GENERAL COMMENTS: Triple-digit gains flooded back into live cattle and feeder cattle trade Tuesday. The renewed support pushed front-month live cattle contracts to new contract highs, sparking follow-through buying late in the day Tuesday. Lean hog futures bounced back from midday lows, with most contracts holding limited single-digit gains, even though spot February futures posted 70-cent gains. Cash cattle markets remain undeveloped with asking prices and bids still silent late Tuesday afternoon. The overall lack of movement is not shocking or unexpected at this point, although there is some uncertainty as to intended activity until the last half of the week. According to the closing report, the national hog base is $1.16 higher ($46 to $51.50 per cwt, weighted average of $50.18 per cwt). Corn futures are lower in light activity. March futures were 2 1/4 cents lower. Dow Jones Index is 276 points higher with the Nasdaq up 74 points.
LIVE CATTLE: Sharp gains flooded into nearby live cattle trade Tuesday despite initial market struggles. Futures closed $0.40 to $2.10 higher. The front-month February futures contract led the renewed support in live cattle, closing at $125.30 per cwt following a $2.10-per-cwt rally. This most recent market surge broke through resistance levels and established new contract highs. The ability to move prices higher in early January points to further potential buying developing in the near future. Front-month live cattle contracts are trading at the highest level since February 2018 in the continuous front-month chart. A move above $130.10 per cwt would break through 2018 highs, setting the tone for additional seasonal support. Beef cut-outs: down, $0.95 lower (select, $207.26) to off $0.30 (choice, $213.98) with good demand and light offerings, 183 loads (112 loads of choice cuts, 37 loads of select cuts, 8 load of trimmings, 26 loads of coarse grinds).
WEDNESDAY'S CASH CATTLE CALL: Steady to $2 higher. Cash activity remains undeveloped with no sign of bids or asking prices at this point. Although packer interest may slowly develop midweek, trade is not expected until later in the week. Futures gains are likely to boost asking prices as the week continues.
FEEDER CATTLE: Wide price swings developed through feeder cattle trade as early losses quickly turned into continued support. Futures ended the session 82 cents to $1.65 higher. Initial losses Tuesday morning put feeder cattle on the defensive as traders backed away from early week support. But the depth of selling pressure was limited through the morning, opening the door for additional strong market gains in the last half of the session. January futures led the complex higher with a $1.65-per-cwt gain. However, the momentum shifted from feeder cattle trade to live cattle futures moving into the driver's seat late Tuesday. CME cash feeder index for 1/7 is $145.63, down $0.43.
LEAN HOGS: Spillover support from the cattle trade provided limited support to lean hog futures. Futures closed mixed, 35 cents lower to 70 cents higher. Lean hog prices bounced around in a wide trading range Tuesday as initial support was replaced by general apathy and moderate pressure. However, buyers resurfaced in the last few minutes of trade, pushing most contracts higher. Many nearby contracts held single-digit price shifts. The February contract was the big winner, gaining 70 cents to close at $62.60 per cwt. The firm support seen over the past week is sparking renewed commercial buyer support as traders focus on cash and pork market gains. Pork values trickled lower with moderate pressure in most primal cuts. Pork cutout values fell $0.40 per cwt, moving to $70.16 per cwt. CME cash lean index for 1/04: $54.50, up $0.87. DTN Projected lean index for 1/07: $54.85, up $0.35.
WEDNESDAY'S CASH HOG CALL: Steady to $1 higher. Cash hog levels are expected to continue to be supported, though there are starting to be some questions as to just how much additional support may develop over the next few days. Most bids are expected to be steady to 50 cents higher. Wednesday plant runs are expected at 477,000 head. Saturday schedules are expected to be near 195,000 head.
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