GENERAL COMMENTS:
Cattle futures have done a complete turnaround from the midweek rally that developed Wednesday. The lack of underlying support and sluggish market interest in all cattle markets continues to add to the price shifts and leaving markets even more unsettled going into the Cattle on Feed report.
Triple-digit losses developed in all cattle contracts with the exception of soon to expire December contracts which posted a 52-cent loss. However, the overall weakness across the complex has done very little to change the overall direction of the market, as light trade and lackluster interest is expected to create additional volatility.
Hog prices closed higher on the Daily Direct Afternoon hog report, up $0.14 with a weighted average of $47.96 on 4,007 hogs. March corn closed up 2 3/4 at $4.725 and March soybean meal closed down $2.30 at $386.4. The Dow Jones Industrial Average is up 322.35 at 37,404.35.
LIVE CATTLE:
Live cattle futures followed feeder cattle trade lower Thursday as traders focused on the overall lack of buyer support that never redeveloped after Wednesday's gains. December contracts posted gains, but the limited volume in this contract is focused more on squaring positions than market discovery, while spring 2024 contracts posted firm triple-digit losses Thursday.
Traders are also starting to adjust positions in front of the Cattle on Feed Report Friday afternoon. The challenge with this report release is that the results will not be able to be traded until Tuesday morning following the Christmas holiday. And even then, very light holiday week trade is likely to limit the overall volume typically seen in a report until the New Year. This could create some additional underlying market swings based on the lack of market participation.
Cash cattle markets are still quiet, although bids continue to be seen over the last couple of days. Live bids in the South are seen at $170 per cwt, with live bids in the North also at $170 per cwt. Dressed bids in the North are holding at $270 per cwt. Asking prices have started to now develop at $173 to $175 live and $272 dressed.
Feeders remain optimistic to focus on steady to higher price levels before the week ends. This could push active trade until sometime Friday, maybe even after the release of the Cattle on Feed report.
December live cattle closed $0.53 higher at $170.55, February live cattle closed $1.63 lower at $168.675 and April live cattle closed $1.65 lower at $172.175.
Thursday's slaughter is estimated at 125,000 head, steady with a week ago and 3,000 head more than a year ago.
Boxed beef prices closed mixed: choice up $2.00 ($291.13) and select down $0.33 ($261.27) with a movement of 166.59 loads (113.90 loads of choice, 20.83 loads of select, 13.63 loads of trim and 18.23 loads of ground beef).
FRIDAY'S CATTLE CALL: Steady. Increased bids and asking prices are still developing as the week continues, but uncertainty of market strength is starting to be realized.
FEEDER CATTLE:
Active pressure redeveloped in feeder cattle futures Thursday, with traders backing away from previous gains. Even though little technical or fundamental changes are seen in the complex, the lack of active trade volume is keeping markets very volatile. These market conditions may continue through the holidays as very limited trader activity is expected to be seen in the upcoming days. Traders are also trying to assess and guess the direction of the cattle on feed report when it comes to cattle placement numbers. This may add even more volatility to the market Friday.
January feeders closed $2.35 lower at $221.7, March feeders closed $2.38 lower at $223.375 and April feeders closed $2.08 lower at $228.45. The CME Feeder Cattle Index for Dec. 19: down $0.51, $219.80.
LEAN HOGS:
Lean hog futures continue to post moderate losses in most contracts, although very limited trade developed once again Thursday. Nearby gains developed in both February and April contracts, but the tone of the market remains generally weak. Some additional positioning is likely to be seen Friday in front of the hogs and pigs report, but the upcoming holidays are also limiting overall trade interest and market volume.
February lean hogs closed $0.43 higher at $70.65, April lean hogs closed $0.03 higher at $76.95 and May lean hogs closed $0.18 lower at $83.55. Thursday's hog slaughter is estimated at 490,000 head, 1,000 head more than a week ago and 2,000 head more than a year ago. Pork Cutouts totaled 200.83 loads with 174.21 loads of pork cuts and 26.62 loads of trim. Pork cutout values are down $0.01 at $81.35. The CME Lean Hog Index for Dec. 19: up $0.17, $66.54.
FRIDAY'S HOG CALL: Steady. Limited support in futures trade this week and softness in pork values is likely to limit the ability for active cash market support through the end of the week, especially heading into a long holiday weekend.
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