ago, steers weighing 550 to 700 pounds traded steady to $3.00 higher and steers weighing 700 pounds or more sold $1.00 to $4.00 stronger. An unevenly steady undertone was noted on heifers up to 550 pounds, heifers weighing 550 to 900 pounds sold steady to $2.00 higher and heifers weighing 900 to 950 pounds traded $6.00 higher. The sale showed excellent demand and had a strong offering of true yearling heifers in load lot sizes; they were sought with exceptionally strong demand. The CME feeder cattle index 1/21/2021: up $0.80, $133.99.

LEAN HOGS:

The lean hog complex didn't drift to the backburner and miss out on Friday's supportive behavior but instead saw strong interest in its nearby contracts while some deferred contracts traded only mildly lower. February lean hogs closed $1.82 higher at $69.92, April lean hogs closed $2.25 higher at $76.15 and June lean hogs closed $1.52 higher at $86.80. The market's advancements weren't only seen throughout the futures but were widespread and were seen throughout the cash market and closing pork cutout values. Pork cutouts totaled 428.15 loads with 399.74 loads of pork cuts and 28.42 loads of trim. Pork cutout values: up $2.57, $82.83. Friday's slaughter is estimated at 490,000 head -- 112,000 head more than a week ago and steady with a year ago. Saturday's slaughter is anticipated to be around 327,000 head. The CME lean hog index 1/20/2021: down $0.27, $65.40.

Pork net sales of 45,200 mt were reported for 2021, increases primarily for Mexico (13,200 mt, including decreases of 800 mt), China (9,700 mt, including decreases of 1,100 MT), Canada (5,000 mt, including decreases of 400 mt) and the Philippines (4,500 mt, including decreases of 800 mt).

MONDAY'S CASH HOG CALL: Steady. Packers have been slaughtering hogs aggressively but through their purchases this past week they most likely won't have to dive into the cash market enough to push prices higher.




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