GENERAL COMMENTS
Triple-digit gains in feeder cattle futures and fresh contract highs in live cattle futures leant a bullish tone even to the otherwise moribund lean hog market Thursday. In the cash cattle market, asking prices remain around $158 to $160 in the South, and $252-plus in the North, waiting to be tested on Friday. The National Direct Afternoon Hog Report showed purchased swine prices down $0.10 to a weighted average of $72.93 on 7,993 head. Prices ranged from $67 to $77, and the 5-day rolling average is now $71.78. March corn moved down 5 3/4 cent to $6.75 1/4 per bushel and March soybean meal closed up $7.10 per ton to $491.80. The Dow Jones Industrial Average was down 39.22 points and the NASDAQ was up 440.04 points.
LIVE CATTLE:
Live cattle futures moved confidently to fresh contract highs Thursday after an encouraging weekly export-sales report and amid the long-term implications of the scant cattle inventory. The February contract closed up $1.325 at $159.75; the April contract closed up $1.60 at $163.825, and the June contract closed up $1.30 at $160.00. It remains to be seen if the bullish tone from futures trade Thursday will carry any influence in the cash cattle market where both packers and producers continue to be locked in a standoff without any significant trade volume to report probably until late Thursday afternoon or Friday. Asking prices remain around $158 to $160 in the South, and $252-plus in the North. For reference, these asking prices are $2 to $4 higher than last week's trade ($156 Southern; $248 Northern) but coming after the vindication of this week's dire Cattle Inventory report (down 3.6% year over year, with the fewest beef cows since 2014), a bullish surge may be worth asking for.
Boxed beef prices higher: choice up $0.03 ($265.10) and select up $0.88 ($253.66), with a movement of 150 loads (107.43 loads of choice, 18.64 loads of select, 7.21 loads of trim and 16.38 loads of ground beef).
FRIDAY'S CASH CATTLE CALL: $1.00 to $2.00 higher. Given that packers are short bought, prices will likely turn higher this week when cattle trade.
FEEDER CATTLE:
Feeder cattle futures contracts led the triple-digit gains in the livestock sector Thursday. At the end of the session, the March feeder cattle contract was up $2.675 at $185.925, the April contract was up $2.125 at $190.075, and the May contract was up $1.85 at $194.25. Not even a fresh jump in soybean meal prices could dim the excitement of futures buyers, and this session posted the highest daily trading volume since last fall. The April contract, for instance, is now about $5 off its contract high from August. Actual movement of calves into or out of feedlots may be limited this week amid rotten winter weather in the South.
LEAN HOGS:
Although the lean hog futures chart must still be described as being in a downward trend through 2023 so far, Thursday was an exception to the losses. The February lean hog contract closed up $1.375 at $75.35; the April contract closed up $1.70 at $86.00; and the May contract closed up $1.50 at $95.275. These gains owe more to the outside markets -- including the influence of the bullish cattle futures trade Thursday -- than to any particular hog supply or demand argument. A relatively friendly movement from the Federal Reserve this week (raising interest rates "only" 0.25 percent) kept the funds busy reallocating capital into risk assets Thursday. The afternoon pork cut-out showed the overall carcass value up $2.55 to $81.50. There were 324.71 total loads (290.90 loads of cuts and 33.81 loads of trim). The CME Lean Hog Index for Jan. 31: down $0.07, $72.51, and the projected Index for Feb. 1: up $0.34, $72.85.
FRIDAY'S CASH HOG CALL: Steady. Packers have been handling large numbers of market-ready hogs lately, but if cutout values can stop falling, they may find current price levels affordable.
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