Written Commentary
MORNING LIVESTOCK FUTURES OUTLOOK
CATTLE
April cattle rallied to their highest level since Monday yesterday, but they came up short of taking out that day’s 2 ½ month high. The USDA cattle inventory report this week showed US cattle supply on January 1 was the lowest since 1951, which was as expected, but it also confirmed that the US cattle herd is shrinking. Better soil moisture in Texas and Oklahoma relative to a year ago make for better grazing for raising cattle, but as of this week, much of Kansas and a good portion of Nebraska were still experiencing moderate to severe drought. Cash live cattle trade volume picked up on Thursday, and prices were higher across the board. The 5-area weighted average price was $177.39, up from an average of $175.28 last week. The USDA estimated cattle slaughter came in at 126,000 head yesterday. This brings the total for the week so far to 505,000 head, up from 492,000 last week and 496,068 a year ago. The USDA boxed beef cutout was down 61 cents at mid-session yesterday but closed 40 cents higher at $294.94. This was down from $298.68 the previous week. The export sales report showed US beef sales for the week ending January 25 at 16,691 tonnes, down from 22,363 the previous week and below the four-week average of 18,200. Cumulative sales for 2024 have reached 192,600 tonnes, down from 224,700 a year ago and the lowest for this point in the year since 2019. The largest buyer was Japan at 5,196 tonnes, followed by China at 3,340.
HOGS
April hogs sold off sharply yesterday and gave back all their gains from the big run up on Tuesday. However, they did close well off the lows of the day, which gives the market a wide range to chop around. Yesterday’s weekly export sales report was strong, but with prices up 20% since the start of the year, the market had gotten top-heavy. The report showed US pork sales for the week ending January 25 at 42,941 tonnes, up from 24,127 the previous week and the highest since December 21. Cumulative sales for 2024 have reached 354,500 tonnes, up from 318,400 a year ago but below the five-year average of 450,500. The largest buyer was Mexico at 13,443 tonnes, followed by China at 12,638. Perhaps traders were expecting China to be a bigger buyer ahead of the Lunar New Year, especially with the jump in their domestic pig prices earlier this week. Those prices have slipped the past couple of days, and the national average spot price was down 4.6% today, cutting the gains for the week to 5.3%. Prices are up 8.8% so far this year. China has allowed imports of breeding pigs from Ireland effective February 1, which seems to run counter to ideas that China’s pig sector will see more liquidation. The CME Lean Hog Index as of January 30 was 72.38, up from 71.48 the previous session and 69.39 the previous week. The USDA estimated hog slaughter came in at 482,000 head. This brings the total for the week so far to 1.955 million, up from 1.935 million last week and 1.937 million a year ago. The USDA pork cutout, released after the close yesterday, came in at $87.92, up $1.04 from Wednesday but down from $88.14 the previous week.
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