Tuesday Closing Livestock Market Update - Firm Gains Redevelop

GENERAL COMMENTS:

Strong early gains in nearby lean hog futures helped sustain positive price direction through the complex Tuesday. February lean hog futures closed $1.27 per cwt higher, but pulled back significantly from midday highs, as traders started to adjust positions following the strong upward moves over the past four trading session.

Live cattle futures gained momentum in the last hour of trade, moving firmly higher in nearby contracts. Hog prices closed higher on the Daily Direct Afternoon hog report, up $0.41 with a weighted average of $45.31 on 8,149 hogs. March corn closed up 4 1/4 at $4.593 and March soybean meal closed down $0.90 at $367.6. The Dow Jones Industrial Average is down 157.85 at 37,525.16.

LIVE CATTLE:

Live cattle futures moved higher in light late-day trade following mixed market movements within a narrow to moderate range through most of the Tuesday trading session. February live cattle futures led the way higher, focusing on the recent support in cash cattle trade and strong upward support in morning beef prices.

Nearby live cattle futures have remained stuck within a narrow $3 per cwt trading range over the past month, creating support on the bottom side of the market, which is helping to stimulate some follow-through buyer interest. But given the sideways market trend through the end of 2023 and start of 2024, the lack of upward market momentum may easily keep prices hovering within this current trading range over the near future. Significant demand support is likely to be needed in order to sustain and draw additional price moves in order to break through resistance levels.

Cash cattle markets are quiet Tuesday with bids and asking prices still unavailable. Part of Northern Cattle country has been hit with winter storms, leaving the main priority of digging lots out early in the week. Active trade may be delayed until midweek or later, with late week trade very possible once again.

February live cattle closed $0.83 higher at $170.775, April live cattle closed $0.58 higher at $173.60 and June live cattle closed $0.40 higher at $170.75. 

Tuesday's slaughter is estimated at 52,000 head, 74,000 head less than a week ago and 72,000 head less than a year ago. 

Boxed beef prices closed higher: choice up $1.33 ($280.16) and select up $3.47 ($262.83) with a movement of 101.05 loads (53.69 loads of choice, 23.90 loads of select, 3.98 loads of trim and 19.48 loads of ground beef).

WEDNESDAY'S CATTLE CALL: Steady to $2 higher. Firm underlying support in futures trade and beef values is helping solidify the expectation of higher asking prices. It may be the end of the week, but feeders are expected to focus on extending the recent market support before selling cattle this week.

FEEDER CATTLE:

Feeder cattle futures were the one livestock market that did not post firm across the board gains Tuesday afternoon. The renewed support in grain trade as well as a pullback in stock prices seemed to have more indication of market stability and limited earlier buyer support. Prices posted narrow nearby losses, although summer and fall contracts were able to etch out moderate gains based on the expectation that feeder cattle numbers are likely to continue to tighten as the year continues.

January feeders closed $0.10 lower at $223.775, March feeders closed $0.20 lower at $224.875 and April feeders closed $0.25 higher at $230.35. The CME Feeder Cattle Index for Jan. 5: down $1.33, $227.69.

LEAN HOGS:

Lean hog trade posted moderate to strong gains early in the session with nearby contracts trading $2 per cwt higher at midday. The continued buyer support in the lean hog complex has pushed prices higher each of the past four trading sessions. Lack of additional buyers moving into the market at the end of the trading session, allowed early gains to erode, but all contracts closed higher Tuesday afternoon.

Traders continue to focus on the ability to sustain additional technical support following previous contract lows, but given the aggressive move higher over the past week, the opportunity to adjust positions and take advantage of profits may limit price shifts midweek.

February lean hogs closed $1.28 higher at $71.875, April lean hogs closed $0.98 higher at $78.50 and May lean hogs closed $0.35 higher at $84.30. Tuesday's hog slaughter is estimated at 440,000 head, 52,000 head less than a week ago and 48,000 head less than a year ago. Pork Cutouts totaled 349.79 loads with 322.80 loads of pork cuts and 26.99 loads of trim. Pork cutout values are down $0.49 at $84.53. The CME Lean Hog Index for January 5: down $0.11, $65.74.

WEDNESDAY'S HOG CALL: Steady to $1 higher. The combined support of a full procurement week and additional futures market gains, cash bids are expected to be steady to firm early Wednesday morning.