GENERAL COMMENTS:
What a day it was for the livestock complex! Heading into the week, we all thought that the week's trade would be mundane and boring, given that the holiday slug was putting a damper on things. Thankfully, the robust demand in the market helped fuel higher cash prices for both cattle and hogs and the contracts closed higher too. Hog prices closed higher on the National Direct Afternoon Hog Report, up $0.55 with a weighted average of $61.09 on 5,801 head. March corn is up 4 1/4 cents per bushel and March soybean meal is up $7.80. The Dow Jones Industrial Average is up 261.19 points and NASDAQ is up 180.80 points.
LIVE CATTLE:
Just when you think that the market is going to venture lower given that it's the week of Christmas, feedlots proved us all wrong as they sat quietly knowing that packers needed cattle and, by the day's end, they saw the higher prices they patiently waited for. I've said it before and I'll say it again, it's powerful just how rewarding it can be to simply wait a day. Most of the week's business has traded for $1.00 or $2.00 lower than last week's weighted average, but upon seeing Wednesday's prices of $136 and $218 in some regions, those prices are fully steady with last week's trade. Thankfully, the phenomenal beef demand that's kept processing speeds elevated throughout the year has enticed packers to continue to run aggressive processing speeds again this week and consequently pushed them into needing to get some more cattle booked this week. The futures contracts were trading higher before the cash cattle market's trade ventured to higher prices than what Tuesday garnished, but the support from the technical side of the market only made feedlots more confident in waiting for the prices they wanted. December live cattle closed $0.22 higher at $135.75, February live cattle closed $0.45 higher at $137.37 and April live cattle closed $0.77 higher at $142.12.
Wednesday's slaughter is estimated at 121,000 head, 8,000 head more than a week and year ago. Don't forget that Thursday afternoon there will be a new Cattle on Feed report released.
Boxed beef prices closed higher: choice up $0.47 ($261.86) and select up $0.91 ($250.83) with a movement of 138 loads (91.26 loads of choice, 14.27 loads of select, 14.10 loads of trim and 18.22 loads of ground beef).
THURSDAY'S CASH CATTLE CALL: Steady with the week's trend. I was utterly surprised to see Wednesday's cash cattle advancement and must commend feedlots on their patience this week. Given that Thursday will be the last trading day of the week, it's likely that most of the week's trade is done with and we will only see drabs of clean up trade.
FEEDER CATTLE:
When cash cattle prices grow stronger midweek during the week of Christmas, you're darn right the feeder cattle contracts are going to feel supported and overlook the corn market's rally to close the day fully higher. The feeder cattle contracts were struggling earlier in Wednesday's trade as the market had little support boosting its morale, but upon seeing both the live cattle contracts rally and the strength in the cash cattle market, the feeder cattle contracts shot higher and championed a fully higher close on Wednesday. January feeders closed $0.92 higher at $161.77, March feeders closed $0.10 stronger at $161.92 and April feeders closed $0.15 higher at $165.55. The CME Feeder Cattle Index for Dec. 21: down $0.08, $160.25.
LEAN HOGS:
The cash market rounded out the day higher, the futures market rallied through closing and pork cutouts climbed higher too -- talk about a winning day for the lean hog market! Ahead of Thursday, the market begins to get anxious for the newest export report. Ahead of the new year, the market hopes to find continued export opportunities in 2022, and any heightened demand will only help the market as producers know that there will be some challenges with Prop 12. The lean hog contracts rallied throughout the day, not seeming to be concerned about taking a break after Tuesday's aggressive rally. February lean hogs closed $0.92 higher at $83.35, April lean hogs closed $1.12 higher at $86.70 and June lean hogs closed $0.80 higher at $97.50. Pork cutouts totaled 257.20 loads with 222.09 loads of pork cuts and 35.11 loads of trim. Pork cutout values: down $0.24, $84.67. Wednesday's slaughter is estimated at 474,000 head - 37,000 head more than a week ago and 44,000 head more than a year ago. Don't forget that Thursday afternoon a new Hogs and Pigs report will be released. The CME Lean Hog Index for Dec. 20: up $0.09, $73.02.
THURSDAY'S CASH HOG CALL: Steady. Packers have been aggressive in this week's cash hog market, but given that Thursday will be the last trading day of the week, they may not be as aggressive in buying given that they will run lighter shifts for the holiday.
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