GENERAL COMMENTS:
Feeder cattle and live cattle contracts were due for a correction with the speed the market has climbed recently. For fed cattle, the cash trade has the market under pressure as it appears packers are finding plenty of cattle to purchase despite what is expected to be tight supply. Iowa, Minnesota and Nebraska traded $222-$245 live and $348-$365 dressed Wednesday. Futures held current technical support levels, so traders are not concerned with Wednesday's market selloff.
The deferred contracts in lean hog futures found some strength in Wednesday's trade. So, while the nearby futures contracts are still feeling the pressure of decreased pork demand, the market is seeing a small buying opportunity in the spring months. The December contract has fallen to lows not seen since fall of 2020. Pork cutouts were lower again on Wednesday. For the Weekly Average Hog Weight report, carcass-basis hogs averaged 219.0 pounds, up 0.7 pounds on the week and 2.5 pounds higher on the year. The national average live weight was 289.5 pounds, up 1 pound from last week. Weights are rising faster than the normal seasonal pattern, setting a bearish tone on more available supply to come.
| BULL SIDE | BEAR SIDE | ||
| 1) | Cattle herd size is not improving as the market had hoped. | 1) | Packers are having no trouble finding cattle to buy despite lower expected herd numbers. |
| 2) | Technical support is still holding steady for cattle markets. | 2) | Weaker cash trade for cattle helped push markets lower Wednesday. |
| 3) | Holidays are around the corner and a family gathering with ham is tradition. | 3) | Lean hog futures find their lowest prices since fall of 2020. |
| 4) | Deferred months finding strength in lean hog futures show the market has some confidence that demand will increase in the future. | 4) | Higher hog weights generally mean hogs are backing up on farms, and more pork supply is coming. |
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