GENERAL COMMENTS:
It was a mixed week for the livestock contracts as the lean hog market outperformed what most thought possible, but the live cattle and cash cattle markets traded rather disappointingly. Heading into next week's trade, the livestock enthusiasts will be intensely watching both markets.
Hog prices closed lower on the National Direct Afternoon Hog Report, down $3.64 with a weighed average of $81.04 on 5,189 head. May corn is up 13 cents per bushel and May soybean meal is up $1.60. The Dow Jones Industrial Average is up 572.16 points and NASDAQ is up 196.68 points.
Friday to Friday livestock futures scored the following changes: April live cattle down $0.97, June live cattle down $0.42; March feeder cattle down $4.08, April feeder cattle down $3.55; April lean hogs up $0.02, June lean hogs up $1.25.
LIVE CATTLE:
After a less than desirable week, the live cattle contracts at least got to round out the week with a higher close. The biggest disappointment this week was, by far, this week's cash cattle market, in both its time and price. Packers love to say that they "don't need cattle," but then why were they bidding as early as Wednesday? If they were able to bid $114 on Wednesday, think about what their bids could have been Friday morning if the market wouldn't have traded! Psychology may be one of the biggest unspoken market factors in the cattle industry, and we need to pay more attention to it. Thankfully, week in and week out, we are given another chance to sharpen our skills and to sit down at the poker table once again -- hopefully next week's trade is stronger. April live cattle closed $0.47 higher at $119.02, June live cattle closed $1.02 higher at $118.00 and August live cattle closed $0.85 higher at $117.07. Cattle that traded this week in the Southern Plains sold mostly for $114, though some sold for $113, and Northern dressed cattle sold for $180. Friday's slaughter is estimated at 109,000 head, 10,000 head less than a week ago and year ago. Saturday's slaughter is projected to be around 71,000 head. This week's slaughter is estimated at 665,000 head, 1,000 head less than a week ago and 16,000 head more than a year ago.
Boxed beef prices scaled lower throughout the week as coolers are mostly restocked from the shortage that was induced by bad weather two weeks ago that limited travel. Throughout the week, choice cuts averaged $234.39 (down $6.00 from last week) and select cuts averaged $224.12 (down $5.65 from last week) with a total movement of cuts, grinds, and trim of 556 loads.
Boxed beef prices closed lower: choice down $2.55 ($231.33) and select down $0.83 ($220.85) with a movement of 112 loads (67.34 loads of choice, 18.21 loads of select, 15.84 loads of trim and 11.05 loads of ground beef).
MONDAY'S CASH CATTLE CALL: Steady to somewhat higher. Upon two weeks of processing 666,000 head and then 665,000 head, packers are going to need to restock their inventory. Packers will argue that, with boxed beef prices seasonally trending lower, cash prices need to reflect such changes.
FEEDER CATTLE:
It was a tough week for the feeder cattle contracts as a weak cash cattle market and higher cost of gains give cattle buyers little room to work with. March feeders closed $0.50 lower at $134.60, April feeders closed $0.05 higher at $139.02 and May feeders closed $2.50 higher at $145.15. Compared to last week, Oklahoma's Weekly Cattle Auction Summary shared that feeder steers sold steady to $4.00 lower and feeder heifers sold $1.00 to $4.00 lower. Steer calves traded $3.00 to $5.00 higher and feeder heifers sold steady to $4.00 higher. Demand was moderate for feeder cattle, as lower cattle futures and increased cost of gains in the feed yard limits buyer's aggression in a hurry. Both steer and heifer calves traded stronger as warmer temperatures reminded cattlemen that spring isn't that far away. The CME Feeder Cattle Index for March 4: down $1.22, $134.85.
LEAN HOGS:
What a week it was for the lean hog complex! The lean hog market surpassed what all anticipated and performed far better this week than initially expected. As Friday's market rounds out the week, the question is, "what will the market do next week?" Yes, I understand that this week performed far better than assumed and the futures complex kept its momentum through closing, but seeing that packers finally let the cash market scale lower could mean that their days of rallying the market are numbered. Watching next week's slaughter pace will be one of the best indications on whether packers plan to keep processing speeds roaring or not. April lean hogs closed $0.12 lower at $87.17, June lean hogs closed $0.70 higher at $95.42 and July lean hogs closed $0.62 higher at $95.92. Pork cutouts totaled 290.80 loads with 246.64 loads of pork cuts and 44.15 loads of trim. Pork cutout values: up $1.62, $95.14. Friday's slaughter is estimated at 483,000 head, 5,000 head less than a week ago and 11,000 head less than a year ago. Saturday's slaughter is projected to be around 98,000 head. The CME Lean Hog Index for March 3: up $0.79, $84.06.
MONDAY'S CASH HOG CALL: Steady to somewhat lower. Seeing that packers weren't nearly as aggressive in the cash market Friday afternoon as they were the rest of the week could mean that they are sitting flush on their hog supplies.
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