Livestock prices LAST week settled mixed: LCG0 +2.700 (+2.16%), LHG0 -1.300 (-1.90%).Â
Feb live cattle on Friday climbed to a 3-1/2 week high and finished the week up by +2.16%. An improvement in domestic beef demand gave cattle prices a lift after wholesale beef prices rose to a 2-week high Friday. A negative factor was the decline in beef packer profit margins to a 1-3/4 year low Thursday, which may curb packer demand for cattle. Supplies are ample as the USDA Cattle on Feed report from Dec 20 showed the U.S. feedlot herd on Dec 1 rose +2.5% to 12.031 mln head, the most cattle in feedlots in 8 years. Feb cattle had surged to a contract high and nearest-futures (Z19) rallied to an 8-month high Dec 13 on improved prospects for an increase in U.S. beef exports. Trade tensions have undercut U.S. beef exports with U.S. Jan-Nov beef exports down -4.6% y/y to 2.767 bln lbs. The U.S. Meat Export Federation forecasts 2020 U.S. beef exports will climb 5% y/y. Supplies are projected to be robust as the USDA estimates U.S. 2019/209 beef production will climb +1.7% y/y to a record 27.515 bln lbs. The USDA projects U.S. 2019/209 beef exports will climb +7.5% y/y to a record 3.305 bln lbs. Â
Feb lean hog prices on Friday closed higher but still finished the week down by -1.90%. Feb hog prices fell to a 1-month low Thursday on demand concerns. Wholesale pork prices fell to a 3-1/2 month low Thursday, a sign of weak domestic demand. Also, pork packer profit margins tumbled to a 2-1/2 month low Friday, which may cub packer demand for hogs. The Dec 23 U.S. Q4 Hog & Pig Inventory report was slightly negative as it showed the total U.S. pig herd at 77.338 mln head on Dec 1, up +3% y/y and right on expectations. Sows retained for breeding in Q4 rose +2.1% y/y to 6.461 mln head, above expectations of +1.6%. Pigs per litter in Q4 rose +3.1% y/y to 11.09, above consensus of +2.9% to 11.07 pigs per litter. Due to Chinese tariffs on U.S. pork, China has mainly imported pork from Europe with European 2019 Jan-Sep pork exports to China up +55% y/y to 1.55 MMT. The USDA FAS projected Sep 11 that European 2020 pork exports to China may climb 4% to a record 3.6 MMT. China’s hog herd has been decimated by African swine fever as China’s total pig herd in Sep totaled 203.6 mln pigs, down -39.2% y/y. Also, Vietnam said it has culled 5.9 million hogs, or 22% of its total swine population, to try to stop the spread of African Swine Fever. Foreign demand for U.S. pork has strengthened with U.S. Jan-Nov pork exports up +5.4% y/y to 5.640 bln lbs as Mexico, the top importer of U.S. pork, has resumed purchases. The USDA projects that U.S. 2019/20 pork exports will climb +12.8% y/y to a record 7.10 bln lbs and that U.S. 2019/20 pork production will climb +3.6% y/y to a record 28.68 bln lbs. Â