GENERAL COMMENTS:
To describe the recent moves in the cattle market as frustrating and discouraging is a gross understatement as even any sense of buyer support seems to be short lived and has led to consecutive days of contract lows in most contract months. Early gains in both live cattle and feeder cattle trade seemed to help bring a sense of stability to the market, but buyer interest quickly dried up in late day trade, leading to firm losses in most nearby contract months.
Lean hog futures posted triple digit losses in all but lightly traded December contracts, creating concerns that continued pressure may break through support levels, leading to additional technical pressure. Hog prices closed lower on the Daily Direct Afternoon hog report, down $2.61 with a weighted average of $51.71 on 3,664 hogs. March corn closed up 3 3/4 at $4.88 and January soybean meal closed down $1.70 at $406.8. The Dow Jones Industrial Average is up 62.95 at 36,117.38.
LIVE CATTLE:
Live cattle futures took another turn lower in late-day trade. Support developed in most contract months through the first half of the trading session Thursday, but the lack of follow-through support and continued technical market pressure hovering over the cattle market left early gains unsupported. This left the opportunity for nearby prices to post moderate to strong losses, with nearby contracts falling over $1 per cwt by closing bell. The concern of additional losses through the end of the week may also limit additional price gains. In Thursday morning's weekly export sales report, net sales of 200 mt for 2023 -- a marketing-year low -- were down 98% from the previous week and from the prior four-week average. Increases primarily for Japan (1,800 mt, including decreases of 1,100 mt), Mexico (1,300 mt, including decreases of 100 mt), China (900 mt, including decreases of 700 mt). Exports of 13,700 mt were up 7% from the previous week, but down 2 %from the prior four-week average. The destinations were primarily to South Korea (3,900 mt).
Cash cattle activity remains quiet Thursday afternoon with bids and asking prices hard to pin down at this point. Light trade developed Tuesday and Wednesday in most areas, but it is still expected that at least some additional cattle are desired to be bought before the end of the week. Cash prices so far this week have been seen at $171 per cwt live basis in the South and $271 per cwt in the North. This is a $3 per cwt loss from last week's weighted average and $4 per cwt lower for dressed cattle in the North. Despite the continued erosion of futures trade, prices may have been set for the week, allowing any price adjustments to be focused on next week's cattle trade.
December live cattle closed $1.10 lower at $162.35, February live cattle closed $1.03 lower at $162.525 and April live cattle closed $0.73 lower at $165.95.
Thursday's slaughter is estimated at 125,000 head, 4,000 head more than a week ago and 1,000 head more than a year ago.
Boxed beef prices closed lower: choice down $0.72 ($289.84) and select down $1.07 ($258.83) with a movement of 218.00 loads (144.49 loads of choice, 19.71 loads of select, 5.02 loads of trim and 48.78 loads of ground beef).
FRIDAY'S CATTLE CALL: Steady with midweek trade. With no additional trade reported Thursday, any additional clean up activity will develop Friday. The tone of the market may have already been set, limiting additional price shifts into next week.
FEEDER CATTLE:
Feeder cattle futures turned lower in late day trade. The short-lived optimism that developed Thursday morning, as prices posted moderate to firm gains during morning trade, has been dashed and once again left traders and general market watchers hoping, looking and searching for any sense of market support through the complex. The closing price levels have caused nearby contracts to set contract lows for two consecutive trading days.
January feeders closed $0.13 higher at $210.275, March feeders closed $0.58 lower at $211.175 and April feeders closed $1.23 lower at $214.425. The CME Feeder Cattle Index for Dec. 5: down $1.92, $222.31.
LEAN HOGS:
Pressure continued to develop in lean hog futures trade with triple-digit losses seen in all but lightly traded spot December contracts. Nearly all trade activity has moved to the February and April contract months. This allowed all 2024 contracts to close with triple-digit losses, creating additional concerns of further weakness possible through the complex. In the Thursday morning release of the weekly export sales report, net sales of 25,900 mt for 2023 were up 23% from the previous week, but down 14% from the prior four-week average. Increases primarily for South Korea (10,100 mt, including decreases of 500 mt), Mexico (7,800 mt, including decreases of 1,000 mt), Japan (2,700 mt, including decreases of 700 mt). Exports of 32,300 mt were up 16% from the previous week and 2% from the prior four-week average. The destinations were primarily to Mexico (12,700 mt), South Korea (4,500 mt), Japan (3,800 mt), China (2,500 mt), and Canada (2,000 mt).
December lean hogs closed steady, February lean hogs closed $1.53 lower at $67.775 and April lean hogs closed $1.33 lower at $74.625. Thursday's hog slaughter is estimated at 487,000 head, 1,000 head more than a week ago and 2,000 head more than a year ago. Pork Cutouts totaled 268.87 loads with 237.08 loads of pork cuts and 31.79 loads of trim. Pork cutout values are up $0.40 at $83.6. The CME Lean Hog Index for Dec. 5: down $0.17, $69.43.
FRIDAY'S HOG CALL: Steady to $1 Lower. Underlying pressure in cash hog values and futures trade Thursday is going to make it difficult to expect higher cash prices at the end of the week.
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