GENERAL COMMENTS
The livestock complex saw mixed interest throughout Tuesday's market as it fully supported the feeder cattle contracts but left both the live cattle and lean hog markets trading lower. Don't forget that this upcoming Friday, the latest Cattle on Feed and Hogs and Pigs reports will be released. Hog prices closed higher on the Daily Direct Afternoon Hog Report, up $0.04 with a weighted average of $79.92 on 4,786 head. March corn is up 4 3/4 cents per bushel and March soybean meal is up $3.20. The Dow Jones Industrial Average is up 92.20 points.
LIVE CATTLE:
The live cattle market would have loved to trade higher throughout Tuesday's market, but in order to do so, the market was going to need to see strong fundamental support in order to justify the higher move. Choice boxed beef prices were able to close higher, but without any support from the cash sector yet, the market trailed slightly lower through Tuesday's hours keeping the market trading mostly steady. It will be interesting to see what choice cuts do come Wednesday as the market hasn't broken above $265.18 since early November. Given that choice cuts closed as strong as they did Tuesday afternoon, packers will either see demand and be able to price those cuts higher as they're in thin supply, or retailers could shake their head at the price, which would motivate packers to again lower choice values. The cash cattle market didn't see any interest in Tuesday's market but early asking prices in the South are noted at $156 plus. Trade could begin to develop on Wednesday, but it's mostly likely that trade is held out until Thursday or later. December live cattle closed $0.22 lower at $155.05, February live cattle closed $0.47 lower at $155.57 and April live cattle closed $0.27 lower at $159.65.
Tuesday's slaughter is estimated at 124,000 head, 3,000 head more than a week ago and 4,000 head more than a year ago.
Boxed beef prices are mixed: choice up $1.22 ($265.05) and select down $4.67 ($233.90) with a movement of 107 loads (62.16 loads of choice, 18.78 loads of select, 11.61 loads of trim and 14.51 loads of ground beef). The choice/select spread sits at $31.15.
WEDNESDAY'S CATTLE CALL: Steady. Friday's Cattle on Feed report will likely be bullish again and feedlots sit in control with the lion's share of the market's leverage. It's likely that prices remain at least steady this week of not advance ever so slightly.
FEEDER CATTLE:
Even though the nearby corn contracts closed $0.03 to $0.05 lower by Monday's end and the live cattle market kept with its modest rally, the feeder cattle complex couldn't gain enough traction to trade higher in Monday's market. Unfortunately, the feeder cattle complex won't likely see much interest from traders from now until after the first of the year as most sale barns held their last sale for 2022 last week. It's as if the feeder cattle market goes on pause during this time span even though the feeder cattle contracts are still traded. Nevertheless, this mundane sideways chop will likely be the market's tone until 2023 unless something wild takes place in either the live cattle or corn markets. January feeders closed $1.67 lower at $182.10, March feeders closed $0.90 lower at $183.80 and April feeders closed $0.65 lower at $187.47. The CME Feeder Cattle Index for Dec. 16: down $0.77, $178.74.
LEAN HOGS:
The lean hog complex traded much like the live cattle market as it longed for fundamental support to push its market higher but didn't see the reassurance that it needed ahead of Tuesday's close. The lean hog market did see a slight increase in cash prices though the day's volume was still thin. This leads me to believe that interest will be even better come Wednesday. February lean hogs closed $1.45 lower at $84.25, April lean hogs closed $0.82 lower at $92.17 and June lean hogs closed $0.42 lower at $106.52. On Friday, the market will see the latest Hogs and Pigs report which could give it more trading power. Until then, however, focusing on fundamental demand from retailers remains a top priority, and unfortunately in Tuesday's market, the complex didn't see much support.
Pork cutouts total 277.06 loads with 250.77 loads of pork cuts and 26.29 loads of trim. Pork cutout values: down $1.47, $83.46. Tuesday's slaughter is estimated at 489,000 head, 8,000 head more than a week ago and 11,000 head more than a year ago. Monday's hog slaughter was revised to 479,000 head. The CME Lean Hog Index for Dec. 16: down $0.71, $80.84.
WEDNESDAY'S HOG CALL: Slightly higher. It's not likely that packers do anything wild in this week's market as they're buying for the slow time between Christmas and the New Year, but given that prices were slightly higher Tuesday afternoon, one is led to believe that packers could be needed to replenish their inventory for upcoming kills.
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