GENERAL COMMENTS:
It was a powerful day for the cattle complex as both the live cattle and feeder cattle markets charged higher, thanks to the support of Wednesday's Cattle Inventory report. Excitement then spilled over into the cash cattle market which saw prices trade $3 to $5 higher than last week's weighted averages. Hog prices closed higher on the Daily Direct Afternoon Hog Report, up $0.79 with a weighted average price of $63.35 on 1,506 head. March corn is down 1 cent per bushel and March soybean meal is down $6.60. The Dow Jones Industrial Average is up 339.50 points.
Thursday's export sales report shared that beef net sales of 16,700 metric tons (mt) for 2024 were primarily for Japan (5,200 mt), China (3,300 mt) and Mexico (2,500 mt). Pork net sales of 42,900 mt for 2024 were primarily for Mexico (13,400 mt), China (12,600 mt) and Canada (4,200 mt).
LIVE CATTLE:
As time passed in Thursday's market, live cattle market's morale only grew stronger as prices stayed higher in both contracts and the countryside. Feedlot managers were empowered when they studied Wednesday's Cattle Inventory report as there's no denying that supplies will be tight for at least the next two years, and potentially longer, if liquidation practices don't ease.
February live cattle closed $2.40 higher at $179.75, April live cattle closed $2.47 higher at $183.17 and June live cattle closed $2.25 higher at $181.12.
The cash cattle market has been nothing short of impressive as trade strengthened throughout the day. Live trade has been reported in parts of Texas at $178, $3 higher than last week's weighted average. In Kansas, cattle were trading for $178 to $179, $4 to $5 higher than last week's weighted average. Northern dressed cattle sold for mostly $280, $3 higher than last week's weighted average. Thursday's slaughter is estimated at 126,000 head -- steady from a week ago and 3,000 head more than a year ago.
For the week ending Jan. 20, steers averaged 918 pounds, nine pounds less than a week ago but up three pounds from a year ago. During the same week, heifers averaged 833 pounds, 16 pounds less than a week ago and three pounds less than a year ago.
Boxed beef prices closed mixed: Choice up $0.40 ($294.94) and select down $0.92 ($283.25) with a movement of 128 loads (90.81 loads of choice, 11.08 loads of select, 4.99 loads of trim and 21.16 loads of ground beef).
FRIDAY'S CATTLE CALL: Steady with the week's trend. Given that cattle have now traded in both regions, it's likely that trade will remain steady with what's already developed.
FEEDER CATTLE:
What a day it has been for the feeder cattle complex. The more time traders spent digging into the fine details of Wednesday's Cattle Inventory report, the more bullish they became and the higher they sent the feeder cattle contracts.
March feeders closed $4.72 higher at $244.87, April feeders closed $4.37 higher at $250.52 and May feeders closed $3.90 higher at $255.70. The spot March contract is now trading at its highest level since mid-October. There's still a fair bit of time between now and spring turnout, but with feeder cattle supplies incredibly low, one could argue that the bearish days between now and then could be quite limited.
At the winter livestock auction in Pratt, Kansas, and at the mid-session point, there weren't enough steers sold for an accurate market test, but feeder heifers weighing 500-800 pounds were selling $6 to $12 higher. Feeder cattle supply over 600 pounds was 94%. The CME feeder cattle index Jan. 30, 2024: Up $1.63, $237.95.
LEAN HOGS:
Lean hog contracts didn't see as much support technically as hoped in Thursday's trade but both cash prices and pork cutout values still closed stronger. The market's slightly lower tone doesn't seem to be a retraction from the recent price surge that the market has experienced. Instead, it seems that traders were interested in supporting the cattle complex given the exciting nature of the week's Cattle Inventory report.
February lean hogs closed $0.55 lower at $75.80, April lean hogs closed $1.07 lower at $83.75 and June lean hogs closed $0.70 lower at $97.20. Carcass prices were able to close higher, thanks to the $6.79 gain in the butt and the $5.22 advancement in the ham. When combined, prices more than offset the $5.85 decline in belly. Thursday's slaughter is estimated at 482,000 head -- 2,000 head more than a week ago but 11,000 head less than a year ago. The CME lean hog index Jan. 30, 2024: Up $0.90, $72.38.
FRIDAY'S HOG CALL: Lower. Given that traders have already supported the cash market this week, it's likely they pay little attention to the cash hog market come Friday.
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