GENERAL COMMENTS:
Upon seeing Thursday's bullish export report, both the live cattle and lean hog contracts were able to rally and eventually the feeder cattle market jumped on board too. The markets will likely trade gingerly throughout Friday's trade as the market enters the week of Christmas. Hog prices closed lower on the National Direct Afternoon Hog Report, down $0.98 with a weighted average of $60.09 on 4,614 head. March corn is up 5 1/2 cents per bushel and January soybean meal is up $0.10. The Dow Jones Industrial Average is down 29.79 points and NASDAQ is down 385.14 points.
LIVE CATTLE:
Thankfully, the live cattle contracts were finally given an opportunity to rally amid a strong export report and the complex jumped at the opportunity. December live cattle closed $0.27 higher at $135.27, February live cattle closed $0.47 higher at $137.05 and April live cattle closed $0.02 higher at $140.95. By and large, the week's cash cattle trade was already done with before Thursday came, but the market did see a little clean-up trade Thursday. So far this week, Southern live deals have marked at $134 to $138, mostly $136 to $138 -- $3 to $4 lower than last week's weighted averages. Northern dressed business has been marked at $216 to $220, mostly $217 to $220 -- steady to $3 lower than last week's weighted average basis Nebraska. The reduction in Wednesday's slaughter stems from the fact that the windstorm that blew across the Midwest on Wednesday limited production in some plants. Thursday's slaughter is estimated at 122,000 head, steady with a week ago and 9,000 head more than a year ago. Wednesday's slaughter was revised to 113,000 head, 7,000 head less than what was originally stated.
Beef net sales of 17,100 mt for 2021 were up noticeably from the previous week but down 3% from the prior four-week average. The three largest buyers were Japan (4,700 mt), South Korea (4,500 mt) and China (3,700 mt).
Thursday's actual slaughter data shared that, for the week ending Dec. 4, steers averaged 928 pounds (up 2 pounds from the week before and a new high for the 2021 calendar year). Heifers for the same week averaged 851 pounds (3 pounds heavier than the week before, there were three weeks in January of 2021 where heifers averaged 851 pounds as well).
The fact that carcass weights hit a new high for the year summons some attention to the matter. First, it's not unusual to see higher weights this time of year but heading forward into 2022, the market should see carcass weights lessening through the first and second quarter of the year. Secondly, heavier carcass weights can be costly for the market if demand isn't strong and processing speeds aren't running at max capacity. Cattle enthusiasts pray that both are strong in 2022, but there's always a chance that one or the other (or both) are lousy, and that creates havoc for the market as supplies back up and cash cattle prices wane lower. Remember what happened when cattle backed up in 2020; it takes a lot longer than most assume to get current again.
Boxed beef prices closed higher: choice up $2.71 ($262.97) and select up $0.69 ($248.14) with a movement of 140 loads (89.35 loads of choice, 27.79 loads of select, 4.12 loads of trim and 18.90 loads of ground beef).
FRIDAY'S CASH CATTLE CALL: Steady. Seeing that cattle have traded in both regions, prices will likely remain steady.
FEEDER CATTLE:
The feeder cattle market didn't close fully higher, but the May 2022, August 2022 and September 2022 contracts were able to close higher amid the corn market's $0.05 rally. It helped that the live cattle contracts nearly all closed higher and that the overall morale throughout the marketplace was stronger than the days earlier in the week. January feeders closed $0.85 lower at $162.57, March feeders closed $0.15 lower at $164.32 and April feeders closed $0.07 lower at $167.27. At La Junta Livestock Commission in La Junta, Colorado, compared to last week, steers weighing 300 to 400 pounds sold steady, steers weighing 400 to 600 pounds traded $5.00 to $8.00 lower, steers weighing 600 to 700 pounds traded steady to $3.00 lower and steers weighing over 700 pounds traded steady. Heifer weights weren't as comparable to the prior week's sale. The CME Feeder Cattle Index for Dec. 15: down $0.69, $161.08.
LEAN HOGS:
The lean hog contracts rallied throughout Thursday's trade as the market saw excellent demand from the day's export report. Still, the market doesn't exactly know how all Prop 12's business is going to affect the market entirely, but producers are hopeful that heightened demand from foreign countries will help offset the distribution changes here in the US. The reduction in Wednesday's slaughter stems from the fact that the windstorm that blew across the Midwest on Wednesday limited production in some plants. Pork cutouts total 327.54 loads with 296.28 loads of pork cuts and 31.26 loads of trim. Pork cutout values: up $3.66, $91.49. Thursday's slaughter is estimated at 463,000 head, 10,000 head less than a week ago and 6,000 head less than a year ago. Wednesday's slaughter was revised to 437,000 head, 30,000 head less than what was originally stated. The CME Lean Hog Index for Dec. 14: up $0.20, $72.30.
Thursday's actual slaughter data shared that, for the week ending Dec. 4, live hogs averaged 293 pounds (up 2 pounds from the week before) and dressed weights averaged 218 pounds (up 1 pound from the week before).
Pork net sales of 31,100 mt for 2021 were up 58% from the previous week and 20% from the prior four-week average. The three largest buyers were Mexico (22,700 mt), Canada (2,700 mt) and Japan (2,100 mt).
FRIDAY'S CASH HOG CALL: Weaker. With the market heading into the Christmas holiday week, it's doubtful that packers are aggressive in Friday's market.
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