It ended up being a better day for the cattle contracts than anticipated as the feeder cattle contracts closed fully higher and the live cattle market was only met with some resistance in nearby contracts. Largely the lean hog contracts traded a lot like the live cattle market as the industry faces heavy front-end supplies and continues to look for support to drive the market higher. Hog prices closed lower on the National Direct Afternoon Hog Report, down $0.52 with a weighted average of $54.48 on 7,266 head. March corn is up 7 1/4 cents per bushel and March soybean meal is down $8.30. The Dow Jones Industrial Average is down 8.22 points and NASDAQ is up 56.52 points.
The live cattle contracts mustered up all the support that the industry could afford to lend and were able to let most of the contracts close higher before the day clocked out. Both the February and April contracts closed lower, but with corn prices at the levels that they are and with packers showing weak acquisition in the cash cattle market and running slower slaughter speeds, the pressure is evident. February live cattle closed $0.22 lower at $112.25, April live cattle closed $0.17 lower at $117.47 and June live cattle closed $0.17 higher at $115.10. The South saw more interest develop throughout the afternoon and ended up trading cattle for mostly $110, but a few $111 pens were sold, which equates to being $1.00 to $2.00 softer than last week's business. The North caught some business as well with dressed deals ranging from $171 to $173, which is roughly $4.00 less than a week ago.
Wednesday's slaughter is estimated at 118,000 head -- 1,000 head more than a week ago and 6,000 head less than a year ago. Tuesday's slaughter was revised to 115,000 head. With both Monday's and Tuesday's cattle slaughter being reduced, it's likely that this week's total slaughter will come in shy of 650,000 head. There's also been some chatter that a couple of plants in Kansas will be limiting their speeds late this week and potentially extending into early next week to perform regular maintenance. One of the most impressive things about 2020's chaotic marketplace was that, even with the COVID-19 disruptions, the year's end slaughter was only 3.5% fewer head in 2020 than in 2019 (roughly 1,135,000 head less). But looking at how 2021 slaughter speeds compare to 2020's vigorous pace is a little disappointing seeing that, as of last Friday, packers have processed 254,000 fewer head of cattle thus far this year.
Boxed beef prices closed higher: choice up $1.86 ($211.00) and select up $0.97 ($199.06) with a movement of 143 loads (78.95 loads of choice, 18.37 loads of select, 18.64 loads of trim and 27.10 loads of ground beef).
THURSDAY'S CASH CATTLE CALL: Steady with the week's trend. Seeing that there's been a moderate movement in the both the North and the South, it's likely that packers try to keep the week's trend at these lower ranges.
Nearby corn contracts still closed higher, but the feeder cattle contracts were eager to trade higher after a long run of depressing, lower trade. January feeders closed $0.35 higher at $133.57, March feeders closed $0.35 higher at $134.32 and April feeders closed $0.50 higher at $136.75. The hard pill to swallow for the feeder cattle market is that, in time, higher corn prices could have a positive affect on the feeder cattle contracts, but right now the pressure remains lofty. If corn prices remain elevated (which it's looking like they are going to) feedlots will be interested in selling their fats at lower weights and replacing their pens with new feeders as the compensatory gain on feeders is far better than that on fat cattle that are topped out. Unfortunately, it will take some time to get the heavier cattle worked out of the system, but thankfully time keeps ticking on. At Miles City Livestock Commission Auction in Miles City, Montana, compared to a week ago, steer calves under 500 pounds sold mostly $10.00 lower, steers weighing 500 to 599 pounds sold steady to $3.00 higher and steers weighing over 600 pounds sold fully steady. Light weight calves were hard to sell this week as buyers were reluctant look buy calves that were going to take longer to feed. Heifers weighing 450 to 550 pounds sold $5.00 to $8.00 higher and heifers weighing over 550 pounds sold steady. Slaughter cows sold $1.00 lower and slaughter bulls sold $1.00 to $2.00 lower. The CME feeder cattle index for Jan. 12: up $0.06, $136.22.
The lean hog contracts faced some pressure in the nearby contracts while the deferred contracts were able to safeguard their levels. Not helping matters, and realistically adding to the market's pressure, was the day's weaker cutout close and softer trading cash hog market. Like we've discussed before, the market needs to work through these front-end supplies and hopefully at that point supply pressure won't be as big of an issue and allow for the market to regain some upward mobility. February lean hogs closed $1.65 lower at $66.85, April lean hogs closed $0.57 lower at $72.95 and June lean hogs closed $0.20 higher at $85.17. Pork cutouts total 383.42 loads with 347.76 loads of pork cuts and 35.66 loads of trim. Pork cutout values: down $1.06, $78.13. Wednesday's slaughter is estimated at 498,000 head, 3,000 head more than a week ago and 1,000 head more than a year ago. The CME lean hog index for Jan. 11: up $0.58, $64.49.
THURSDAY'S CASH HOG CALL: Lower. Packers have been a little less aggressive in the cash hog market and, with a mixed futures complex faced with resistance in the nearby contracts, it's likely that packers continue to let the cash market slide lower.