GENERAL COMMENTS:
June cattle, May feeder cattle and June lean hogs were all sharply lower Monday, unable to find support after steep sell-offs in November.
LIVE CATTLE:
February live cattle tried to hold steady early, but finished down $2.15 at $168.82 Monday, extending last week's sell-off to their lowest prices since March. Monday's selling likely included more noncommercial liquidation as Monday afternoon's CFTC report showed noncommercials lightened net longs by 4,159 contracts in the week ending Nov. 21, leaving 38,656 net longs still exposed to the last three sessions of selling.
The more interesting thing is that, while cash cattle prices remain under pressure, the declines have not matched the futures board. Monday's report from USDA showed live steers in the five-state area were down $1.05 in the week ending Nov. 24 to an average of $176.77, nearly $8.00 above the February close. Dressed steers were down $2.69 in the same week to $278.73. The discouraging part of Monday's report for cattle bulls was that negotiated volume only totaled 51,288 during Thanksgiving week, a light sign of packer interest.
Despite concerns from some retailers about consumer spending, Forbes reported that Black Friday sales hit a new record high of $9.8 billion and the number of shoppers at stores was estimated a few percent higher than last year. Outside markets have been mostly supportive with the stock market higher and U.S. dollar lower in November.
Choice boxed beef was down 78 cents at $297.25 Monday, while selects were down 96 cents at $267.80 with 106 total loads. USDA estimated Monday's cattle slaughter at 123,000, down from 125,000 last week and 127,000 last year.
TUESDAY'S CATTLE CALL: Steady to lower early Tuesday with traders possibly nervous about the deep discount in the futures price.
FEEDER CATTLE:
After a sharp drop of $9.17 last week, January feeder cattle fell another $6.52 Monday to end at $212.80 and is getting close to the contract low of $210.45. Monday afternoon's CFTC data showed noncommercial net shorts increased from 2,543 to 4,236 as of November 21 as specs became more convinced prices were going lower. Similar to live cattle, the January futures prices is now well below the CME Feeder Cattle Index of $225.24 as of Friday and it remains to be seen if the specs are correct or if they have overshot the cash market. It's a small consolation for those feeding cattle, but March corn fell 7 1/4 cents to a new 2023 low of $4.75 1/4 Monday.
Parts of central Kansas received 10 to 14 inches of snow over the weekend, but the rest of the central and southern Plains saw mostly light amounts, presenting no significant problems for travel on the roads. The snow isn't expected to be around long with warmer temperatures returning through the week. Technically speaking, January feeder cattle are in a downward spiral of noncommercial liquidation that is losing track of the cash market but hasn't shown signs of finding support yet.
LEAN HOGS:
February lean hogs closed down $1.85 at a new contract low of $66.92 Monday, influenced by selling in cattle, but also having problems of their own that look like too much supply for the market's level of demand. Monday afternoon's CFTC report showed noncommercials increased net shorts from 10,448 to 16,941 as of November 21, right after the February price broke to a new low in November. Pork slaughter has been robust, running well above the one-year average since mid-September and that was even true during Thanksgiving week. USDA estimated Monday's hog slaughter at 485,000, down slightly from last week's 486,000 and last year's 489,000. Judging by prices, even the higher slaughter pace has not tightened the supplies of available hogs and packers continue to have an easy time securing weekly needs. Monday's national formula price of $71.37 is over $4.00 above the February futures price and remains over $10 above the national negotiated hog price, an obvious sign of poor packer interest for negotiated hogs. The CME Lean Hog Index was projected at $72.33 as of Friday, Nov. 24, roughly $5.00 above the February close.
Needless to say, with slaughter levels humming, packer profitability remains high and was helped by a $4.58 gain in Monday's cutout value, now at $88.75 with 297.72 loads reported. So far, there are no signs of those good times trickling down to hog producers, having one of their worst years in a long time.
TUESDAY'S HOG CALL: Steady in February hogs after a drop of over $8.00 in four sessions.
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