GENERAL COMMENTS:
The focus on light trade activity and limited volume surrounding the holidays sometimes seems to be the most obvious answer for market shifts, however, even though the lack of active market participants does have a significant role in the ability for market prices to break away from fundamental and technical market shifts, the reality of daily market shifts due to this quiet trade does not make the price losses or gains any less real or logical.
Follow-through buying stepped back into the feeder cattle market through the day, although prices shifted in a moderate range during the trading session. With the same information, live cattle futures posted mixed to mostly lower trade with the most aggressive pressure seen in actively traded Live cattle contracts. Hog futures were limited to a much more narrow price shift at closing bell, although prices bounced around through the midweek trading session. Outside markets also played a bigger part in the limited activity in livestock trade as stock prices reached or neared record highs, creating some expectations of what may develop not only through the end of the year, but early 2024 in stock prices, and how this will further impact commodity markets.
Hog prices closed lower on the Daily Direct Afternoon hog report, down $0.29 with a weighted average of $46.26 on 7,347 hogs. March corn closed down 3 3/4 at $4.765 and March soybean meal closed down $2.10 at $393.8. The Dow Jones Industrial Average is up 111.19 at 37,656.52.
LIVE CATTLE:
Live cattle futures traded lower Wednesday with the exception of spot December contracts, which are nearing expiration and even more lightly traded than the rest of the complex during the holiday week. February futures led the complex lower with triple-digit losses, and closed $1.12 per cwt lower by the end of the trading session. Trader interest remains limited with very little long-term direction expected during the holiday week. However, this does not mean that the price shifts are irrelevant at this point, as the midweek market softness continues to allow prices to wander within the moderate sideways market trend seen over the past several weeks. The support during the month of December has pushed current price levels nearly $7 per cwt above long-term support levels, but still dangerously close to market lows following the $30 per cwt loss in the last four months. Traders continue to look for additional longer term market direction from beef demand and outside markets heading into 2024, which may help to bring about increased buyer interest into all contracts.
Cash cattle trade is still at a standstill with a few bids available at $270 dressed basis in Nebraska. Feeders are passing at these at this point, and no other interest is seen in other areas midweek. Asking prices have yet to be well established in any area, and it is expected that trade will be pushed off until sometime Thursday or Friday. Feeders continue to focus on heading into the New Year's weekend with higher prices, but it is still uncertain just how flexible packers will become in moving prices higher before the end of the year.
December live cattle closed $0.15 higher at $170.725, February live cattle closed $1.13 lower at $169.275 and April live cattle closed $0.48 lower at $172.975.
Wednesday's slaughter is estimated at 125,000 head, 1,000 head more than a week ago and 3,000 head more than a year ago.
Boxed beef prices closed lower: choice down $1.83 ($291.48) and select down $0.87 ($260.32) with a movement of 106.49 loads (63.80 loads of choice, 24.30 loads of select, 4.93 loads of trim and 13.46 loads of ground beef).
THURSDAY'S CATTLE CALL: Steady to $1 higher. Despite limited bids seen in Nebraska Wednesday, the market remains very quiet. Feeders continue to focus on the expectation of steady to higher prices, which may push trade until late in the week.
FEEDER CATTLE:
Feeder cattle futures shifted higher Wednesday with steady but consistent buyer support moving into the market through most of the trading session. The market remains oversold, and will continue to be in that status for some time, but there is still limited fundamental news available which is likely to create a strong market shift in the near future. This latest move pushed contracts to month-long highs, helping to focus on the potential to draw additional interest back into the market once normal trade volume levels return following the holidays.
January feeders closed $0.93 higher at $224.475, March feeders closed $0.83 higher at $225.4 and April feeders closed $0.83 higher at $230.90. The CME Feeder Cattle Index for Dec. 22: down $0.52, $220.51.
LEAN HOGS:
Lean hog futures regained some market composure during early trade Wednesday, but this initial buyer support was short-lived in most contract months as all but spot February contracts closed lower by the end of the session. Even though February futures were able to retract a portion of Tuesday's losses, gaining 57 cents per cwt, the general lack of interest in buyer support during the holiday week left prices even more vulnerable to end of the week pressure.
Traders are still concerned about the amount of pork available during the first half of 2024, and without any significant shift in domestic or export demand in the coming weeks or months, it appears that prices may continue to wander near the bottom end of the trading range for the short term.
February lean hogs closed $0.58 higher at $69.875, April lean hogs closed $0.15 lower at $75.925 and May lean hogs closed $0.20 lower at $82.60. Wednesday's hog slaughter is estimated at 488,000 head, 3,000 head less than a week ago and 0 head less than a year ago. Pork Cutouts totaled 331.11 loads with 281.98 loads of pork cuts and 49.13 loads of trim. Pork cutout values are up $0.40 at $82.52. The CME Lean Hog Index for Dec.22: down $0.66, $65.59.
THURSDAY'S HOG CALL: Steady. Limited end-of-the week market direction is expected Thursday morning. Packers are preparing for another light procurement weekend with plants dark next Monday for New Year's Day. Midweek softness in cash values is being partially offset by a narrow to moderate boost in pork values, which is likely to lead to cash market stability early Thursday.
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