GENERAL COMMENTS:
Strong underlying buyer interest quickly and aggressively moved into feeder cattle and lean hog futures Thursday afternoon. The underlying support across the market helped to shift market direction away from short-term demand and supply issues, and more on long-term potential. The renewed support in financial and stock markets is also helping to create expectations of further growth through beef and pork demand through the middle to end of 2024.
February lean hog futures led the complex higher with gains of $3.75 per cwt at closing bell. Hog prices closed lower on the Daily Direct Afternoon hog report, down $0.44 with a weighted average of $49.21 on 3,905 hogs. March corn closed down 1/4 at $4.793 and January soybean meal closed up $1.50 at $403.70. The Dow Jones Industrial Average is up 158.11 at 37,248.35.
LIVE CATTLE:
Live cattle futures posted moderate to firm gains following the pullback in price levels Wednesday. The ability for buyers to step back into the market Thursday is helping to create additional underlying fundamental and technical support, which is being built on firm gains early in the week.
The limited trade volume expected over the holiday season could reduce additional market shifts, but the ability to hold current long term support levels will be huge in sustaining buying interest into early 2024.
The weekly export sales report posted net sales of 10,600 mt for 2023 were up noticeably from the previous week and up 67% from the prior four-week average. Increases were primarily for South Korea (2,700 mt, including decreases of 1,200 mt), Japan (2,300 mt, including decreases of 500 mt), Mexico (1,800 mt, including decreases of 100 mt), China (1,300 mt, including decreases of 100 mt), and Canada (500 mt, including decreases of 100 mt). Net sales of 5,100 mt for 2024 primarily for Japan (2,600 mt), South Korea (1,000 mt), Canada (500 mt), Mexico (400 mt), and Chile (200 mt), were offset by reductions for China (100 mt). Exports of 14,500 mt were up 5% from the previous week and from the prior four-week average. The destinations were primarily to South Korea (4,300 mt), Japan (3,000 mt), China (2,500 mt), Mexico (2,000 mt), and Canada (800 mt).
Cash cattle markets remain very quiet Thursday afternoon although bids are starting to develop in several areas. Trade earlier in the week added some additional pressure to the market, which could set the tone for weaker prices through the rest of the week. Southern activity remains quiet, although there are some bids being established at $168 live and $265 to $267 dressed. Asking prices remain at $170 live in the South and $270 dressed in the North. There is expected to be some additional trade needed before the end of the week. This activity could be done some time Friday.
December live cattle closed $0.55 higher at $167.5, February live cattle closed $0.70 higher at $167.925 and April live cattle closed $0.63 higher at $171.575. Thursday's slaughter is estimated at 125,000 head, 1,000 head less than a week ago and 3,000 head more than a year ago.
Boxed beef prices closed mixed: choice down $1.14 ($291.64) and select up $0.55 ($259.21) with a movement of 176.11 loads (107.77 loads of choice, 30.63 loads of select, 14.10 loads of trim and 23.61 loads of ground beef).
FRIDAY'S CATTLE CALL: Steady to $3 lower. Midweek price pressure is seen Wednesday, is still putting pressure on cash markets despite the push higher in futures trade Thursday.
FEEDER CATTLE:
Gains in feeder cattle futures helped to offset midweek pressure as buyers actively stepped back into the market following one day of position taking and adjustments. The most recent shift higher is helping to confirm the previous three-day rally, which started late last week. Technical support is starting to slowly develop across the complex, although prices remain dangerously near contract lows and traders remain resistant about becoming overly aggressive ahead of the Christmas and New Year's holiday.
Triple-digit gains developed in all feeder cattle futures, helping create additional support for additional end of the week gains. January feeders closed $1.98 higher at $219.35, March feeders closed $2.28 higher at $220.125 and April feeders closed $2.50 higher at $224.325. The CME Feeder Cattle Index for Dec. 12: up $2.51, $217.84.
LEAN HOGS:
Lean hog futures technically ended mixed Thursday with lightly traded and soon to expire December contracts falling 75 cents per cwt, while aggressive market gains developed in other nearby contracts. February futures led the complex higher with gains of $3.75 per cwt, focusing on recent export sales support reported in the Thursday report.
In Thursday's weekly export report, net sales of 28,200 mt for 2023 were up 9% from the previous week and 15% from the prior four-week average. Increases were primarily for Mexico (13,700 mt, including decreases of 300 mt), Japan (3,100 mt, including decreases of 900 mt), Australia (2,100 mt, including decreases of 200 mt), South Korea (1,600 mt, including decreases of 1,300 mt), and Canada (1,300 mt, including decreases of 500 mt). Net sales of 12,900 mt for 2024 primarily for Mexico (6,300 mt), South Korea (2,200 mt), Colombia (1,400 mt), Australia (1,100 mt), and Japan (800 mt), were offset by reductions for China (100 mt). Exports of 36,100 mt were up 12% from the previous week and 17% from the prior four-week average. The destinations were primarily to Mexico (16,800 mt), South Korea (4,500 mt), Japan (3,100 mt), China (3,100 mt), and Colombia (2,500 mt). The ability to build on this expected demand support could quickly help rekindle buyer support across the entire lean hog complex.
December lean hogs closed $0.75 lower at $67.175, February lean hogs closed $3.75 higher at $70.475 and April lean hogs closed $2.80 higher at $77.175. Thursday's hog slaughter is estimated at 489,000 head, 1,000 head more than a week ago and 15,000 head more than a year ago. Pork Cutouts totaled 280.33 loads with 256.35 loads of pork cuts and 23.98 loads of trim. Pork cutout values are down $0.36 at $83.57. The CME Lean Hog Index for Dec. 12: up $0.43, $68.13.
FRIDAY'S HOG CALL: Steady. Limited end of the week market shifts will take into account recent futures market gains, but the focus on processing slowdowns over the next couple of weeks.
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