Friday Closing Livestock Market Update - Traders Tiptoe Around Complex Ahead of Close

GENERAL COMMENTS

It was a mixed day for the livestock complex as the live cattle market rallied on the wins the cash cattle market made, but both the feeder cattle and lean hog markets faced some resistance. Hog prices closed lower on the Daily Direct Afternoon Hog report, down $0.33 with a weighted average of $76.49 on 6,241 head. March corn is up 1 3/4 cents per bushel and March soybean meal is down $0.30. The Dow Jones Industrial Average is up 129.84 points.

Friday to Friday, livestock futures scored the following changes: February live cattle up $2.38, April live cattle up $0.70; March feeder cattle up $0.13, April feeder cattle down $0.22; April lean hogs up $1.95, June lean hogs up $1.08; March corn down $0.03, May corn down $0.01.

LIVE CATTLE:

Throughout Friday, the live cattle contracts traded higher as traders noted the strong price advancements made in the cash sector and continue to note the resilient nature of boxed beef prices. April live cattle closed $0.57 higher at $164.65, June live cattle closed $0.40 higher at $160.12 and August live cattle closed $0.27 higher at $159.05. As of midday on Friday, the volume of cash cattle traded in the South has been extremely thin. More trade will likely need to develop ahead of the week's end or next week's market will need to move considerably more cattle. Throughout the week Northern dressed cattle traded for a range of $252 to $258, but mostly at $256 which is $2.00 to $3.00 higher than last week's weighted average. In the South live cattle have traded for mostly $162 which is $2.00 higher than last week's weighted average. So long as demand remains high, the cash cattle market will likely keep with this upward trek.

Friday's slaughter is estimated at 121,000 head, 1,000 head less than a week and year ago. Saturday's slaughter is projected to be around 7,000 head. This week's slaughter is estimated at 627,000 head, 3,000 head less than a week ago and 43,000 head less than a year ago.

Boxed beef prices closed higher: choice up $1.49 ($281.04) and select up $3.25 ($265.89) with a movement of 70 loads (40.14 loads of choice, 10.23 loads of select, 7.20 loads of trim and 12.54 loads of ground beef). Throughout the week choice cuts averaged $275.66 ($7.77 higher than last week) and select cuts averaged $260.94 (up $6.44 from last week) and the week's total movement of cuts, grinds and trim totaled 506 loads.

TUESDAY'S CATTLE CALL: Higher. Fed cattle supplies are thin, and with demand being as strong as it is, packers will likely stay engaged and active in the cash market.

FEEDER CATTLE:

The feeder cattle complex continued to weigh the different signals it received from the live cattle/cash cattle market against the rallying corn prices. Beef demand remains incredibly strong, which has propelled cash cattle prices higher and given feeders hope that paying for these high inputs will work out in the end. March feeders closed $0.30 higher at $186.52, April feeders closed $0.15 lower at $190.45 and May feeders closed $0.12 lower at $194.35. I think it's interesting to note that both steer calf and feeder prices were lower compared to a week ago while heifer calf and feeder prices were slightly higher. The build back of our cowherd hasn't started yet, but buyers are more interested in females as they market them several different ways. The Oklahoma Weekly Cattle Auction Summary shared that, throughout the state when compared to last week, feeder steers traded $2.00 to $4.00 lower, while feeder heifers traded $3.00 to $6.00 higher. Steer calves sold steady to $2.00 lower while heifer calves traded $3.00 to $6.00 higher. Feeder cattle supply over 600 pounds was 55%. The CME Feeder Cattle Index for Feb. 16: down $0.40, $182.63.

LEAN HOGS:

The lean hog complex closed lower in most of its nearby contracts while its deferred contracts kept their modest gains through closing. One could point to the fact that both cash prices and pork cutout values closed lower, but the pullback in pork cutout values wasn't anything substantial and, when you take into account Thursday's strong export report, demand is still better off than originally assumed. Friday's weakness in the futures complex likely stemmed from the fact that corn prices were slightly higher and that traders let the market grow quite after advancing it aggressively early this week. April lean hogs closed $0.50 lower at $85.27, June lean hogs closed $0.42 lower at $102.72 and July lean hogs closed $0.35 lower at $104.60. Pork cutouts totaled 188.52 loads with 175.89 loads of pork cuts and 12.64 loads of trim. Pork cutout values: down $0.97, $82.09. Friday's slaughter is estimated at 478,000 head, 2,000 head more than a week ago and 16,000 head more than a year ago. Saturday's slaughter is projected to be around 107,000 head. The CME Lean Hog Index for Feb. 15: up $0.23, $75.85.

TUESDAY'S HOG CALL: Higher. Given that demand has been strong, packers could advance prices as early as Tuesday.

Friday Midday Livestock Market Summary - Better Interest Finds the Livestock Complex

GENERAL COMMENTS:

The livestock complex has seen better interest flow into its marketplace Friday as traders are driving most of the contracts higher into the noon hour. The cash cattle market still hasn't seen much trade develop in the South, and it looks like today's trade could hold out until the week's bitter end. March corn is up 1 3/4 cents per bushel and March soybean meal is up $0.20. The Dow Jones Industrial Average is up 26.31 points.

LIVE CATTLE:

With emboldened feedlot managers driving the live cattle complex higher, both cash prices and the futures complex is higher at Friday's midday point. There's been a little more trade reported in the Nebraska and Iowa for $257, which is fully steady with the week's business and $2.00 to $3.00 higher than last week's weighted average. Asking prices remain firm in the South at $163-plus and $260 in the North. The market desperately needs to see some more trade develop in the South before the week's end, as only a handful of cattle have traded thus far in the South for $161, which is $1.00 higher than last week's weighted average. With both the futures contracts higher and midday boxed beef prices higher, feedlots should be able to drive the market to their full asking price if they remain patient. April live cattle are up $1.07 at $165.15, June live cattle are $0.70 at $160.42 and August live cattle are up $0.40 at $159.17.

Boxed beef prices are higher: choice up $1.34 ($280.89) and select up $4.01 ($266.65) with a movement of 42 loads (26.94 loads of choice, 5.88 loads of select, zero loads of trim and 9.00 loads of ground beef).

FEEDER CATTLE:

The feeder cattle complex is in limbo as the market posts modest gains in its nearby contracts, but the deferred months are regressing as they anxiously note the mild gains in the corn complex. March feeders are up $0.57 at $186.80, April feeders are up $0.27 at $190.87 and May feeders are up $0.10 at $194.72. Helping the feeder cattle market more than anything right now is the fact that, once again this week, cash cattle prices are trending higher. In order for feedlots to justifiably pay the incredibly high input prices that come with Friday's cattle feeding industry, they need to see higher fat cattle prices and higher prices becoming the market's norm.

LEAN HOGS:

The lean hog complex has had a back-and-forth week as the market saw tremendous support early on but struggled through the week's midpoint. Come Friday, the market is again trading higher as traders see opportunity in the livestock market today. April lean hogs are up $0.70 at $86.47, June lean hogs are up $0.55 at $103.62 and July lean hogs are up $0.67 at $105.55. Not that it means that the afternoon's pork cutout value will close lower, but Friday's midday cutout carcass is lower with significant day over day declines seen in the ham (down $4.48) and the picnic (down $1.48).

The projected lean hog index for Feb. 16 is up $0.24 at $76.09, and the actual index for Feb. 15 is up $0.23 at $75.85. Hog prices on the Daily Direct National Hog Report average $76.19 ranging from $69.00 to $78.00 on 4,185 head and a five-day rolling average of $75.35. Pork cutouts total 122.93 loads with 113.92 loads of pork cuts and 9.00 loads of trim. Pork cutout values: down $1.08, $81.98.

Friday Morning Livestock Market Update - Cash Trade Waits

GENERAL COMMENTS:

Cattle trade is again waiting until the last day for business to be accomplished. Bids and offers were $2.00 to $3.00 apart Thursday and will need to come together Friday. The question is which side will decide to do business and at what price? It would seem feedlots are in a better position to win as packers will need cattle and increasing boxed beef prices indicate strong demand. Boxed beef showed strong gains Thursday with choice up $3.88 and select up $1.45. Weekly export sales were good at 28,100 metric tons (mt), up 72% from the previous week. February live cattle futures made a new contract high again Thursday. Feeder cattle were under pressure despite steady corn prices.

Hog futures were under pressure throughout the day, even though weekly export sales were strong at 45,000 mt, up 56% from the previous week with China listed as one of the top buyers. Cash was lower as expected on the National Direct Afternoon Hog report with a decline of $0.54. Cash is expected to be lower again today as it usually is on Friday. However, the strength in cutouts may influence the market with higher prices as the final print for the day is not known until after the close and is generally traded the following day. Cutouts Thursday jumped $2.12, supported by a strong gain in bellies of $6.51. Saturday slaughter is estimated at 98,000 head.

	BULL SIDE		BEAR SIDE
1)	Cash trade has waited until Friday, which is generally positive to feedlots with higher prices expected.	1)	Cattle futures are not leading cash higher. Traders are bullish but would rather wait for confirmation than add extra premium to futures.
2)	Another new contract high in February is very positive for the market. Later contracts may follow suit.	2)	Feeder cattle futures have not been following live cattle closely. Feeders have been trading sideways over the past two weeks for the March contract.
3)	Strong pork cutouts Thursday may be an indication of a trend higher as packers try to improve their margins with slightly reduced slaughter.	3)	Hog futures have not been able to hold the rally earlier in the week. The finding of ASF in a herd of hogs in Hong Kong is now old news and factored into the market.
4)	Solid export sales indicate good international demand. This will keep pork moving rather than backing up in the domestic market.	4)	The strength of pork cutouts will need to be maintained and continue or futures will fall back again.

Thursday Closing Livestock Market Update - Lower Futures Haven't Knocked Out Bullish Mood for Cattle

GENERAL COMMENTS:

Alongside surging pork and beef prices, average lean hog bids from the packers have been improving this week (before a pullback Thursday), and there is some momentum on the side of the cash cattle market too, but Thursday's livestock futures trade mostly ignored the bullish supply-and-demand arguments and instead pulled prices back to counteract gains made earlier in the week. In the cash cattle market, asking prices remain around $163 live basis, so far unmatched by packers' bids at $160. The National Direct Afternoon Hog Report showed purchased swine prices down $0.54 to a weighted average of $76.82 on 5,917 head. Prices ranged from $75 to $80, and the five-day rolling average is now $76.73. March corn closed down 1/4 cent to $6.76 per bushel and March soybean meal closed up $0.30 per ton to $491.40. The Dow Jones Industrial Average was down 431.66 points and the NASDAQ was down 245.41 points.

LIVE CATTLE:

The live cattle futures market can only be described with bullish supply-and-demand fundamentals and a bullish trend on the chart, but they can't go up every day, and they mostly didn't on Thursday. The February contract closed up $0.225 at $162.775; the April contract closed down $0.525 at $164.075, and the June contract closed down $0.475 at $159.725. Boxed beef prices have been moving higher by leaps and bounds this week, supported by resilient demand from U.S. grocery shoppers but also by eager foreign buyers, as seen in Thursday's friendly export sales report. In the cash cattle market, it's the usual standoff between feedlots who note these rip-roaring gains in beef prices and are asking for $163 in the South (a $2 gain over last week's trades), versus packers who have held off so far this week with nothing more than a few token bids several dollars below asking prices, specifically $160 in Iowa (live basis) or $256 in Nebraska (dressed basis).

Boxed beef prices significantly higher: choice up $3.88 ($279.55) and select up $1.45 ($262.64), with a movement of 106 loads (73.92 loads of choice, 9.6 loads of select, 5.24 loads of trim and 17.43 loads of ground beef).

FRIDAY'S CASH CATTLE CALL: $1 higher. Given that packers were able to build up their inventory last week, they'll likely be tougher to negotiate with this week. But improving beef values and packer margins may work in market bulls' favor.

FEEDER CATTLE:

Feeder cattle futures experienced a sell-off Thursday. The March feeder cattle contract was down $1.10 at $186.225, the April contract was down $0.55 at $190.60, and the May contract was down $0.50 at $194.475. Meanwhile, the November 2023 futures contract remains above $214. For historical reference, the all-time high for feeder cattle futures was $245.20 for the October 2014 contract, and that was at a time when live cattle weren't much higher ($171) than they are now, and the select beef cut-out was actually $20 per cwt lower than it is now. Thursday's newly updated March precipitation outlook from NOAA's Climate Prediction Center calls for above average precipitation pretty much everywhere it will add complications to cattle feeding or hauling logistics (the Midwest and Northern Plains) and pretty much nowhere it could help relieve the ongoing drought in the High Plains, where 83% of the region remains in some sort of abnormally dry or drought conditions.

LEAN HOGS:

Most of the nearby lean hog futures contracts posted losses Thursday amid fairly quiet spread trade. The April lean hog contract closed down $0.725 at $85.775; the April contract closed down $0.85 at $94.85; and the June contract closed down $1.15 at $103.15. Some traders may be feeling impatient for the charts to start making a seasonal move higher. Generally helpful bids from the packers this week support that shift, as does the positive weekly export sales report for pork. However, there was a relatively low volume of futures trade Thursday, and it just wasn't the day for a big move yet. The afternoon pork cut-out showed the overall carcass value up $2.12 to $83.06. There were 297.16 total loads (274.60 loads of cuts and 22.57 loads of trim). The CME Lean Hog Index for Feb. 14: up $0.44, $75.62, and the projected Index for 2/15: up $0.23, $75.85.

FRIDAY'S CASH HOG CALL: Higher. Packers have already shown some willingness to be aggressive this week, which may be what it takes to keep the nation's rollicking slaughter pace rolling.