Thomas Elwood: Early livestock comments
Cash cattle traded $0.50 to $1.00 lower last week as packers cut back on slaughter levels in response to deteriorating margins. Slaughter was only 639,000 head, the smallest non-holiday slaughter since spring of 2010. Cattle traded $105.00-$106.50 in the south, with the highest prices in early trade. Cattle trade in the north came at $105.00-$105.50 live and $168-$170 dressed. Volumes traded were moderate at best and cattle will be carried over in most areas. While asking prices may start out firm, it will be mostly on bravado. Showlists are expected to be larger, and negative packer margins point to a lower trade again.
The choice cutout was down $0.47 at $165.83 Friday night, with the select down $0.56 at $160.02. The beef market faltered late in the week. There is concern among beef buyers that consumers will resist higher beef prices at the retail counter as they attempt to deal with both December heating bills and Christmas credit card statements. Spot volume on boxed beef was extremely limited and partly explained packers' decision to cut slaughter. How much success packers have in leveraging the smaller production this week into firmer asking prices likely will determine the direction of the market for the rest of January.
Cash hog calls are mostly steady this morning though weather is going to be a factor in both the Western Corn Belt and in the Southeast. Both areas are contending with major weather systems. The Eastern Corn Belt will see the snow come on Tuesday.
The pork cutout gained $0.41 Friday night. Bone-in loins were unquoted, with boneless quoted steady. Butts were 2-4 cents. Hams were quoted steady. Bellies were 4 cents higher. We have to wonder if the part of the bounce in bellies is from S. Korea buying single rib bellies as their livestock production system grows more stressed.
S. Korea is suffering major disease outbreaks, which are disrupting meat and poultry production. The recent FMD outbreak has spread to most provinces and over 1.3 mill hogs and cattle have been slaughtered or are scheduled for culling. Meat production has been severely curtailed since animals cannot move freely, and beef and pork prices have skyrocketed in the past week. In addition, three poultry farms have confirmed cases of H5N1 bird flu, the first such outbreak in two years.