GENERAL COMMENTS:
Moderate to firm pressure developed across the livestock complex Wednesday morning. Early softness was focused on position taking opportunities, although as the day continued the focus shifted to strong gains in stock market prices, which had a negative impact on all commodity markets.
Wednesday saw a positive Federal Reserve meeting that focused on indications that previous rate hikes appear to be enough to slow the economy adequately. The message taken from the meeting is that there are no plans for further increases in the interest rate, with the potential and likelihood that cuts could be seen in the upcoming quarters. This helped to push the Dow Jones Index to gains of over 500 points Wednesday afternoon. Feeder cattle futures led the livestock market lower, but the direction through the end of the week is still uncertain.
Hog prices closed higher on the Daily Direct Afternoon hog report, up $0.88 with a weighted average of $49.65 on 4,329 hogs. March corn closed down 5 3/4 at $4.795 and January soybean meal closed down $8.10 at $402.2. The Dow Jones Industrial Average is up 512.30 at 37,090.24.
LIVE CATTLE:
Live cattle futures worked lower through the session with triple-digit losses developing in February through June contract months. This may add increased pressure through the end of the week.
Following three days of strong market gains, traders focused on squaring positions with increased volatility developing as strong gains developed in stock and financial markets. Cash cattle markets were slow to develop and remained quiet in most areas. A small number of cattle were sold in Nebraska at $168 per cwt live and $267 dressed. This is $3 per cwt lower than last week's average, but it is still uncertain if this is enough movement to set the tone for the week. Asking prices remain at $170 live in the South and $270 dressed in the North. More active trade is expected to be seen over the next couple of days.
December live cattle closed $0.75 lower at $166.95, February live cattle closed $1.38 lower at $167.225 and April live cattle closed $1.45 lower at $170.95.
Wednesday's slaughter is estimated at 127,000 head, 2,000 head more than a week ago and 10,000 head more than a year ago.
Boxed beef prices closed mixed: choice down $1.14 ($291.64) and select up $0.55 ($259.21) with a movement of 176.11 loads (107.77 loads of choice, 30.63 loads of select, 14.10 loads of trim and 23.61 loads of ground beef).
THURSDAY'S CATTLE CALL: Steady to $3 lower. Midweek price pressure is seen Wednesday, but the hope to create some market stability is causing feeders to hold onto steady asking prices.
FEEDER CATTLE:
Triple-digit losses moved into the feeder cattle futures as traders slowly backed away from previous gains. Given the move higher over the past three trading sessions and firm support in financial markets, commodities came under pressure, allowing feeder cattle traders to take protection following the recent gains. Most significant losses developed in nearby contracts, although overall volume remained moderate at best.
January feeders closed $1.88 lower at $217.375, March feeders closed $1.75 lower at $217.85 and April feeders closed $1.53 lower at $221.825. The CME Feeder Cattle Index for Dec. 11: down $0.73, $215.32.
LEAN HOGS:
Lean hog futures moved mostly lower with the most aggressive losses seen in February and April contracts. These moves broke through November lows and moved the lean hog complex out of the sideways market shift, creating additional concerns of follow through pressure in the near future. Long-term concerns surrounding strong global pork production may limit demand growth through the first half of 2024.
December lean hogs closed $0.10 higher at $67.925, February lean hogs closed $1.53 lower at $66.725 and April lean hogs closed $1.10 lower at $74.375. Wednesday's hog slaughter is estimated at 489,000 head, 2,000 head more than a week ago and 1,000 head more than a year ago. Pork Cutouts totaled 303.02 loads with 266.58 loads of pork cuts and 36.44 loads of trim. Pork cutout values are down $0.03 at $83.93. The CME Lean Hog Index for Dec. 11: down $0.23, $67.70.
WEDNESDAY'S HOG CALL: Steady. Pressure in futures trade and sluggish moves in cash earlier in the week is expected to limit upward movement in cash hog values through the end of the week.
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