GENERAL COMMENTS:
On the Monday after Thanksgiving, prices of live cattle, feeders and lean hogs are trading at new lows, still searching for support in the month of November.
LIVE CATTLE:
February live cattle futures are trading down $0.82 at $170.15, extending their lowest prices since March after last week's sell-off marked the February contract down $5.82. Monday's report of weighted averages will be interesting to see as it looked like southern live trade was down roughly $1 to $2 at $176 to $177, while northern dressed trade was just over a dollar lower, mostly near $280. Seeing cash prices hold firmer than the futures is an encouraging sign, and we'll see if negotiated prices showed any better interest from packers last week. Last week's estimated slaughter of 538,000 during Thanksgiving week wasn't unusual for having a day off and Monday's cattle slaughter is estimated at 125,000 by Dow Jones, down from 126,000 last week.
USDA's report on Monday morning showed choice boxed beef at $298.38, staying near $300.00 while selects were up $3.33 to $272.09 with a total load count of 32. Overall, the U.S. economy has been supportive for continued beef demand at the retail counter. Some retailers have expressed concerns about consumer spending, but Forbes reported Black Friday sales at a record high $9.8 billion and store traffic up a few percent from last year.
According to the National Weather Service, parts of central Kansas received 10 to 14 inches of snow over the weekend, but amounts were lighter elsewhere around the central Plains. The snow is not expected to last long as warmer temperatures are expected to return during the week and restore road conditions. The CFTC will release updated information on trader positions Monday afternoon, likely showing more liquidation among specs in cattle. As of Nov. 14, noncommercials were net long 42,815 contracts of live cattle.
FEEDER CATTLE:
January feeder cattle are trading down $3.22 at $216.10, extending last week's loss to their lowest prices since February. In November, January feeders have experienced a harsh sell-off that puts the futures well below the CME Feeder Index, last seen at $226.94 as of Tuesday, Nov. 21. The sell-off that was initially triggered by USDA's report of higher placements in September has turned into a bearish rout in the futures market, even after the CFTC data for Nov. 14 showed noncommercials had exited net longs and have gone slightly net short. Monday afternoon's update as of November 21 is apt to show specs holding a larger net short position. March corn is trading down 8 cents Monday, a small consolation for the sharp drop in feeder prices that shows no sign of slowing down yet.
LEAN HOGS:
February lean hogs are trading down $1.00 at $67.77, another new contract low that is being influenced by Monday's selling in cattle and feeders. The hog market continues to have the look of an over-supplied market with no sign of packers having any trouble securing their weekly needs. Even though U.S. pork exports are up 6% so far in 2023, it also doesn't help to see the national price of hogs in China at 14.41 yuan per kilogram, among its lowest prices since early 2022.
USDA estimated last week's hog slaughter at 2.221 million head, decent activity for the holiday week. Dow Jones estimated Monday's hog slaughter at 485,000 down from 487,000 a week ago and still at an active pace. Monday morning's report of pork cutout values were also encouraging for demand, showing the cutout at $89.63, up from Friday and still well above the prices packers are paying for cash hogs. Monday's higher cutout was supported by a $17.76 gain in bellies and $11.40 increase in picnics. CME's most recent lean hog index was projected at $73.60 for Wednesday, Nov. 22.
Monday morning's Daily Direct afternoon report showed national formula hog prices holding at $71.78 per hundredweight, while negotiated trade remains more than $10 lower at $60.92, a bearish sign of demand from packers. Technically speaking, February hog prices are in an active downtrend, having fallen to their lowest February prices in well over two years. The Covid-related 2020 low of $52.57 seems too low for this market, but there is no sign of support yet.
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