GENERAL COMMENTS:
Light to moderate gains developed Tuesday morning in cattle trade as traders continue to focus on the increased market support seen Monday. At midday, buyer support started to erode following the initial release of cattle on feed estimates hitting the market. At this point, there is very limited movement in live cattle and feeder cattle trade, although the focus is moving from strong early week gains to moderately mixed price moves Tuesday.
Firm pressure is holding in lean hog trade as traders continue to assess current market supplies and overall short-term demand expectations. This could keep lean hog prices moving in a sideways trading range over the near future.
March corn is down 5 1/4 at $4.718 and January soybean meal is down $6.50 at $406.3. The Dow Jones Industrial Average is up 177.43 at 37,483.45.
LIVE CATTLE:
Live cattle trade remains mixed in limited direction. The inability for live cattle futures to hold the triple-digit gains seen early Monday is causing some uncertainty about additional upward price movement in front of the Christmas holiday.
For the week before Christmas, there continues to be a lot going on in the cattle market. Overall volume is expected to remain generally sluggish through the end of the year with markets closed for a day next week and the following week for the Christmas and New Year's holiday. However, this Friday will also be the release of the December cattle on feed report. Although initial estimates hit the news this morning, there will be some market adjustments seen through the rest of the week as well as next week.
Traders will not be able to actually trade the report until next Tuesday after coming back from the Christmas holiday. Early estimates point to an average estimate of 2% increase from year ago on feed numbers. This has softened early 2024 contract prices at midday.
Cash cattle activity remains at a standstill with bids and asking prices still not well developed. It could easily be Wednesday or later before active trade is seen in cash cattle markets. The reduced slaughter numbers for the holiday week could also limit packers' need to become as active in the market as in typical weeks.
December live cattle are $0.15 higher at $168.975, February live cattle are $0.38 lower at $169.25, April live cattle are $0.28 lower at $173.225.
Boxed beef prices are mixed: choice up $0.02 ($288.95) and select down $0.30 ($236.42) with a movement of 68.29 loads (37.18 loads of choice, 13.29 loads of select, 8.51 loads of trim and 9.31 loads of ground beef).
FEEDER CATTLE:
Feeder cattle futures have slowly pulled back from early week market gains, with nearby contracts steady to 62 cents lower at midday, while narrow to moderate gains are seen in deferred contracts. Early estimates for the upcoming cattle on feed report have been released, with overall placement numbers near 96% of year-ago levels.
Although larger placement numbers are not expected, the recent market rally has started to factor in the potential that significant pullback of cattle placed in feedyards may help build additional optimism heading into the new year. Even without the estimates affecting the market, the narrow pullback in prices is not out of line for normal market adjustments following the aggressive market shift higher in the last several days.
January feeders are $0.58 lower at $222.6, March feeders are $0.30 lower at $223.85 and April feeders are $0.03 higher at $228.65.
LEAN HOGS:
Firm pressure is seen in lean hog futures trade with traders still concerned about short term demand support given the current production levels and uncertainty of strong export demand during early 2024. Nearby contracts are holding losses of $1 per cwt or greater, while light to moderate pressure is seen in the second half of 2024. Trade is likely to remain sluggish through the rest of the day, with limited overall volume likely in the coming days due to the holiday weekend approaching.
February lean hogs are $0.98 lower at $70.6, April lean hogs are $1.20 lower at $77.375 and May lean hogs are $0.75 lower at $84.10. Hog Prices are higher on the Daily Direct Morning Hog report, up $0.88 with a weighted average of $50.29, ranging from $41.00 to $54.00 on 1,047 head with a five-day rolling average of $49.55. Pork Cutouts totaled 156.81 loads with 145.03 loads of pork cuts and 11.78 loads of trim. Pork cutout values are up $1.01 at $85.54.
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