GENERAL COMMENTS
The livestock complex powered through Wednesday's trade as the support from the commodity market helped propel all the contracts higher. Come Thursday, the market will be e interested in seeing how the cash cattle market trades. Hog prices closed lower on the Daily Direct Afternoon Hog Report, down $0.40 with a weighted average of $79.52 on 3,764 head. March corn is up 10 1/4 cents per bushel and March soybean meal is up $3.40. The Dow Jones Industrial Average is up 526.74 points.
LIVE CATTLE:
There are good days, and then there are unforeseen, crazy days like Wednesday. The board's willingness to trade higher completely changes the tone of this week's market and lays the grounds for next week's market to trade substantially higher, especially if Friday's Cattle on Feed report is bullish, which it's expected to be with lighter on-feed numbers and fewer placements. What was potentially most exciting about Wednesday's trade was that, in both the spot February contract and the highly sought-after April contract, resistance was broke. February live cattle were able to close at $157.70 which far surpassed the market's resistance at $157, and April live cattle broke above $160 and to close at $161.17. I realize that reaching these price points is one thing and keeping the market elevated to trade at these levels is another, but with feedlots unwilling to trade cattle at Wednesday's early bids, I tend to believe that with the added power of Friday's potentially strong Cattle on Feed report. And the chance that feedlots trade cattle steady to somewhat higher may be enough fundamental support to keep traders actively engaged in the live cattle market. Bids of $153 were offered in both Kansas and Texas, but that's significantly lower than feedlot's asking prices of $156 to $157. Trade will develop sometime Thursday and will be the focus of most in the cattle sector.
Wednesday's slaughter is estimated at 122,000 head, 4,000 head more than a week ago and steady with a year ago.
Boxed beef prices closed mixed: choice down $0.19 ($265.86) and select up $2.39 ($236.29) with a movement of 118 loads (65.39 loads of choice, 20.92 loads of select, 6.98 loads of trim and 24.83 loads of ground beef). The choice/select spread sits at $28.57.
THURSDAY'S CATTLE CALL: Higher. With the change in the market's tone thanks to the dynamic trade throughout the futures complex, I do believe that feedlots will be able to trade cattle at least steady, if not even a little higher this week.
FEEDER CATTLE:
The feeder cattle complex traded strong throughout Wednesday's market even though it usually would have cratered and went tumbling lower at the sight of corn trading $0.08 to $0.10 higher. But with Friday's Cattle on Feed report expected to be supportive with fewer on-feed numbers and significantly lighter placements, combined with the stark rally in the live cattle contracts, the feeder cattle market opted to take a chance and trade higher. January feeders closed $0.20 higher at $183.82, March feeders closed $0.70 higher at $185.72 and April feeders closed $0.87 higher at $189.35. Thursday's market will test the feeder cattle complex, as it will either have to support Wednesday's decision and continue to trade steady to somewhat higher, or retract and trade lower. Much will depend on what the live cattle market does and how this week's cash cattle market pans out. The CME Feeder Cattle Index for Dec. 20: up $0.13, $178.14.
LEAN HOGS:
It was wild to watch the lean hog complex close as strongly as it did, as the market hasn't largely been trading in a somewhat lower trending pattern. Besides trading higher alongside both the live cattle and feeder cattle markets, the trickle-over support from the commodity market and the hope that Friday's Hogs and Pigs report will be supportive sent Wednesday's market higher. Now the market's fundamentals paint a different outlook to the complex -- as the cash market didn't see hardly any hogs trade and pork cutout values closed lower again -- the futures market stepped up to the plate at Wednesday's dawn. February lean hogs closed $4.15 higher at $88.40, April lean hogs closed $3.10 higher at $95.27 and June lean hogs closed $1.90 higher at $108.42. Pork cutouts totaled 272.96 loads with 235.07 loads of pork cuts and 37.89 loads of trim. Pork cutout values: down $1.01, $82.45. Wednesday's slaughter is estimated at 460,000 head, 30,000 head less than a week ago and 5,000 head less than a year ago. The CME Lean Hog Complex for Dec. 19: up $0.02, $80.86.
THURSDAY'S HOG CALL: Lower. Packers have shown that they're not interested in aggressively procuring hogs ahead of the Christmas holiday.
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