GENERAL COMMENTS:
The live cattle and lean hog contracts closed higher heading into the weekend, but the feeder cattle contracts grew leery of the corn market's modest rally. Hog prices closed lower on the National Direct Afternoon Hog Report, down $2.49 with a weighted average of $63.84 on 3,767 head. March corn is up 8 3/4 cents per bushel, and March soybean meal is down $3.30. The Dow Jones Industrial Average is down 201.81 points, and the NASDAQ is up 86.94 points. From Friday to Friday, livestock futures scored the following changes: February live cattle up $0.65, April live cattle up $0.07, January feeder cattle up $0.60, March feeder cattle down $0.30, February lean hogs up $1.25, April lean hogs up $1.10.
LIVE CATTLE:
While it's nice to round out the week higher, one can't help but feel like there's a thorn in your side with how the cattle market shook out this week. Feedlots lost $2 in the cash trade, slaughter plants aren't running at full capacity, and no one knows when this spike in COVID is going to pass and life is going to get back to "normal." It's especially concerning for the cattle market as feedlots are worried about supplies backing up and ultimately costing the market its spring rally. February live cattle closed $0.97 higher at $137.97, April live cattle closed $1.15 higher at $142.12 and June live cattle closed $0.77 higher at $137.62. Throughout the week, Southern cash cattle traded for $134 to $137, mostly at $136 to $137, which is steady to $2 lower than last week. Northern dressed cattle traded from $217 to $220, mostly at $218 which is $2 lower than a week ago.
Friday's slaughter is estimated at 113,000 head -- 1,000 head more than a week ago and 2,000 head less than a year ago. Saturday's kill is projected to be around 53,000 head -- 5,000 head less than a week ago. This week's total slaughter is estimated at 621,000 head -- which is 1,000 head more than a week ago but 31,000 head less than a year ago.
Boxed beef prices closed higher: choice up $1.45 ($284.31) and select up $1.21 ($273.97) with a movement of 86 loads (47.86 loads of choice, 16.31 loads of select, 10.97 loads of trim and 10.61 loads of ground beef). Throughout the week, choice cuts averaged $280.27 (which is $12.24 higher than a week ago) and select cuts averaged $270.57 (which is $10.67 higher than a week ago) and the week's total movement of cuts, grinds and trim totaled 622 loads.
TUESDAY'S CASH CATTLE CALL: $1 to $2 lower. Unless packing plants can run at full capacity, cash prices will likely be lower.
FEEDER CATTLE:
Even though the live cattle contracts closed higher, the feeder cattle contracts couldn't round out the day fully higher as the corn market's $0.05 to $0.08 higher close in the nearby contracts shook feeders' confidence. January feeders closed $0.22 lower at $162.70, March feeders closed $0.35 lower at $166.37 and April feeders closed $0.12 lower at $170.35. Throughout the week, demand was phenomenal for lightweight calves and lighter-weight feeder cattle, but the feeders that were much above 800 pounds didn't see as much interest as they'll no longer make April. Country feeders who have access to their own corn have been aggressive in the markets, which has been a huge help. But feedlots who must outsource their feed have had to pay close attention to their cost of gains as corn prices have been choppy. The weekly Oklahoma Cattle Auction summary shared that, throughout the entire state compared to last week, feeder steer sold steady to $3 lower, except those weighing 600 to 700 pounds, which traded $6 higher, and feeder heifers traded steady to $2 higher. Steer calves traded $3 to $10 higher, and heifer calves sold $2 to $5 stronger. The CME feeder cattle index 1/13/2022: down $0.22, $161.79.
LEAN HOGS:
What a week. Even though nothing drastically rocked the markets this week, the violent swings in pork cutout values, wide price ranges in the cash market, lousy processing speeds and the ongoing spread of African swine fever in foreign countries was enough to keep the market alive, alert and awake. The continued spread of ASF in Italy and Thailand is likely what drove the futures market higher Friday afternoon as the market desperately hopes that, first, ASF never lands on U.S. soil, and second, that export opportunities will become available. February lean hogs closed $3.05 higher at $80.90, April lean hogs closed $3.12 higher at $88.45 and June lean hogs closed $2.20 higher at $99.90. It's not surprising to see the selloff in pork cutout prices given that Thursday's jump was a record for the market. It's concerning to see such volatile swings in the market, as it creates an uneasy and untrusted environment. Pork cutouts totaled 358.21 loads with 329.86 loads of pork cuts and 28.34 loads of trim. Pork cutout values: down $6.21, $89.07. Friday's kill is estimated at 438,000 head -- 15,000 head less than a week ago and 59,000 head more than a year ago. Saturday's kill is projected to be around 174,000 head -- 88,000 head less than a week ago. The CME lean hog index 1/12/2022: down $0.46, $74.60.
TUESDAY'S CASH HOG CALL: Steady. Until there's a better understanding of how aggressive processing speeds will run next week, it's likely that packers are cautious about their cash market purchases after buying aggressively throughout this week's trade.
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