GENERAL COMMENTS
It was mostly a strong day for the livestock complex as the cash cattle market has only partially traded and with the lean hog complex able to see its futures contracts close higher amid strong pork cutout values. The feeder cattle contracts closed lower as corn prices were higher, but cattlemen did duly note the strong tone in the cash market given that prices in the North held steady. Hog prices closed lower on the Daily Direct Afternoon Hog Report, down $1.70 with a weighted average of $70.57 on 4,933 head. March corn is up 7 3/4 cents per bushel and March soybean meal is up $11.60. The Dow Jones Industrial Average is up 205.57 points.
LIVE CATTLE:
Some people love the anticipation and buildup of a movie's climax, and cattlemen love the anticipation in the cash cattle market when cattle wait to trade until Thursday afternoon and/or on Friday. It's a beautiful thing to see the market achieve full price discovery on a week in, week out basis and to see feedlot managers and owners working the market to its fullest potential. There was a thin movement of cattle traded in Iowa and Nebraska for mostly $248, which is fully steady with last week's weighted average. The big question moving forward is: What will cash cattle prices do on Friday in the South? And, for the feedlots in the North that opted not to sell Thursday, could they still see higher prices? To answer the second question, I tend to believe so, given that packers are in need of cattle. The futures market didn't close higher but largely that was because traders were dying to see what happened in the cash market and trade waited to develop until late in the day. February live cattle closed $0.87 lower at $156.72, April live cattle closed $1.02 lower at $160.52 and June live cattle closed $0.82 lower at $157.37.
Thursday's slaughter is estimated at 126,000 head, 6,000 head more than a week ago and 5,000 head more than a year ago.
Thursday's actual slaughter data shared that for the week ending Jan. 14 steers averaged 914 pounds, which is 5 pounds less than the previous week and 8 pounds lighter than a year ago. For the same week, heifers averaged 833 pounds, which is 2 pounds heavier than the previous week but 18 pounds lighter than a year ago.
Beef net sales of 25,100 mt for 2023 were primarily for South Korea (10,00 mt), Japan (4,400 mt) and China (4,200 mt).
Boxed beef prices closed mixed: choice up $0.47 ($268.75) and select down $0.32 ($251.48) with a movement of 120 loads (77.28 loads of choice, 16.66 loads of select, 10.48 loads of trim and 15.19 loads of ground beef).
FRIDAY'S CATTLE CALL: $1.00 higher. I believe that feedlots know they can milk more money out of this market and that's why some have opted to wait until Friday to trade cattle.
FEEDER CATTLE:
As the corn market grew stronger throughout the day, the feeder cattle complex closed lower as the sight of the nearby corn contracts closed $0.06 to $0.07 higher was too much for the market to bear. The cash cattle market did see a thin movement of cattle trade in the North -- and prices were steady with last week's weighted average -- but that support wasn't enough to offset the pressure added by the corn complex. March feeders closed $0.90 lower at $182.85, April feeders closed $1.35 lower at $187.00 and May feeders closed $1.30 lower at $191.27. At Winter Livestock Auction in Pratt, Kansas, compared to last week, feeder steers weighing 450 to 900 pounds traded steady to $5.00 higher. However, steers weighing 550 to 600 pounds sold up to $10.00 higher. Feeder heifers weighing 400 to 900 pounds sold steady to $5.00 higher. Slaughter cows traded $10.00 higher. Feeder cattle supply over 600 pounds was 81%. The CME Feeder Cattle Index for Jan. 25: up $1.02, $178.80.
LEAN HOGS:
The momentum that the lean hog complex possessed early in the day stuck with the market through closing as traders drove the contracts higher early with the exciting nature of the day's export report and then kept the contracts trading higher as pork cutout values closed higher too. It's not surprising that cash hog prices closed lower as packers were aggressive early in the week and it's extremely unusual for packers to support the market early on and then later too -- they usually only do their buying early in the week when supplies are as available as they are. Pork cutouts were able to close higher as the market saw steady gains throughout the majority of the individual cuts, but the biggest day over day gain came from the loin which jumped $4.13 higher, and then by the ham which gained $3.20. February lean hogs closed $0.22 higher at $77.02, April lean hogs closed $1.67 higher at $87.00 and June lean hogs closed $1.25 higher $103.05. Pork cutouts totaled 257.36 loads with 219.87 loads of pork cuts and 37.50 loads of trim. Pork cutout values: up $1.35, $80.46. Thursday's slaughter is estimated at 491,000 head, 57,000 head more than a week ago and 17,000 head more than a year ago. The CME Lean Hog Index for Jan. 24: up $0.21, $72.32.
Pork net sales of 44,700 mt for 2023 were primarily for Mexico (17,700 mt), China (12,500 mt) and Japan (3,700 mt).
FRIDAY'S HOG CALL: Lower. Given that packers were supportive of the market early in the week, it's unlikely that they show Friday's market much interest.
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