GENERAL COMMENTS:
Once again, the feeder cattle complex is the leader of the pack when it comes to price moves Friday morning. For now, the direction of markets is higher, with feeder cattle and live cattle trade holding moderate to strong gains, while lean hog futures are hanging onto limited midday gains, but unable to draw much market momentum at the end of the week.
Cattle futures continue to struggle to gain enough long-lasting support to move prices from long-term support levels, with underlying technical and fundamental weakness seen across the market. The ability to push prices higher at the end of the week may not help bring quick relief to the oversold market structure, but it would help set the tone for more consistent buyer interest early next week.
March corn is up 1 3/4 at $4.898 and January soybean meal is up $4.50 at $411.3. The Dow Jones Industrial Average is up 1.16 at 36,118.54.
LIVE CATTLE:
Live cattle futures have gained support through the morning with early gains holding, but additional buyer interest moving into the complex following the release of the December WASDE report. The report has not significantly changed the overall direction of the market, but the report posted unchanged production expectations for 2023, and a 180-million-pound increase for 2024 from last month's estimate. The increased feeder cattle placement numbers over the past two months has increased the focus of beef production gains.
Even with this production boost reported, traders feel that this has already been factored into the market, and the current increase is causing a calming effect on price levels, allowing buyers the room to expand gains from early trade. It is still uncertain if price support will be able to hold through the end of the session, but the positive Friday moves are a welcome sight.
Cash cattle activity remains slow and generally quiet Friday morning with no bids redeveloping following midweek trade. Asking prices on cattle are listed around $172 live basis in the South and $272 per cwt dressed in the North. Even though overall estimated numbers remain generally light, the bulk of the weekly business could be wrapped up. There is the possibility that some clean up activity may develop through the rest of the day.
Reported cash cattle trade earlier this week is listed at $171 live basis, $3 per cwt lower than last week's weighted average, and $271 per cwt dressed in the North which is $4 per cwt lower than last week. December live cattle are $2.40 higher at $164.75, February live cattle are $2.75 higher at $165.275, April live cattle are $2.60 higher at $168.55.
Boxed beef prices are mixed: choice down $1.54 ($288.30) and select up $0.08 ($258.91) with a movement of 119.00 loads (77.21 loads of choice, 16.94 loads of select, 5.82 loads of trim and 19.03 loads of ground beef).
FEEDER CATTLE:
Feeder cattle futures have gained additional momentum at midday following the December WASDE report. The increase in beef production levels from November's report confirmed what the market has already known, but with overall production expected to increase 180 million pounds over previous estimates, traders feel that this has already been factored into the market.
Nearby contracts are trading $4 to $5 per cwt higher with active support already in the complex.
The ability to minimize the weekly damage seen in feeder cattle trade at the end of the week is likely to help instill follow-through buyer support early next week.
January feeders are $5.03 higher at $215.3, March feeders are $4.70 higher at $215.875 and April feeders are $4.23 higher at $218.65.
LEAN HOGS:
Lean hog futures are holding moderate support midday after struggling to find any secure footing through much of the morning. The December WASDE report released midmorning was generally neutral to lean hog markets, but the lack of bearishness in the report is taken as a breath of fresh air and has allowed limited but supportive buying activity to move back into the complex. The potential to create firm and consistent buying activity over the upcoming days and weeks is likely to add additional technical support to the entire complex.
December lean hogs are $0.40 higher at $67.95, February lean hogs are $0.50 higher at $68.275 and April lean hogs are $0.63 higher at $75.25. Hog Prices are lower on the Daily Direct Morning Hog report, down $1.33 with a weighted average of $52.59, ranging from $49.00 to $54.00 on 2,976 head with a five-day rolling average of $54.46. Pork Cutouts totaled 143.34 loads with 130.97 loads of pork cuts and 12.37 loads of trim. Pork cutout values are down $2.16 at $81.35.
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