GENERAL COMMENTS
Traders were hesitant participants throughout Tuesday's market and their skeptical nature led the livestock complex to a lower end on Tuesday. Heading into Wednesday's market, feedlots are ready to price cattle higher and will likely be willing to wait until the week's end to trade. Hog prices averaged $74.69 on the Daily Direct Afternoon Hog Report, with a total movement of 4,747 head and a five-day rolling average of $75.37. March corn is down 8 cents per bushel and March soybean meal is down $5.90. The Dow Jones Industrial Average is down 10.88 points.
LIVE CATTLE:
The live cattle complex attempted to trade higher early in the day, but as the nature of the livestock market grew weary, the complex grew weaker and closed 5 to 105 points lower by Tuesday's end. It's fair to say that traders would be longing to see follow-through fundamental support early in the week after the long holiday run between Christmas and the New Year, but with a $3.00 to $4.00 increase in boxed beef prices and a slaughter speed of 126,000, it's hard to say that traders need to see more fundamental support than that! The cash cattle market didn't see any trade throughout Tuesday's market, and as feedlots set out to trade cattle higher again this week, trade will likely develop on Thursday, if not potentially on Friday. New showlists appear to be higher in all three major feeding states. February live cattle closed $1.05 lower at $156.85, April live cattle closed $0.92 lower at $160.87 and June live cattle closed $1.00 lower at $156.82.
Tuesday's slaughter is estimated at 126,000 head, 2,000 head less than a week ago and 10,000 head more than a year ago. Monday's slaughter is estimated at 7,000 head.
Most of last week's cash cattle trade took place on Thursday and Friday. Northern dressed deals ranged from $248 to $255, but mostly from $252 to $254, which is $3.00 to $5.00 higher than the previous week's weighted average. Southern live cattle traded for mostly $157, which is $1.00 higher than the previous week's weighted average.
Boxed beef prices closed higher: choice up $4.97 ($286.95) and select up $3.70 ($254.63) with a movement of 117 loads (59.74 loads of choice, 18.01 loads of select, 10.37 loads of select and 29.26 loads of ground beef). The choice/select spread sits at $32.32.
WEDNESDAY'S CATTLE CALL: Higher. With boxed beef prices stronger early this week, feedlots will be emboldened to demand higher cash prices and will likely see the advancement they want as packers need more cattle.
FEEDER CATTLE:
The feeder cattle complex traded timidly throughout Tuesday's market as traders opted to sit back and wait to see what took place throughout the live cattle market and how demand panned out in sale barns early this week. Unfortunately, this approach led to a lower close in the feeder cattle contracts, but if boxed beef prices continue to grind higher and the corn complex continues to trade in a lower manner, the market stands a chance at trading higher later this week. January feeders closed $1.00 lower at $182.70, March feeders closed $1.45 lower at $184.77 and April feeders closed $0.85 lower at $188.77. It will help the feeder cattle market if the cash cattle complex is again able to trade cattle higher, which could begin to be seen as early as Wednesday. At Joplin Regional Stockyards in Carthage, Missouri, compared to the last sale two weeks ago, feeders traded $4.00 to $7.00 higher with feeder heifers trading $6.00 to $11.00 higher. Feeder cattle supply over 600 pounds was 68%. The CME Feeder Cattle Index for Jan. 2: down $2.57, $181.02.
LEAN HOGS:
The lean hog complex is struggling to find sufficient demand in its market, and throughout Tuesday's market, traders aren't willing to advance the contracts until they see better demand -- better demand in the form of stronger more robust cash sales and better demand in the form of better pork sales. The pork cutout value was pulled lower as the belly fell $3.61, the rib fell $3.50 and the ham fell $3.18. With cold storage beyond full of inventory, it's hard saying whether an uptick in demand would affect cutout values as packers have ample product to push. February lean hogs closed $2.62 lower at $85.07, April lean hogs closed $1.50 lower at $93.80 and June lean hogs closed $1.02 lower at $108.15. Pork cutouts totaled 370.49 loads with 320.93 loads of pork cuts and 49.56 loads of trim. Pork cutout values: down $1.90, $86.00. Tuesday's slaughter is estimated at 483,000 head, 1,000 head more than a week ago and 17,000 head more than a year ago. Monday's slaughter is estimated at 25,000 head. The CME Lean Hog Index for Dec. 29: down $0.55, $80.19.
WEDNESDAY'S HOG CALL: Higher. Given that packers were extremely complacent in last week's market, it's likely that they will be more aggressive come Wednesday.
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