GENERAL COMMENTS
Ebenezer Scrooge made an early December appearance and had his way with the livestock complex throughout Tuesday's trade. Red figures flashed across the marketplace as traders let the contracts fall lower given that fundamental support was nearly impossible to come by. Hog prices closed higher on the Daily Direct Afternoon Hog Report, up $0.43 with a weighted average of $82.12 on 8,411 head. March corn is down 3 1/4 cents per bushel and January soybean meal is up $16.50. The Dow Jones Industrial Average is down 350.76 points.
LIVE CATTLE:
It was a painful day throughout the live cattle complex as the market bled lower as the day dragged on. By the market's close, the spot February contract had closed beneath its 100-day moving average, signaling that traders are concerned. As traders scanned the marketplace, longing for any crumble of support, their eyes couldn't escape the fact that boxed beef prices are dwindling and what effect that could have on the cash sector. December live cattle closed $1.67 lower at $151.55, February live cattle closed $2.20 lower at $153.62 and April live cattle closed $1.95 lower at $157.62. Yes, front-end supplies of cattle are thin and packers aren't overly committed, but at the same time, we know that packers are intending to pull back production. With their margins growing more scant, one does have to wonder how aggressively they'll procure cattle this week. Tuesday's market was quiet with asking prices in the South being noted at $157-plus and still unavailable in the North. Tuesday's slaughter is estimated at 128,000 head, steady with a week ago and 4,000 head more than a year ago.
Boxed beef prices closed lower: choice down $0.66 ($242.65) and select down $1.97 ($219.14) with a movement of 147 loads (83.37 loads of choice, 35.40 loads of select, 12.44 loads of trim and 15.97 loads of ground beef). The choice/select spread sits at $23.51
WEDNESDAY'S CATTLE CALL: Steady. The market could see some trade begin to develop by Wednesday afternoon, but feedlots could wait packers out and hold trade off until Thursday. The longer feedlots push back trade, the more likely it is to favor their position.
FEEDER CATTLE:
The feeder cattle complex would have loved to keep with Monday's momentum and continue to push forward (especially with corn prices closing lower), but as the market watched boxed beef prices sink lower and questions what will happen to the spot cash cattle market, traders bailed and sent the contracts tumbling lower. January feeders closed $1.97 lower at $181.80, March feeders closed $2.22 lower at $184.15 and April feeders closed $2.20 lower at $187.32. Feeder cattle prices are high compared to what current cash cattle prices are, which is why the downturn in boxed beef prices affects feeders so heavily. Packers have opted to continue to chase after the cash sector as boxed beef demand has been strong (either in the form of prices or volume of boxes sold), but with the market now seeing more pressure, feeders are fearful that packers could pull back, which could lessen the interest of potential feeder cattle buyers. At Joplin Regional Stockyards in Carthage, Missouri, compared to last week, feeder steers traded steady to $5.00 higher and feeder heifers traded steady. Feeder cattle supply over 600 pounds was 49%. The CME Feeder Cattle Index for Dec. 5: up $0.39, $178.53.
LEAN HOGS:
The lean hog complex didn't have better luck throughout Tuesday's trade than the cattle contracts had, as the market saw the widespread downturn in the commodity markets and opted to trade lower despite seeing higher cash prices and a stronger pork cutout close. The problem with Tuesday's pork cutout value closing higher is that, even though today's market successfully closed lower, there's little assurance that Wednesday's market will be able to do the same. With so much volatility submerged throughout the pork cutout sector, holding your breath for a guaranteed higher close is risky business. Nevertheless, Tuesday's cutout did see a $3.36 advancement, which was gained by the $6.67 gain in bellies, the $5.44 gain in the ham and the $5.23 jump in the picnic. December lean hogs closed $0.20 higher at $82.27, February lean hogs closed $3.60 lower at $86.92 and April lean hogs closed $3.02 lower at $92.80. Pork cutouts totaled 344.05 loads with 318.93 loads of pork cuts and 25.12 loads of trim. Pork cutout values: up $3.36, $89.82. Tuesday's slaughter is estimated at 491,000 head, 4,000 head more than a week ago and 20,000 head more than a year ago. Monday's hog slaughter was revised to 483,000 head. The CME Lean Hog Index for Dec. 2: down $0.08, $82.79.
WEDNESDAY'S HOG CALL: Higher. Wednesday's market will likely see more cash hog trade as Tuesday's volume was thin.
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