Market News

Hog futures lower on profit taking, demand questions

Chicago Mercantile Exchange live cattle futures were mostly lower, getting ready for widespread direct cash business and the week’s USDA numbers. February was up $.02 at $126.37 and April was down $.02 at $127.22.

Feeder cattle were mostly lower on the same factors as the live pit. January was $.27 lower at $145.07 and March was down $.32 at $144.67.

Direct cash cattle markets were quiet. This week’s showlist looks mixed, mostly lower, and packer profit margins are tighter, which might limit spending and could push back the week’s business, maybe even until after the USDA’s Cattle on Feed report out Friday afternoon. Weather in some of the major feeding areas is expected to restrict movement and make it harder for cattle to gain weight. Last week’s business was mainly at $124 on the live basis, steady with the previous week, and mostly $199 dressed, down $1 from the week before. The trade volume and formula totals were mixed, higher in Nebraska, lower in Texas and Kansas.

Boxed beef closed weak with moderate demand for moderate to heavy offerings. Choice was down $.13 at $214.51 and Select was $.01 lower at $213.47. The estimated cattle slaughter of 123,000 head was unchanged on the week and up 6,000 on the year.

At the Ozarks Regional Stockyards feeder cattle sale in Missouri, compared to the previous week, steer calves weighing less than 600 pounds were $2 to $4 higher with heavier weights steady, while heifer calves were steady to $3 higher. The USDA says demand was good for a moderate supply, with midsession receipts down on the week, but up on the year. 48% of the offering were steers, 48% were heifers, and the remaining 4% were bulls, with 60% of the run weighing less than 600 pounds. Medium and Large 1 feeder steers weighing 500 to 600 pounds were reported at $150 to $181 and 600 to 700-pound steers sold at $139 to $157. Medium and Large 1 feeder heifers weighing 400 to 500 pounds brought $139 to $156 and 500 to 600-pound heifers ranged from $132.50 to $146.

Lean hog futures were lower on profit taking, waiting for signs of improving export demand from China, while getting ready for what could be a bearish set of USDA reports later this week. February was down $.32 at $67.35 and April was down $.27 at $73.82.

Cash hogs were mixed, mostly steady to higher, with good closing negotiated numbers for the major direct markets. The trends depended on packer demand following the holiday weekend and weather issues in some areas. The trade is watching demand signals, with weekly export sales out Friday morning. China reportedly bought a record amount of pork in November 2019, sourcing most of it from the European Union. China’s National Bureau of Statistics says 2019 domestic pork production was a 16-year low at 42.55 million tons, a drop of 21.3% from 2018. The industry will also be digesting the USDA’s Cold Storage numbers Wednesday and the livestock slaughter report for December, out Thursday.

Pork closed $1.08 higher at $78.19. Hams gained $4.48, with butts, picnics, and bellies also firm to higher. Loins and ribs were lower. The estimated hog slaughter of 498,000 head was up 1,000 on the week and 25,000 on the year. Monday’s kill was revised to 411,000 head, down 10,000 from the USDA’s initial projection.

National direct barrows and gilts closed $.11 lower at $46 to $53 with a weighted average of $51.71, while Iowa/Southern Minnesota was $.39 higher at $52.15 and the Western Corn Belt was up $.19 at $51.96. Butcher hogs at the Midwest cash markets were steady at $36. Illinois direct sows were $1 to $2 higher at $12 to $20 on moderate demand for heavy offerings. Barrows and gilts were steady at $28 to $36 with moderate demand and offerings. Boars ranged from $5 to $15.