Livestock Contracts Burst with Support
It may have been a rough start to the New Year for the livestock contracts but with a little bit of patience the contracts have found ample demand through Friday’s trade.
Traders are pouring the coals to the livestock contracts as the market’s fundamental backing is helping ignite this impressive rally through Friday’s trade. The strength in the feeder cattle market continues to grow and grow. Some nearby contracts are capturing gains $3.00 to $4.00 higher than Thursday’s levels. With this much support filtrating throughout the marketplace, it would be the icing on the cake to have Friday’s afternoon Cattle on Feed Report come out bullish and help this positive movement roll into next week’s business. March corn is down 17 1/2 cents per bushel and March soybean meal is down $10.70. The Dow Jones Industrial Average is down 83.71 points and NASDAQ is down 5.40 points.
We’ve been hoping to see the April live cattle contract trade at $120 for the last month but seeing the contract trade at $122.30 is even sweeter! February live cattle are up $2.50 at $116.60, April live cattle are up $2.37 at $122.30 and June live cattle are up $1.57 at $118.70. As the market shoots to either long-term highs or completely new contract highs, the live cattle market is being met with extraordinary demand from all sides of the market other than this week’s cash cattle trade.
If the Cattle on Feed Report that is scheduled to come out this afternoon can lend an additional hand in the market’s current upward swing by showing lighter placements – the market stands a good chance to carry this strength into the weeks to come. The countryside remains lackadaisical without bids surfacing and its looking like the bulk of the week’s cash cattle trade is done and over.
Beef net sales of 24,500 mt reported for 2021, increases were primarily for Japan (4,900 mt, including decreases of 500 mt), China (4,300 mt, including decreases of 100 mt) and South Korea (3,500 mt, including decreases of 600 mt).
Boxed beef prices are higher: choice up $1.85 ($223.05) and select up $3.24 ($213.52) with a movement of 85 loads (45.14 loads of choice, 18.24 loads of select, 8.05 loads of trim and 13.67 loads of ground beef).
The feeder cattle contracts had a long and grueling, painful entrance into 2021 but low and behold the momentum that has become available this week is powerful for the feeder cattle contracts. January feeders are up $1.60 at $137.47, March feeders are up $4.30 at $143.52 and April feeders are up $3.55 at $145.42. Some of the market’s support is stemming from the correction in corn prices, but then again, the technical support the market has mustered up is nothing to overlook as contract highs are being made in all of the feeder cattle contracts from April 2021 through November 2021. If Friday can keep this momentum through closing the feeder cattle complex stands a great chance carrying this supportive trend into next week’s trade.
Thankfully while the cattle contracts leap higher, the lean hog contracts are met with strong acquisition in their nearby contracts too. February lean hogs are up $1.17 at $69.27, April lean hogs are up $1.60 at $75.50 and June lean hogs are up $1.00 at $86.27. Packers may have bought a plethora of hogs midweek, but they’ve came back to the cash market willing to buy more hogs and even willing to give higher prices for them. and last but certainly not least, the support from the strong pork cutout value is incredibly helpful again as the board is met with strong signals to trade higher and no hesitant is weighing the contracts down.
Pork net sales of 45,200 mt reported for 2021, increases primarily for Mexico (13,200 mt, including decreases of 800 mt), China (9,700 mt, including decreases of 1,100 MT), Canada (5,000 MT, including decreases of 400 mt) and the Philippines (4,500 mt, including decreases of 800 mt).
The projected lean hog index for 1/21/2021 is up $0.15 at $65.55, and the actual index for 1/20/2021 is down $0.27 at $65.40. Hog prices are higher on the National Direct Moring Hog Report, up $0.87 with a weighted average of $55.56, ranging from $50.75 to $56.00 on 3,300 head and a five-day rolling average of $55.56. Pork cutouts total 229.29 loads with 208.76 loads of pork cuts and 20.52 loads of trim. Pork cutout values: up $3.64, $83.90.