GENERAL COMMENTS:
Moderate gains have developed and held in feeder cattle futures as traders are focusing on covering short positions after the aggressive market tumble seen Wednesday. The support across feeder cattle trade is helping to instill limited but supportive spillover buying in the live cattle complex, although these gains are very limited through most of the morning trade.
Lean hog futures are showing firm market pressure, although this has not broken out of the current sideways trading pattern. The fundamental market weakness seen in cash values and pork values in early December is creating some underlying concern through the entire futures complex.
March corn is up 3 1/2 at $4.878 and January soybean meal is down $1.00 at $407.50. The Dow Jones Industrial Average is up 5.53 at 36,059.96.
LIVE CATTLE:
Price stability is seen in live cattle futures early Thursday morning. Nearby contracts are steady to moderately higher at midday as firm support has trickled back into the feeder cattle futures. The aggressive triple-digit price freefall seen in live cattle and feeder cattle trade late Wednesday has limited additional selling pressure and allowed for light to moderate short covering in what is still expected to be an oversold market. Despite the complex remaining in an oversold status, the combination of technical and fundamental weakness is making traders extremely hesitant to actively step into the complex.
In the 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 morning following light trade in all areas Wednesday. It is expected that some additional cattle trade will need to develop over the next couple of days, but it is still uncertain just how solid the previous price tone is and the potential to break away from the recent market pressure. Cattle trade in the South is reported at $171 per cwt, $3 per cwt lower than last week's weighted average, but generally steady with earlier week trade. Northern dressed trade was reported at $271 per cwt, $4 per cwt below last week's weighted average.
December live cattle are $0.18 higher at $163.625, February live cattle are $0.18 higher at $163.725, April live cattle are $0.20 higher at $166.875.
Boxed beef prices are mixed: choice down $1.94 ($288.62) and select up $0.44 ($260.34) with a movement of 106.73 loads (60.21 loads of choice, 10.54 loads of select, zero loads of trim and 35.98 loads of ground beef).
FEEDER CATTLE:
Moderate gains have developed and held through the morning in feeder cattle futures. The ability to draw even light to moderate support into the complex following aggressive $5 per cwt losses midweek is indicating that selling pressure may be slowing significantly as the week continues. Technically, the overall tone of the market remains weak with prices Front month January contracts set contract lows Wednesday, with the hope that buyer support can continue to firm and move off these recent support levels. This means that the January feeder cattle contract has traded back and forth within a $58 per cwt trading range during the life of the contract.
January feeders are $1.68 higher at $211.825, March feeders are $0.88 higher at $212.625 and April feeders are $0.43 higher at $216.075.
LEAN HOGS:
Lean hog futures have eroded through morning trade with nearby contracts holding losses of $1 to $2 per cwt. The recent softness in cattle futures is having some spillover impact on 2024 lean hog buying support, but traders remain focused on prices remaining within the previous short-term market range. Although prices are working closer to support levels due to the most recent market pullback, technical support remains at this point.
In 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 are $0.03 lower at $67.525, February lean hogs are $1.05 lower at $68.25 and April lean hogs are $1.45 lower at $74.50. Hog Prices are lower on the Daily Direct Morning Hog report, down $0.97 with a weighted average of $53.92, ranging from $48.00 to $55.00 on 895 head with a five-day rolling average of $55.05. Pork Cutouts totaled 156.62 loads with 136.84 loads of pork cuts and 19.78 loads of trim. Pork cutout values are down $0.28 at $83.51.
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