GENERAL COMMENTS:
Livestock futures remained mixed as traders returned from the extended holiday weekend. Renewed buyer support developed in all cattle markets, as spot month February live cattle futures set the tone for the higher moving markets. Moderate to firm gains developed in all feeder cattle futures while the most aggressive support in live cattle prices developed in February and April contract months. The combination between increased beef values, firming expectations of higher cash cattle trade through the end of January and building technical support helped to steadily draw buyers back into the market Tuesday. Lean hog futures slipped lower for the second consecutive trading session. This move is not enough to create concern of a widespread selling trend developing, but traders are looking for additional confirmation from meat values as the week continues. Hog prices closed higher on the Daily Direct Afternoon hog report, up $0.94 with a weighted average of $45.9 on 4,720 hogs. March corn closed down 3 1/2 at $4.435 and March soybean meal closed up $9.00 at $371.1. The Dow Jones Industrial Average is down 231.86 at 37,361.12.
LIVE CATTLE:
Live cattle futures rallied higher Tuesday with the front month February contract leading the market higher. This most recent shift in live cattle contracts moved prices above $173 per cwt, and has moved through short-term resistance levels once again and to the highest price levels since late November. Traders continue to focus on firming beef values during early January, as well as expectations that cash cattle prices will continue to advance as the entire complex is coming off recent market pressure and regaining significant market momentum. Early estimates for this week's cattle on feed report are starting to circulate with overall on feed estimates pegged at 102.2% of year-ago levels. This increase is not a significant surprise given the increased placement levels over the past few months. But it will be very interesting to see how close the actual report is to overall estimated levels, and if the market has already factored in the higher on feed numbers going into 2024. Cash cattle activity remains quiet Tuesday with both sides showing limited interest in jumping into the market too early. Bitterly cold weather continues to hover over much of the Northern half of the country, creating additional concerns for not only maintaining cattle health, but nearly eliminating gains over the recent days. Both sides will get back to the business of selling and buying cattle, although the last of the winter weather seems far from over yet. A few asking prices are seen in the South at $174 to $175 per cwt, but bids are elusive in all areas.
February live cattle closed $1.75 higher at $173.125, April live cattle closed $1.00 higher at $175.175 and June live cattle closed $0.55 higher at $172.175.
Tuesday's slaughter is estimated at 112,000 head, 3,000 head less than a week ago and 10,000 head less than a year ago.
Boxed beef prices closed higher: choice up $3.57 ($294.99) and select up $7.42 ($279.98) with a movement of 111.93 loads (73.96 loads of choice, 15.67 loads of select, 3.98 loads of trim and 18.32 loads of ground beef).
WEDNESDAY'S CATTLE CALL: Steady. Limited interest is seen Tuesday afternoon, which is expected to push active trade to midweek or later. Feeders are looking for steady to higher money, but the ability to get active bids is currently a challenge.
FEEDER CATTLE:
Feeder cattle futures moved actively higher as all but spot January contracts closed with triple-digit gains Tuesday afternoon. Traders are focusing on the momentum seen last week in both feeder cattle and live cattle contracts which is expected to add fundamental and technical support to the market over the upcoming trading days. Early estimates for Friday's cattle on feed report point to cattle placement levels falling nearly 5% from year-ago levels. Given the fact that previous month placements were higher than the previous year would indicate earlier than usual movement of cattle into feedlots.
January feeders closed $0.98 higher at $227.55, March feeders closed $1.13 higher at $228.825 and April feeders closed $1.28 higher at $234.275. The CME Feeder Cattle Index for January 11: down $1.57, $226.43.
LEAN HOGS:
Lean hog futures moved lower once again as traders returned from the long weekend. This is the second day of lower-moving markets, but still does not negate the strong upward move in the market over the last couple of weeks. Traders remain cautiously optimistic about the ability to continue to move pork values higher over the coming days and weeks, and it becomes a challenge not to get too caught up in the daily moves of either cash hog prices or pork values, especially surrounding long holiday weekend, and weather events like seen over the last week. This uncertainty may add some additional volatility to the market, but the underlying tone of the lean hog market still remains generally optimistic.
February lean hogs closed $1.13 lower at $70.775, April lean hogs closed $1.05 lower at $77.575 and May lean hogs closed $0.55 lower at $83.90. Tuesday's hog slaughter is estimated at 378,000 head, 111,000 head less than a week ago and 110,000 head less than a year ago. Pork Cutouts totaled 279.54 loads with 259.03 loads of pork cuts and 20.51 loads of trim. Pork cutout values are up $0.98 at $87.06. The CME Lean Hog Index for January 11: down $0.22, $66.55.
WEDNESDAY'S HOG CALL: Steady. With a holiday-shortened trading week, plant activity remains generally strong. This could help to stabilize cash hog values midweek, although both sides continue to closely monitor futures market activity.
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