Thursday, February 4, 2021

Thursday Closing Livestock Market Update - Contracts Surge Higher

GENERAL COMMENTS:

The livestock complex traded back and forth throughout the early part of Thursday but as closing grew near, traders decided to invest once again in the contracts. The cash cattle market has only been lightly tested which means that once again, Friday's business will be crucial for the cash cattle market this week. Hog prices closed lower on the National Direct Afternoon Hog Report, down $0.78 with a weighted average of $61.16 on 6,566 head. March corn is down 2 cents per bushel and March soybean meal is down $2.40. The Dow Jones Industrial Average is up 332.26 points and NASDAQ is up 167.20 points.

LIVE CATTLE:

The early bird may get the worm, but feedlots know that cash is king; waiting until later in the week more often than not secures one's chances of getting more cash. With cash cattle prices still only lightly tested in the North and no bids to speak of yet in the South, Friday's cash cattle trade is going to be one worth watching. There's been a light trade reported in parts of Nebraska at $178 to $180, which is steady to mostly $2.00 higher than a week ago. Asking prices in the South remain firm at $115, and the cattle that are left to trade in the North are set at $182 to $185. We've been lucky to only experience mild winter conditions thus far, but as snow blows across Nebraska and Iowa feedlots won't mind waiting until Friday's end hour to trade their cattle. The futures market saw the cash market's gusto and even with a lower closing boxed beef market, the board closed higher. February live cattle closed $0.97 higher at $116.45, April live cattle closed $1.30 higher at $123.75 and June live cattle closed $0.72 higher at $120.20.

Thursday's slaughter is estimated at 116,000 head, 4,000 head less than a week ago and 6,000 head less than a year ago. The Cargill plant in Dodge City, Kansas, is closed through at least Monday to perform scheduled, regular maintenance -- this will reduce slaughter speeds until the plant s back up in full production.

Thursday's actual slaughter data shared that for the week ending Jan. 23 carcass weights are on the rise again. Steers averaged 926 pounds (up 1 pound) and heifers averaged 851 pounds (up 1 pound).

Beef net sales of 29,800 mt were reported for 2021, increases were primarily for South Korea (10,000 mt, including decreases of 300 mt), Japan (7,000 mt, including decreases of 700 mt) and China (7,000 mt, including decreases of 100 mt).

Boxed beef prices closed lower: choice down $1.03 ($234.25) and select down $2.95 ($220.44) with a movement of 132 loads (83.62 loads of choice, 20.29 loads of select, 13.48 loads of trim and 14.17 loads of ground beef).

FRIDAY'S CASH CATTLE CALL: Higher. Feedlots haven't waited this long in the week to trade cattle for stead money. Friday's trade will push packers into paying at least $1.00 higher if not $2.00 higher than last week's business.

FEEDER CATTLE:

Corn prices closed mixed with only mild gains seen throughout the deferred contracts while the nearby contracts closed slightly lower. Feeder cattle contracts ran with the day's opportunity and closed modestly higher in the nearby contracts. March feeders closed $0.97 higher at $139.50, April feeders closed $0.85 higher at $142.67 and May feeders closed $0.75 higher at $145.07. Friday's trade could be pushed lower if the corn contracts decide to trade higher, but if the cash cattle market can secure $1.00 to $2.00 gains the feeder cattle contracts will also be motivated to trade higher. At Winter Livestock in Pratt, Kansas, compared to a week ago, feeder steers weighing 700 to 900 pounds sold $2.00 to $4.00 lower, and steers weighing 900 to 1,000 pounds sold steady. Feeder heifers weighing 650 to 900 pounds sold $3.00 to $5.00 higher. Demand was good throughout the whole sale on a sizeable offering. The CME Feeder Cattle Index for Feb. 3: down $0.17, $136.27

LEAN HOGS:

Thursday was another powerful day for the lean hog contracts as traders wanted to let the complex slip to lower levels, but the market's fundamental drivers wouldn't let the day end that way. February lean hogs closed $1.35 lower at $71.02, April lean hogs closed $0.10 higher at $79.30 and June lean hogs closed $0.05 higher at $88.77. Starting the day out on a strong note with another excellent export report helped packers reassure their thoughts and will support the need to keep slaughter levels elevated. Given how strong Wednesday's cash hog close was it comes as no surprise to see Thursday's close somewhat weaker, but most importantly, pork cutouts were met with lofty gains once again. Pork cutouts totaled 289.34 loads with 237.78 loads of pork cuts and 51.56 loads of trim. Pork cutout values: up $5.60, $85.83. Thursday's slaughter is estimated at 466,000 head, 29,000 head less than a week ago and 26,000 head less than a year ago. The CME Lean Hog Index Feb. 2: up $0.30, $69.17.

Thursday's actual slaughter data shared that for the week ending Jan. 23 hog carcass weights were steady to somewhat lighter. Live weights averaged 295 pounds (unchanged from the previous week) but dressed weights averaged 220 pounds (down 1 pound).

Pork net sales of 46,300 mt were reported for 2021, increases primarily for China (17,900 mt, including decreases of 1,300 mt), Mexico (10,300 mt, including decreases of 500 mt) and Japan (4,000 mt, including decreases of 100 mt).

FRIDAY'S CASH HOG CALL: Steady. With Wednesday closing with exceptional gains, the rest of the week will most likely see steady if not slightly lower prices for the cash hog market. Seeing that pork is being sought with such strong demand both domestically and internationally, packers will need to keep somewhat active in the cash market to keep chain-speeds rolling.




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