GENERAL COMMENTS:
Limited trade activity is expected through most of the week between the Christmas and New Year's holidays. But that did not stop buyers from stepping back into the cattle complex despite the morning price pressure following the Cattle on Feed report last week. Strong triple-digit gains developed in most live cattle futures and deferred feeder cattle contracts in the last two hours of trade. Hog futures moved in the opposite direction as the cattle market during the Tuesday trading session with strong losses seen in spring 2024 contract months with the concern that still strong supply levels will continue to be a drag on the market and limit overall demand growth through the first half of 2024. Hog prices closed lower on the Daily Direct Afternoon hog report, down $1.21 with a weighted average of $46.55 on 4,640 hogs. March corn closed up 7 1/4 at $4.803 and March soybean meal closed up $4.80 at $395.9. The Dow Jones Industrial Average is up 159.36 at 37,545.33.
LIVE CATTLE:
Live cattle futures traded higher through most of the session, despite initial price uncertainty following the holiday weekend. The overall take of the higher-than-expected cattle on feed numbers in our nation's feedlots was that any bearishness in the market had been factored into market prices over the past couple of weeks, and the outlook for slowing feed numbers in the months to come may help to add even more support to the live cattle complex. By the end of the session actively traded nearby contracts were more than $1 per cwt higher, adding potential support for follow-through gains during the week. Overall volume and market activity is expected to remain extremely light through the entire week, which could add even more volatility to market prices over the next few days, but with prices near support levels, there is more upside market potential than down. Cash cattle trade remains quiet with bids and asking prices undeveloped during the afternoon. Showlists appear mixed, lower in Texas, steady in Kansas, and higher in Nebraska and Colorado. It very well could be late in the week before active cash trade develops. The 5-area weekly average price last week increased $2.14 per cwt from the previous week to $170.85. This move higher ahead of the Christmas holiday is expected to help bring some additional support to this week's cash market direction. December live cattle closed $0.53 higher at $170.575, February live cattle closed $1.88 higher at $170.4 and April live cattle closed $1.33 higher at $173.45.
Tuesday's slaughter is estimated at 100,000 head -- 25,000 head less than a week ago and 22,000 head less than a year ago.
Boxed beef prices closed higher: choice up $0.38 ($293.31) and select up $0.04 ($261.19) with a movement of 68.54 loads (42.38 loads of choice, 13.19 loads of select, 7.36 loads of trim and 5.61 loads of ground beef).
WEDNESDAY'S CATTLE CALL: Steady to $1 Higher. Both sides remain quiet following Tuesday, with expectations that sluggish activity will develop through midweek. It very well could be late in the week before active trade develops.
FEEDER CATTLE:
Feeder cattle futures started out under light to moderate pressure Tuesday morning as traders took into account the larger-than-expected placement levels in Friday's Cattle on Feed report. But this market weakness slowly eroded near midday as renewed buyer support and growing support in live cattle futures trade helped rekindle buyer activity. The focus on long-term market direction pushed the most active price gains into late 2024 contract markets, but left all contracts moving in a positive direction through the end of the trading session. Holiday schedules are expected to keep trade volume reduced through most of the week, which could very well add even more volatility to the entire feeder cattle complex. January feeders closed $0.80 higher at $223.55, March feeders closed $0.18 higher at $224.575 and April feeders closed $0.55 higher at $230.075. The CME Feeder Cattle Index for Dec. 21: up $1.22, $221.03.
LEAN HOGS:
Lean hog futures tumbled lower Tuesday as traders continue to be plagued by underlying fundamental support and news that the hog herd has not contracted as expected over the past few months. Even though only narrow reductions were expected in hog numbers in last Friday's Hogs and Pigs report, the fact that overall numbers were slightly higher than year ago levels has impacted market prices and the general direction of the hog complex. February futures led the market lower with a $2.05 per cwt loss, based on the expected number of market-ready hogs in the near future and lack of short-term demand growth. Deferred futures posted much more subdued losses, based on the expectation that breeding herds will be reduced. February lean hogs closed $2.05 lower at $69.3, April lean hogs closed $1.50 lower at $76.075 and May lean hogs closed $1.15 lower at $82.80. Tuesday's hog slaughter is estimated at 463,000 head -- 14,000 head less than a week ago and 16,000 head less than a year ago. Pork Cutouts totaled 298.09 loads with 264.30 loads of pork cuts and 33.79 loads of trim. Pork cutout values are down $0.09 at $82.12. The CME Lean Hog Index for December 21: down $0.44, $66.25.
WEDNESDAY'S HOG CALL: Steady to $1 lower. Continued pressure in futures as well as softness in cash values are likely to limit price gains at midweek. With weekly procurement schedules limited by not only Christmas holiday schedules, but dark plants next Monday due to New Year's Day, limited buying is expected to be needed.
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