GENERAL COMMENTS:
Week ending: 1/19/24
From Friday to Friday livestock futures scored the following changes: February Live cattle up $3.00, April Live cattle up $3.20; January Feeder cattle up $3.53, March Feeder cattle up $4.25; February Lean hogs off $1.15; February Pork cutout off $0.45, April Pork cutout off $0.00.
Following the excitement and drama in the market following the last few Cattle on Feed Reports, the January report came in as close to estimated as possible. Trade estimates were within a fraction of a percentage in not only overall cattle on feed numbers, but placements, and cattle marketings. This should help to create market stability through the entire cattle complex early next week when traders get a chance to trade the report following the weekend break. Livestock futures Friday were mixed in sluggish and generally directionless trade as traders made some last-minute position adjustments ahead of the Cattle on Feed Report, and trimmed gains following Thursday's aggressive market rally in Cattle Futures. Lean hog futures remained stuck in a narrow but mixed pattern with traders comfortable, allowing previous market moves to coast into the weekend break. Hog prices closed lower on the Daily Direct Afternoon hog report, down $1.42 with a weighted average of $46.62 on 2,956 hogs. March corn closed up 1 1/2 at $4.455 and March soybean meal closed down $4.80 at $356.50. The Dow Jones Industrial Average is up 395.19 at 37,863.80.
LIVE CATTLE:
Live cattle futures closed mixed Friday afternoon following a slight market pullback after aggressive triple-digit gains held Thursday. End-of-the-week trimming activity seemed to be the main focus of most contract months following the ability to push prices above short-term resistance levels earlier in the week, and looking forward to the results of the most recent Cattle on Feed Report, which was released following the closing bell Friday afternoon. Nearby futures posted narrow to moderate losses of 12 to 45 cents per cwt, while differed contracts posted narrow gains. The cattle on feed report posted total inventory of cattle in commercial feedlots at 11.93 million head. This is 102% of year-ago levels but spot on with pre-report estimates. Even though total inventory levels are higher than a year ago, cattle on feed numbers fell 81,000 head from the previous report in December. Cash cattle trade is starting to slowly develop following the cattle on feed report Friday afternoon. A few cattle have been reported sold in Nebraska at $274 dressed basis, which would be $1 per cwt higher than last week's weighted average price. Additional bids of $170 to $172 live basis in the South and $272 dressed basis in Iowa are still being passed upon. Asking prices still remain firmly planted at $175 and higher live in the South, and $275 and higher in the North dressed basis. It is uncertain just how many more cattle will be reported sold, but evening trade is a strong possibility. Given the weather conditions in several areas of Northern cattle country, feeders may be very willing to hold onto cattle until next week if bids do not quickly improve.
February live cattle closed $0.45 lower at $174.375, April live cattle closed $0.28 lower at $177.375 and June live cattle closed $0.20 lower at $174.325.
Friday's slaughter is estimated at 121,000 head, 16,000 head more than a week ago and 3,000 head less than a year ago. Saturday slaughter is expected at 34,000 head. This would move weekly slaughter estimates to 617,000 head.
Boxed beef prices closed lower: choice down $0.79 ($295.5) and select down $0.71 ($283.05) with a movement of 111.18 loads (76.21 loads of choice, 11.33 loads of select, 4.05 loads of trim and 19.59 loads of ground beef).
MONDAY'S CATTLE CALL: Steady to $1 Higher. Given the limited movement at this point in cash cattle trade, Monday activity is still expected to remain sluggish, but feeders are likely focused on moving the needle higher when pricing cattle for sale next week.
FEEDER CATTLE:
Feeder cattle futures remained mixed through the end of the session Friday following early morning softness in nearby contracts. Traders showed very little market direction at the end of the week, but following the aggressive triple-digit gains seen Thursday, the main focus turned to position squaring as nearby feeder cattle futures broke through short-term resistance levels during the week, and traders remained focused on the upcoming cattle on feed report. January's cattle on feed report was released following market close Friday, posting little to no surprises in the report as a whole and especially in cattle placement numbers. Over the last several months, higher-than-expected cattle placement numbers seen in this report has been the driver for most of the market volatility which has developed across the cattle complex. As traders expect that the seasonal peak of cattle placement has well passed, traders are now focusing on the potential of tighter supplies in the coming months.
January feeders closed $0.83 lower at $230.1, March feeders closed $0.60 lower at $231.95 and April feeders closed $0.28 lower at $237.475. The CME Feeder Cattle Index for January 17: down $0.03, $227.26.
LEAN HOGS:
Lean hog futures remained quietly traded once again Friday. The activity and focus of most livestock trade pointed toward the cattle complex over the past couple of days left most lean hog markets to wander in mixed but narrow trading ranges. Continued underlying firmness continues to be seen in pork values over the past couple of weeks. This is likely to bring about further support through the complex, but at the same time is not expected to aggressively move prices out of the current market range in the immediate future. The focus on strong supply levels with stable demand through the first quarter of 2024, will likely continue to leave nearby contracts trading at a significant discount to summer lean hog contract prices.
February lean hogs closed $0.35 lower at $70.75, April lean hogs closed $0.30 lower at $78.15 and May lean hogs closed $0.13 lower at $83.975. Friday's hog slaughter is estimated at 482,000 head, 158,000 head more than a week ago and 4,000 head less than a year ago. Saturday hog slaughter is expected at 365,000 head. This would move the weekly slaughter total to 2.65 million head. Pork Cutouts totaled 245.18 loads with 215.38 loads of pork cuts and 29.80 loads of trim. Pork cutout values are down $0.17 at $88.56.
The CME Lean Hog Index for January 17: up $0.53, $67.87.
MONDAY'S HOG CALL: Steady. Following mixed futures trade at the end of the week and a slight pullback in cash hog and pork cutout values, it is expected that initial packer bids will be steady early next week.
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