GENERAL COMMENTS
Mild gains in live cattle futures Tuesday were enough to boost several nearby contracts to fresh contract highs. The daily gains were larger for feeder cattle and lean hogs, but since these merely corrected previous losses, there is less impact on their charts. In the cash cattle market, no significant trade volume is expected until Wednesday or Thursday, but some asking prices are around $157 to $158 in the South which, if met, would be about $2 higher than last week's business. The National Direct Afternoon Hog Report showed purchased swine prices down $0.20 to a weighted average of $81.48 on 12,322 head. Prices ranged from $74 to $85, and the five-day rolling average is now $83.22. March corn moved down 1/2 cent to $6.53 1/2 per bushel and January soybean meal closed up $2.10 per ton to $452.30. The Dow Jones Industrial Average was up 100 points and the NASDAQ was up 127 points.
LIVE CATTLE:
Live cattle futures moved confidently higher Tuesday, even exploring fresh contract highs in several of the nearby contracts. The December contract closed up $0.50 at $154.90; the February contract closed up $0.25 at $156.35, and the April contract closed up $0.15 at $160.05. Just for historical reference, the all-time high for a nearby live cattle futures contract was $171.975 in October 2014, so traders have plenty of territory to cover yet. At this point in the week, packer inquiry for cash cattle continues to be very light to nonexistent, with significant trade volume more likely to take place on Wednesday or Thursday, although packers will be buying for holiday-shortened work weeks and therefore probably not seeking large numbers. Some early asking prices are around $157 to $158 in the South, which, if met, would be about $2 higher than last week's cash cattle prices.
There has been bullish momentum in the beef market lately, as retailers may be expecting holiday shoppers to approach the meat counter with confident seasonal enthusiasm. Choice values in particular have been surging back toward their early November levels, but the Tuesday afternoon boxed beef report was a set-back to this trend. Boxed beef prices lower: choice down $2.07 ($254.95) and select down $0.22 ($225.46), with an impressive movement of 129 loads (81.42 loads of choice, 26.65 loads of select, 6.34 loads of trim and 14.38 loads of ground beef).
WEDNESDAY'S CASH CATTLE CALL: Steady to $1.00 higher. The cash cattle market won't likely trade until Wednesday or later as feedlots are going to attempt to move the market again, but the longer they wait the week out, the more likely it becomes that they do indeed see higher prices.
FEEDER CATTLE:
Feeder cattle futures prices were higher Tuesday alongside every other livestock market and most commodity markets, with the notable exception of corn prices, which actually ended the day with light losses. At the end of the session, the January feeder cattle contract was up $0.575 at $184.225, the March contract was up $0.50 at $185.725, and the April contract was up $0.425 at $189.075. A slow-moving winter storm system is hovering over a huge swath of cattle country this week, stretching from Oklahoma to Manitoba and gumming up transportation logistics for calves trying to get to feedlots. The storm could also dampen attendance and enthusiasm at the sale barns this week, and then the Christmas holiday is coming up next week already, so the market in some regions may go relatively untested.
LEAN HOGS:
A lower U.S. dollar on Tuesday was a good booster to commodity prices, including the prices for pork and hogs. The December lean hog contract closed up $0.45 at $82.40, with its last trading day Wednesday, Dec. 14, to ultimately converge with the CME Lean Hog index that's trending below that level. The February contract closed up $0.875 at $84.575; and the April contract closed up $0.70 at $91.35. A slight relenting in the recent pace of inflation -- with the CPI increasing "only" 7.1% in November -- gave the outside markets an inkling of hope that the Federal Reserve may not need to hike interest rates so aggressively in their upcoming Wednesday announcement. For food, specifically, prices have been rising 12% from November 2021 to November 2022, but it's not meats (up 1.1%) or pork (up 1.2%) that's leading the charge. Futures traders were active with considerable trading volume during Tuesday's session, taking lean hog contracts higher alongside most of the outside markets, which may help to establish some technical support on the charts above $83 for the February contract, for instance, and forestall a further sell-off in this market. The Tuesday afternoon pork cut-out showed the overall carcass value suddenly up $4.20 to $91.14, led by a surge of volatility in bellies. There were 343.30 total loads (306.83 loads of cuts and 36.47 loads of trim). The CME Lean Hog Index for Dec. 9: down $0.52, $81.47, and the projected Index for Dec. 12: up $0.15, $81.62.
WEDNESDAY'S CASH HOG CALL: Steady. Packers may jealously guard their profit margins, especially amid unpredictable ever-changing primal values.
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