GENERAL COMMENTS
The livestock complex was a grim place to be ahead of Wednesday's end as traders didn't stick around to support the complex last minute. Heading into Thursday, all eyes will be on the day's export report, and any developments regarding cash cattle sales. The Feds did raise interest rates by a half-percent, which was expected. Hog prices closed lower on the Daily Direct Afternoon Hog Report, down $0.85 with a weighted average of $80.63 on 7,947 head. March corn is down 3 cents per bushel and January soybean meal is up $7.80. The Dow Jones Industrial Average is down 142.29 points.
LIVE CATTLE:
Try as it might, the live cattle complex just can't seem to break out and trade outside its current range. If packers weren't slowing down processing speeds, and if boxed beef prices weren't seeing some pushback, the market could be saddled with a different outcome, but for the time being, those circumstances aren't what the market is facing. The cash cattle market still hasn't seen any trade develop and it's a gamble whether or not packers are going to show much interest at all in this week's market. As packers pull back chain speeds from here until at least the first of 2023 (if not beyond), they won't likely pay the cash market much interest as they're going to use this time to keep prices steady. Asking prices in the South are noted at $156 to $158 but are still unestablished in the North. December live cattle closed $0.40 lower at $154.50, February live cattle closed $0.65 lower at $155.70 and April live cattle closed $0.47 lower at $159.57.
Wednesday's slaughter is estimated at 118,000 head, 9,000 head less than a week ago and 4,000 head more than a year ago.
The Fed Cattle Exchange Auction held Wednesday reported seven lots (five lots in Texas and one lot in Colorado), totaling 995 head of cattle, none of which sold. Opening prices were at $153, high bids had a range of $153 to $154.75, but none of these bids met reserve prices of $156 to $157.
Boxed beef prices closed mixed: choice down $4.88 ($250.07) and select up $1.23 ($226.69) with a movement of 117 loads (74.41 loads of choice, 20.42 loads of select, 6.82 loads of trim and 15.72 loads of ground beef). The choice/select spread now sits at $23.38.
THURSDAY'S CATTLE CALL: Steady. Packers aren't likely to do much in this week's cash market as they're wanting to use this time to keep prices steady.
FEEDER CATTLE:
One would have hoped that, with the corn complex closing lower in its nearby contracts, the feeder cattle contracts would have been able to advance on corn's weakness, but with the live cattle and cash cattle markets lending no support, it simply wasn't in Wednesday's cards for the feeder cattle market to trade higher. January feeders closed $0.62 lower at $183.60, March feeders closed $0.27 lower at $185.45 and April feeders closed $0.15 lower at $188.92. It's becoming evident in watching these feeder cattle sales that the lightweight calves that can be held over for grass next spring are bringing a premium right now. Most sale barns are either having their last sale for the year this week or will do so nearly next week. At OKC West Livestock Auction in El Reno, Oklahoma, compared to last week, feeder steers and heifers traded $1.00 to $3.00 higher. Steer and heifers under 550 pounds traded mostly $3.00 to $5.00 higher while everything over 550 pounds sold fully steady. Feeder cattle supply over 600 pounds was 59%. The CME Feeder Cattle Index for Dec. 13: not available at this time.
LEAN HOGS:
The lean hog complex can't seem to catch a break or draw in any substantial fundamental support, and traders are noting this too in how they're handling the contract. February lean hogs closed $1.17 lower at $83.40, April lean hogs closed $0.62 lower at $90.72 and June lean hogs closed $0.47 lower at $105.07. Regardless if you look to the market's pork cutout prices or its cash trade for fundamental support, you'll be disappointed as neither lent the market anything positive ahead of Wednesday's end. Pork cutout values continue to fall lower, and Wednesday's big nosedive was 99% because of the $36.94 drop in bellies. Pork cutouts totaled 302.81 loads with 256.50 loads of pork cuts and 46.31 loads of trim. Pork cutout values: down $6.87, $84.27. Thursday's export report isn't expected to produce anything wildly supportive for the hog sector. Wednesday's slaughter is estimated at 490,000 head, 6,000 head more than a week ago and 52,000 head more than a year ago. Tuesday's hog slaughter was revised to 481,000 head. The CME Lean Hog Index for Dec. 12: up $0.15, $81.62.
THURSDAY'S HOG CALL: Slightly higher. Packers aren't running aggressively after the cash market, as they're buying for a holiday-shortened week. Still, they'll need to ensure that they have enough hogs committed for the days after.
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