GENERAL COMMENTS:
Livestock futures started the New Year off with a bang, as cattle futures surged higher with aggressive triple-digit buyer support, and active triple-digit losses flooded into lean hog trade. The overall lack of trade volume and lackluster market activity discussed much of last week came to an end with traders resumed normal duties as they put holiday schedules in the rearview mirror and focused on moving price levels and supply expectations forward for the new year. Nearby live cattle and feeder cattle futures ended the day with a $3 per cwt rally, while $2 per cwt losses quickly developed and held in nearby lean hog trade.
Hog prices closed higher on the Daily Direct Afternoon hog report, up $1.56 with a weighted average of $45.13 on 8,884 hogs. March corn closed down 7 1/2 at $4.638 and March soybean meal closed down $6.50 at $379.5. The Dow Jones Industrial Average is up 25.50 at 37,715.04.
LIVE CATTLE:
Live cattle had a great day of trade Tuesday as buyers who seemingly had a great holiday break aggressively moved back into the market following the lack of overall activity and volume last week. With end-of-the-year apathy and holiday schedules, traders seemed to have very little interest in any sense of market direction until today. However, regaining market support and a slightly less bearish outlook for the upcoming weeks and months seemed to be the focus of all traders. The most aggressive support developed in February futures, but all contracts were able to secure triple digit gains at closing bell, creating some sense of market support heading into the month of January.
Cash cattle activity remains very quiet with bids and asking prices yet to be established. Showlists appear to be generally mixed, higher in Kansas and Nebraska, while lower in Texas. It is likely to be midweek or last before active interest is seen, but given the early week support in futures trade and price gains at the end of the year, feeders are likely to be content with nothing less than steady to higher money.
February live cattle closed $3.43 higher at $171.925, April live cattle closed $2.25 higher at $174.5 and June live cattle closed $1.88 higher at $171.925.
Tuesday's slaughter is estimated at 126,000 head, 26,000 head higher than a week ago and 2,000 head higher than a year ago.
Boxed beef prices closed lower: choice down $5.37 ($284.34) and select down $1.47 ($258.86) with a movement of 139.06 loads (79.13 loads of choice, 26.75 loads of select, 12.04 loads of trim and 21.14 loads of ground beef).
WEDNESDAY'S CATTLE CALL: Steady. With markets and plants closed Monday due to the New Year's Day holiday, trade activity is expected to remain delayed this week. Late-week activity is not unlikely and could easily stretch into Friday.
FEEDER CATTLE:
Feeder cattle futures led the market higher Tuesday with gains over $4 per cwt seen in nearby contracts during morning trade. Although prices were unable to close at session highs, the overall support across the complex was uniform and focused on increased overall market momentum across the entire complex. The limited volume and light activity left markets ripe for a market rebound Tuesday once traders returned from the long holiday weekend. Sharp losses across grain trade and most other commodity markets also added to the underlying support in feeder cattle trade, helping to secure $3 per cwt gains in all nearby contracts.
Cash feeder cattle sales at Joplin Regional Stockyards posted sales $2 to $12 per cwt higher than the last sale two weeks ago. This underlying support through the market is expected to be seen in other markets over the coming days, and could help to build even more support in all areas of the feeder cattle complex.
January feeders closed $3.13 higher at $225.425, March feeders closed $3.35 higher at $226.45 and April feeders closed $3.25 higher at $232.15. The CME Feeder Cattle Index for Dec. 28: up $12.21, $228.19.
LEAN HOGS:
Lean hog futures are having a very hard time finding any sense of market stability or price support following the pre-Christmas release of the quarterly hogs and pigs report. Even though last week posted very lethargic market activity, the tone of the market has steadily declined over the past couple of weeks. The announcement that the nation's hog herd did not contract as expected at the end of 2023 continues to be a disappointing factor that traders are still not fully working into price points and market expectations.
Nearby lean hog futures quickly broke through previous support levels, setting contract low prices, and creating significant questions about where the market bottom may be. This could lead to additional market uncertainty over the next few days as traders try to establish a new support level heading into the month of January.
February lean hogs closed $2.65 lower at $65.325, April lean hogs closed $2.35 lower at $72.5 and May lean hogs closed $1.65 lower at $79.85. Tuesday's hog slaughter is estimated at 492,000 head, 41,000 head more than a week ago and 58,000 head more than a year ago. Pork Cutouts totaled 305.68 loads with 255.54 loads of pork cuts and 50.14 loads of trim. Pork cutout values are up $0.34 at $85.1. The CME Lean Hog Index for Dec. 28: down $0.22, $65.35.
WEDNESDAY'S HOG CALL: Steady to $1 lower. The strong pressure in futures trade early in the week is going to create follow-through cash market support as challenge despite early week gains in cash and pork cutout values.
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