GENERAL COMMENTS:
Livestock futures have seen mostly profit-taking selling activity through the first part of Thursday's trading session, despite positive weekly export sales numbers for both beef and pork, which helped to confirm some of the recent bullish recovery in these U.S. markets. The cash cattle market has remained quiet so far this week, although it will be closely watched for developments Thursday and Friday. Asking prices are noted in the South at $163. March corn is down 2 cents per bushel and March soybean meal is down $1.70 per ton. The Dow Jones Industrial Average is down 204 points.
LIVE CATTLE:
A friendly weekly export-sales report Thursday morning wasn't enough to spur futures traders to fresh contract highs just yet. February live cattle are up $0.025 at $162.575, April live cattle are down $0.575 at $164.025 and June live cattle are down $0.40 at $159.80. Specifically, net weekly sales of beef from the United States reached 28,100 metric tons, mostly destined for Japan, South Korea, and -- notably -- China. This was 34 percent over the previous four-week average pace. Select boxed beef prices have been churning higher and are now $50 over their October low in recognition of this resilient demand, both domestic and international. This helps packer profit margins, which have slipped in recent weeks as they've had to pay up for cattle. There is a chance they'll have to cough up even more when cash cattle trade gets rolling Thursday or Friday, with asking prices in the South at $163, which would be another $2 week-over-week gain on top of last week's gain.
Thursday's slaughter is estimated at 124,000 head, which is 2,000 fewer than a week ago but 1,000 more than a year ago at this time.
Boxed beef prices made another big jump higher Thursday morning: choice up $3.86 ($279.53) and select up $2.10 ($263.29), with a movement of only 51 loads (29.19 loads of choice, 3.89 loads of select, 3.6 loads of trim and 14.7 loads of ground beef).
FEEDER CATTLE:
It's "Turnaround Thursday" in the feeder cattle futures market, with a morning sell-off giving back most of Wednesday's gains. March feeders are down $0.825 at $186.50, April feeders down $0.45 at $190.70 and May feeders are down $0.275 at $194.70. There aren't huge volumes of futures contracts trading yet during this session, so there is every chance for a change in direction before the day is done. Likewise, there aren't huge volumes of calves coming through sale barns at this time of year, especially not in the Midwestern regions where a winter storm is snarling travel and logistics on Thursday, but for producers who are calving now and looking ahead to lock in profitable calf prices in the fall of 2023, the futures and options markets are offering impressive opportunities. The October contract remains within $1 of its contract time high from last week: $214.
LEAN HOGS:
A huge jump in pork export sales was shown in Thursday's report, with weekly net sales at 45,000 metric tons or 56% more than the previous week. High volume doesn't always mean high prices, though, and until Thursday's $2 boost, the overall pork cutout had struggled to pull more than $4 off its January low. April lean hogs are down $0.525 at $85.975, May lean hogs are down $0.60 at $95.10 and June lean hogs are down $0.675 at $103.625. Packers have shown a willingness to keep inching upward with their lean hog bids so far this week, and there is a growing sense that the hog and pork markets are ready to move past their recent bottoming-out levels. However, in the low volume of futures trade seen so far Thursday morning, this vague sense isn't enough to counteract the broader sell-off in the livestock sector. Thursday's slaughter is projected at 485,000 head, which is even with a week ago and 33,000 more than a year ago at this time.
The projected CME Lean Hog Index for Feb. 14 is up $0.44 at $75.62 and the actual index for Feb 13 was up $0.54 at $75.18. Due to confidentiality, Thursday's Daily Direct Morning Hog Report didn't show Thursday's weighted average price on 3,767 head, but the five-day rolling average is $75.39. Pork cutouts total 147.89 loads with 136.49 loads of pork cuts and 11.40 loads of trim. Pork cutout values: up $2.14 to $83.08.
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