GENERAL COMMENTS:
Trade Wednesday seemed to be focused on position adjustments in all livestock trade with narrow gains redeveloping in lean hog futures following an initial price pullback. Meanwhile, live cattle futures closed mostly higher, but well off session highs as traders continue to focus on firming market fundamentals, but technical trade is unwilling to break out of the current sideways trading pattern.
Hog prices closed lower on the Daily Direct Afternoon hog report, down $0.04 with a weighted average of $45.27 on 6,343 hogs. March corn closed up 1/4 at $4.595 and March soybean meal closed down $3.30 at $364.3. The Dow Jones Industrial Average is up 170.57 at 37,695.73.
LIVE CATTLE:
Live cattle futures backed away from firm morning gains as buyer interest slowly but steadily started to erode in the last couple hours of trade. This left the market still trading mostly higher with spot February futures the only contract in all livestock markets holding a narrow loss of 2.5 cents per cwt. Other livestock futures held onto narrow to moderate gains during the light trade activity, although the inability to show significant market support may continue to limit upward market potential.
Spot contracts are trading over $1 per cwt under early January highs. Although the ability to inch prices higher is important, the market feels like it is stuck within the current sideways trend despite firming fundamental support during early 2024.
Cash cattle activity remains extremely limited with a few asking prices from earlier in the day seen at $174 and higher in the South. Asking prices in other areas and bids are still illusive, indicating that trade will be moved to sometime Thursday or Friday. At this point, late Friday trade is not out of the question, especially with next Monday being a holiday.
February live cattle closed $0.03 lower at $170.75, April live cattle closed $0.08 higher at $173.675 and June live cattle closed $0.35 higher at $171.1.
Wednesday's slaughter is estimated at 113,000 head, 15,000 head less than a week ago and 11,000 head less than a year ago.
Boxed beef prices closed higher: choice up $2.91 ($283.07) and select up $4.11 ($266.94) with a movement of 137.12 loads (85.54 loads of choice, 15.79 loads of select, 9.85 loads of trim and 25.94 loads of ground beef).
THURSDAY'S CATTLE CALL: Steady to $1 higher. Despite the lackluster interest during the first half of the week, feeders are focused on steady to higher price levels, and may be willing to hold out until late in the week.
FEEDER CATTLE:
Feeder cattle futures led the market higher with several nearby feeder cattle contracts able to post triple-digit gains at the closing bell. The lack of follow-through support in all cattle trade at the end of the session eroded prices from session highs, but still did not create any significant change in overall market direction or price movement.
Feeder cattle futures find themselves stuck within a moderate to wide sideways market range. Although prices have bounce nearly $1.50 per cwt higher from early January lows, there seems to be very little momentum from either technical or fundamental factors which would indicate a Quick move above monthly highs set on Jan. 3. This could continue to allow feeder cattle futures to wander higher and lower within in current market range over the upcoming days.
January feeders closed $0.85 higher at $224.625, March feeders closed $1.25 higher at $226.125 and April feeders closed $1.10 higher at $231.45. The CME Feeder Cattle Index for Jan. 8: down $1.33, $227.69.
LEAN HOGS:
Lean hog markets closed higher Wednesday afternoon, despite holding moderate losses through the first half of the trading session. Following strong upward momentum over the past four trading sessions, traders seemed focused on taking profits and adjusting positions given the opportunity and slowing market momentum Tuesday. The selling pressure seemed to quickly run out of gas, as buyers moved back into the market with April and May contracts able to close 40 to 45 cents per cwt higher by the end of the session. Underlying support, both fundamentally and technically, is still seen in the hog complex, allowing for markets to break through short-term resistance levels at the end of the session, moving above December market highs in spot month contracts.
February lean hogs closed $0.20 higher at $72.075, April lean hogs closed $0.45 higher at $78.95 and May lean hogs closed $0.40 higher at $84.70. Wednesday's hog slaughter is estimated at 470,000 head, 1,000 head higher than a week ago and 14,000 head less than a year ago. Pork Cutouts totaled 252.95 loads with 214.54 loads of pork cuts and 38.41 loads of trim. Pork cutout values are up $2.14 at $86.67. The CME Lean Hog Index for Jan. 8: up $0.09, $65.83.
THURSDAY'S HOG CALL: Steady to $1 higher. Building momentum through the entire hog complex at the end of the week is expected to lead to firming packer bids Thursday morning.
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