GENERAL COMMENTS
Triple-digit gains for lean hog futures and feeder cattle futures gained momentum Wednesday afternoon as bullish headline-chasing speculators churned through a strong volume of contracts. Outside markets were the originators of these bullish ideas, with crude oil pivoting higher and trading above $80 per barrel. In the cash cattle market, light trade developed Wednesday in parts of the South at $155, fully steady with last week's weighted averages. Asking prices are around $156 to $158 in the South, but still not established in the North. The National Direct Afternoon Hog Report is delayed Wednesday afternoon, but as a benchmark, the five-day rolling average from the morning report was $84.73. December corn moved down 3 3/4 cents to $6.62 per bushel and December soybean meal closed up $9.20 per ton to $417.70. The Dow Jones Industrial Average was up 737.24 points and the NASDAQ was up 526.61 points.
LIVE CATTLE:
Gains in live cattle futures were relatively mild Wednesday compared to other commodity markets, but these live cattle charts are still bumping up against recent contract highs. The December contract ended up $0.40 at $153.075; the February contract ended up $0.875 at $155.675, and the April contract ended up $0.70 at $159.275. Some light cash cattle trade has developed in parts of the South (mostly Kansas and Texas) at $155, fully steady with last week's weighted averages. A few live bids have been noted in Nebraska, but so far, they are being passed. Asking prices are around $156 to $158 in the South, but still not established in the North. Last week's northern dressed business was marked at $245, which was itself a big $3 week-over-week jump. It may be tricky for the market to sustain gains like that two weeks in a row, although the bullish mood spilling over from outside markets could help.
Boxed beef prices were mixed Wednesday afternoon: choice up $0.14 ($254.88) and select down $0.81 ($225.01), with a movement of 190 loads (139.01 loads of choice, 19.23 loads of select, 5.36 loads of trim and 25.90 loads of ground beef).
THURSDAY'S CASH CATTLE CALL: $1.00 to $2.00 higher. With front-end supplies of market-ready cattle as thin as they are, and with throughput as aggressive as it is, cash cattle prices will likely be higher again this week.
FEEDER CATTLE:
Momentum built in the feeder cattle futures market through the second half of Wednesday's trading session, with higher prices attracting a surge of afternoon futures buying volume and creating a self-fulfilling prophecy of even higher prices. At Wednesday's close, the January contract was up $2.475 at $180.475, the March contract was up $2.275 at $183.45, and the April contract was up $1.95 at $186.80. Even after these impressive triple-digit gains, the nearby contracts remain shy of their highs from last week, but that simply leaves opportunities for additional buying interest, if the renewed confidence in bullish commodity markets carries through the rest of this week. The volume of calves coming through sale barns is seasonally slowing down, but the long-term picture of supply-and-demand remains in the producers' favor.
LEAN HOGS:
Crude oil was higher Wednesday, oilseeds were higher, the Shanghai Composite Index of Chinese stock prices is higher -- in short, the easing of COVID restrictions in parts of China has been a bullish boon to markets that are sensitive to that economy's strength, notably including pork and hogs. The December contract closed up $1.825 at $82.90; the February contract closed up $1.20 at $85.35; and the April contract closed up $0.90 at $90.65. While these gains are more likely the result of speculators buying futures based on headline-chasing, rather than some fresh outlook for domestic U.S. hog supply and demand, the same thing could be said of last week's precipitous sell-off, so a correction may be more than overdue. Packers have been taking a cue from the falling futures prices to pressure hog values lower in recent days, but with the lean hog index eventually slipping below $84 per cwt, these cash values may also be justified in making hefty day-to-day upward corrections. The afternoon pork cut-out showed the overall carcass value up $1.65 to $87.33. There were 304.84 total loads (256.08 loads of cuts and 48.77 loads of trim). The CME Lean Hog Index for Nov. 28: down $0.42, $84.21, and the projected Index for Nov. 29: down $0.32, $83.89.
THURSDAY'S CASH HOG CALL: $1 to $2 higher. In a scenario where domestic pork demand and slaughter tempo remain undaunted, the recent erosion in hog values may need additional correction.
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