GENERAL COMMENTS:
It's been an eventful week for the new year, and when given the opportunity, the livestock contracts were thankfully rallied with Thursday's modest support. Hog prices closed higher on the National Direct Afternoon Hog Report, up $2.88 with a weighted average of $55.23 on 5,567 head. March corn is down 1 cent per bushel and March soybean meal is down $6.10. The Dow Jones Industrial Average is up 211.73 points and NASDAQ is up 326.69 points.
LIVE CATTLE:
The live cattle contracts closed slightly higher Thursday afternoon as the break in the corn market came as a refreshing surprise. February live cattle closed $0.02 lower at $114.97, April live cattle closed $0.22 higher at $119.50 and June live cattle closed $0.42 higher at $115.37. It was somewhat disappointing to see some cash cattle trade develop Thursday afternoon for steady prices given that packers have been processing cattle swiftly and given that the futures market closed higher. Seeing that Thursday's trade was only on a light development, there's still a chance that the market could push prices $1.00 higher sometime Friday. Thursday afternoon Southern live cattle traded at $112 which is steady with a week ago, and Northern dressed cattle traded from $174 to $180, though mostly at $176 to $177, which is steady to $1.00 higher than last week's weighted average.
Accumulated beef exports for 2020 totaled 851,800 metric tons (mt), up 3% from the 823,500 mt exported in 2019. Thursday's slaughter is estimated at 119,000 head, incomparable with a week ago and 5,000 head less than a year ago.
Actual slaughter data shared positive news for the week of Christmas! For the week ending Dec. 26, steer carcass weights averaged 913 pounds, which is 8 pounds less than the previous week and heifers also dropped 8 pounds from the last report to average 839 pounds.
Boxed beef prices closed higher: choice up $0.54 ($205.81) and select up $0.51 ($196.59) with a movement of 176 loads (112.19 loads of choice, 21.48 loads of select, 14.20 loads of trim and 28.00 loads of ground beef).
FRIDAY'S CASH CATTLE CALL: Steady to $1.00 higher. Packers are playing their cards wisely this week and not seeming to be in any rush. Meanwhile feedlots grew a little worried that the week's cash cattle market had yet to be tested and let some cattle go Thursday afternoon for steady prices. More cattle will undoubtedly trade Friday for at least steady prices, if not potentially $1.00 stronger.
FEEDER CATTLE:
As little as a $0.01 regression in the corn market gave the feeder cattle contracts a little relief and allowed for the contracts to trade higher throughout Thursday's trade. January feeders closed $0.92 higher at $136.70, March feeders closed $1.00 higher at $137.57 and April feeders closed $1.05 higher at $139.67. Given the vast pressure that the feeder cattle contracts have been under from the rising price of corn, it's refreshing to finally have a day of stronger trade and to see the feeder cattle contracts reflect some of the demand that's been made noticeable throughout the sales this week. At Kist Livestock Auction in Mandan, North Dakota, compared to their last auction three weeks ago, feeder steers weighing 550 to 650 pounds sold $1.00 to $5.00 higher, while steers weighing 650 to 800 pounds sold steady to $3.00 lower. Feeder heifers weighing 500 to 600 pounds traded anywhere from $1.00 to $3.00 lower and those weighing 600 to 700 pounds sold $2.00 to $3.00 higher. The market's offering was mostly comprised of long time weaned calves that buyers were geared to sell, and it's important to note that calves are coming in weighing more than usual for this time of year, which can largely be attributed to the nice weather. The CME feeder cattle index for Jan. 6: up $0.43, $135.35.
LEAN HOGS:
Thursday presented the lean hog contracts with the opportunity to scale modestly higher other than in the spot February contract. February lean hogs closed $0.65 lower at $69.12, April lean hogs closed $0.05 higher at $73.05 and June lean hogs closed $0.50 higher at $84.12. The market was supported from nearly every angle as the cash market closed higher, pork cutout values closed stronger and, other than the upward resistance starting to build in the futures market, it was a fully supported market through Thursday's close. Accumulated pork exports for 2020 totaled 1,938,000 mt, up 16% from the 1,624,000 mt exported in 2019. Thursday's slaughter is estimated at 497,000 head, incomparable to a week ago and 2,000 head less than a year ago. Pork cutouts totaled 380.95 load with 338.05 loads of pork cuts and 42.90 loads of trim. Pork cutout values: up $2.17, $79.82. The CME lean hog index for Jan. 5: up $0.95, $62.42.
Thursday's actual slaughter data shared that hog carcass weights are slowly declining. For the week ending Dec. 26, live weights averaged 292 pounds (down 1 pound) and dressed weights averaged 217 pounds (down 1 pound).
FRIDAY'S CASH HOG CALL: Higher. With the support that's been evident throughout the cash hog market this week, its likely that packers will buy with vigor to round out the week.
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