GENERAL COMMENTS:
Even though the day traded in a slow manner, the cash cattle market and pork cutout prices kept the market interesting. Heading into Friday's trade, it's not likely that there will be much excitement, but the livestock complex is open. DTN will provide comments even though the USDA will not be open nor sharing any reports. Hog prices are delayed due to packer submission problems. March corn is down 9 1/2 cents per bushel and March soybean meal is down $4.50. The Dow Jones Industrial Average is down 90.55 points and NASDAQ is down 24.66 points.
LIVE CATTLE:
The live cattle contracts didn't end up rounding out the day higher, but the advancements made in the cash market this past week far outweigh Thursday's slightly lower close. February live cattle closed $0.75 lower at $139.97, April live cattle closed $0.45 lower at $144.87 and June live cattle closed $0.45 lower at $139.07. The South hadn't traded any cattle before the noon hour as Southern feedlots were sticking to their guns and demanding $138 but come midafternoon some lots in Kansas and Texas caved and left cattle walk for $138. The rest of the South has yet to trade and based on multiple sources, most feedlots are willing to carry cattle over into next week before they sell them at $138. Largely, Southern feedlots want $140 and given the substantial amount of leverage they've recently gained, it's likely that they will either get their full asking price or roll the cattle over. Meanwhile, trade in the North is done with as cattle traded $3.00 to $5.00 higher earlier in the week. With Northern feedlots being light on their numbers of market-ready cattle, packers knew that they had to offer up a considerable amount of coin before feedlots were going to let any cattle sell. There could be some more cattle trade in the South but it's looking like the bulk of the week's trade is done with. Thursday's slaughter is estimated at 117,000 head, steady with a week ago and 23,000 head more than a year ago.
Thursday's actual slaughter data shared that for the week ending Dec. 18 steer carcass weights fell by 5 pounds from the previous report to average 924 pounds, and heifers fell by 1 pound to average 850 pounds.
Beef net sales of 6,300 mt for 2021 were down 48% from the previous week and 55% from the prior four-week average. The three largest buyers were Japan (2,600 mt), South Korea (1,800 mt) and China (1,000 mt).
Boxed beef prices closed mixed: choice down $0.45 ($265.26) and select up $1.14 ($258.23) with a movement of 102 loads (66.71 loads of choice, 8.37 loads of select, 12.92 loads of trim and 14.23 loads of ground beef).
FRIDAY'S CASH CATTLE CALL: Steady in the North, potentially $2.00 higher in the South. The only question left on the table heading into Friday's trade for the cash cattle market is whether or not packers will give Southern feedlots another $2.00 to reach their $140 asking prices or if feedlots are going to carry the cattle over into next week.
FEEDER CATTLE:
The live cattle market may have not been able to lend much support to the feeder cattle complex, but upon seeing the corn market's $0.09 to $0.10 regression, feeders shot higher. While it is indeed exciting for feeders to see weaker corn and a rallying cash cattle market, it's extremely exciting to look ahead to next week's market as sale barns will likely be met with robust interest. With not having had a sale in the last two weeks, sale barns will likely have large receipts and a crowd full of interested buyers. And with the cash cattle market striding out and demanding more money, order buyers will be anxious to get cattle bought, trucked home and on feed to hopefully capture some of the profitability in the cash cattle market themselves. January feeders closed $0.45 higher at $166.32, March feeders closed $0.95 higher at $169.00 and April feeders closed $0.80 higher at $171.85. The CME Feeder Cattle Index for Dec. 29: up $4.10.
LEAN HOGS:
The lean hog market was rather disappointed in the day's export report, and even though pork cutouts saw a staggering increase, the market opted to trade cautiously after having rallied aggressively on Wednesday. February lean hogs closed $1.12 lower at $82.70, April lean hogs closed $0.62 lower at $87.82 and June lean hogs closed $0.57 lower at $98.47. Upon seeing Thursday morning's heightened pork cutout values, I expected the afternoon prices to be somewhat better but certainly not as good as what they ended up being. And while the loin set out and closed with the most aggressive gains (up $18.32), one can't overlook the jump in belly prices which closed $12.38 stronger, and the $3.73 jump in hams. Pork cutouts total 363.61 loads with 341.92 loads of pork cuts and 21.69 loads of trim. Pork cutout values: up $7.06, $91.35. Thursday's slaughter is estimated at 463,000 head, 9,000 head more than a week ago and 45,000 head more than a year ago. Wednesday's hog slaughter was revised to 474,000 head, 5,000 head less than what was originally stated. The CME Lean Hog Index for Dec. 28: up $0.38, $72.20.
Thursday's actual slaughter data for the week ending Dec. 18 shared that both live and dressed hog weights scaled lower. Live carcasses averaged 291 pounds (down 2 pounds from the previous week) and dressed carcasses averaged 217 pounds (down 1 pounds from the week before).
Pork net sales of 3,200 mt for 2021 were down 89% from the previous week and 90% from the prior four-week average. The three largest buyers were Mexico (14,700 mt), Japan (2,500 mt) and Nicaragua (100 mt).
FRIDAY'S CASH HOG CALL: Lower. Given that next week Prop 12 goes into effect, I don't foresee Friday's cash market being that strong.
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