GENERAL COMMENTS:
Cattle futures quickly pulled back from strong gains seen over the last week, but most of the market pressure was confined to the last hour of trade. January feeder cattle futures led the complex lower with $1 per cwt losses at closing bell, but the uncertainty of Friday's cattle on feed report and upcoming limited holiday trade is starting to cast a nervous tone across the entire cattle complex.
Hog futures posted moderate losses through most of the session as trades continue to focus on lack of significant changes in short-term production levels and questions about demand growth in early 2024. Hog prices closed lower on the Daily Direct Afternoon hog report, down $1.42 with a weighted average of $46.97 on 3,717 hogs.
March corn closed down 4 1/4 at $4.728 and January soybean meal closed down $9.60 at $403.2. The Dow Jones Industrial Average is up 251.90 at 37,557.92.
LIVE CATTLE:
Live cattle futures shifted lower in late-day trade Tuesday. The trend of live cattle markets over the past couple of trading sessions is to move firmly higher early in the session and walk back a portion, if not all of these early gains as the trading day continues.
With limited amount of buyer interest in the pre-holiday market, and very little fundamental changes seen during each trading session, it is likely that moderate daily price shifts may develop through the upcoming days and weeks. Trade volume is only expected to slow from now until the end of the year due to holiday trade.
Early estimates for Friday's Cattle on Feed report are being released with average estimates of 102.2% year-ago levels. This could generally curb overall market support, but the narrow range seems that most analysts are generally confident by this projection.
Cash cattle activity remains quiet Tuesday afternoon with bids and asking prices still limited. It very well could be the last half of the week before any active trade develops. December live cattle closed $0.38 lower at $168.45,
February live cattle closed $0.85 lower at $168.775 and April live cattle closed $0.83 lower at $172.675.
Tuesday's slaughter is estimated at 124,000 head, 3,000 head less than a week ago and unchanged from a year ago.
Boxed beef prices closed lower: choice down $0.10 ($288.83) and select down $0.56 ($263.16) with a movement of 134.75 loads (76.31 loads of choice, 25.29 loads of select, 11.12 loads of trim and 22.03 loads of ground beef).
WEDNESDAY'S CATTLE CALL: Steady. Limited interest is seen Tuesday, which could further delay any activity in the market. With Friday's report being closely watched, possible trade could be pushed off until late in the week.
FEEDER CATTLE:
Feeder cattle futures led the market lower Tuesday as late day pressure developed in all contract months. Even though firm buyer support was seen early in the session, the lack of follow-through activity in the complex added to the overall market pressure.
Front month January contracts led the losses of the day, although there remains uncertainty as to how many active trades developed at the lower price levels given the late day market pullback. Traders look for increased direction at the end of the week and are preparing for Friday's report, although limited pre-holiday activity may continue to keep markets sluggish through most of the week.
January feeders closed $1.28 lower at $221.9, March feeders closed $0.95 lower at $223.2 and April feeders closed $0.75 lower at $227.875. The CME Feeder Cattle Index for Dec.15: up $1.76, $219.91.
LEAN HOGS:
Lean hog futures moved lower for the second consecutive trading session as limited buyer interest was seen in all contracts. The quarterly hogs and pigs report will be released Friday, although this may add some direction to the market based on longer term production and supply levels, the overall impact is not expected to be significant as these factors are already being priced into the market.
Given the strong rally during the last week in lean hog futures, the pullback over the last two days is more focused on market positioning than a change in direction.
February lean hogs closed $1.03 lower at $70.55, April lean hogs closed $0.98 lower at $77.6 and May lean hogs closed $0.50 lower at $84.35. Tuesday's hog slaughter is estimated at 491,000 head, 17,000 head more than a week ago and 1,000 head more than a year ago. Pork Cutouts totaled 271.23 loads with 248.11 loads of pork cuts and 23.12 loads of trim. Pork cutout values are down $0.91 at $83.06. The CME Lean Hog Index for December 15: down $0.56, $66.59.
WEDNESDAY'S HOG CALL: Steady. Softness in futures prices and upcoming holiday procurement needs may limit upside market potential midweek.
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