Thursday Closing Livestock Market Update - Futures Slide Lower

GENERAL COMMENTS:

Cattle futures have done a complete turnaround from the midweek rally that developed Wednesday. The lack of underlying support and sluggish market interest in all cattle markets continues to add to the price shifts and leaving markets even more unsettled going into the Cattle on Feed report.

Triple-digit losses developed in all cattle contracts with the exception of soon to expire December contracts which posted a 52-cent loss. However, the overall weakness across the complex has done very little to change the overall direction of the market, as light trade and lackluster interest is expected to create additional volatility.

Hog prices closed higher on the Daily Direct Afternoon hog report, up $0.14 with a weighted average of $47.96 on 4,007 hogs. March corn closed up 2 3/4 at $4.725 and March soybean meal closed down $2.30 at $386.4. The Dow Jones Industrial Average is up 322.35 at 37,404.35.

LIVE CATTLE:

Live cattle futures followed feeder cattle trade lower Thursday as traders focused on the overall lack of buyer support that never redeveloped after Wednesday's gains. December contracts posted gains, but the limited volume in this contract is focused more on squaring positions than market discovery, while spring 2024 contracts posted firm triple-digit losses Thursday.

Traders are also starting to adjust positions in front of the Cattle on Feed Report Friday afternoon. The challenge with this report release is that the results will not be able to be traded until Tuesday morning following the Christmas holiday. And even then, very light holiday week trade is likely to limit the overall volume typically seen in a report until the New Year. This could create some additional underlying market swings based on the lack of market participation.

Cash cattle markets are still quiet, although bids continue to be seen over the last couple of days. Live bids in the South are seen at $170 per cwt, with live bids in the North also at $170 per cwt. Dressed bids in the North are holding at $270 per cwt. Asking prices have started to now develop at $173 to $175 live and $272 dressed.

Feeders remain optimistic to focus on steady to higher price levels before the week ends. This could push active trade until sometime Friday, maybe even after the release of the Cattle on Feed report.

December live cattle closed $0.53 higher at $170.55, February live cattle closed $1.63 lower at $168.675 and April live cattle closed $1.65 lower at $172.175. 

Thursday's slaughter is estimated at 125,000 head, steady with a week ago and 3,000 head more than a year ago. 

Boxed beef prices closed mixed: choice up $2.00 ($291.13) and select down $0.33 ($261.27) with a movement of 166.59 loads (113.90 loads of choice, 20.83 loads of select, 13.63 loads of trim and 18.23 loads of ground beef).

FRIDAY'S CATTLE CALL: Steady. Increased bids and asking prices are still developing as the week continues, but uncertainty of market strength is starting to be realized.

FEEDER CATTLE:

Active pressure redeveloped in feeder cattle futures Thursday, with traders backing away from previous gains. Even though little technical or fundamental changes are seen in the complex, the lack of active trade volume is keeping markets very volatile. These market conditions may continue through the holidays as very limited trader activity is expected to be seen in the upcoming days. Traders are also trying to assess and guess the direction of the cattle on feed report when it comes to cattle placement numbers. This may add even more volatility to the market Friday.

January feeders closed $2.35 lower at $221.7, March feeders closed $2.38 lower at $223.375 and April feeders closed $2.08 lower at $228.45. The CME Feeder Cattle Index for Dec. 19: down $0.51, $219.80.

LEAN HOGS:

Lean hog futures continue to post moderate losses in most contracts, although very limited trade developed once again Thursday. Nearby gains developed in both February and April contracts, but the tone of the market remains generally weak. Some additional positioning is likely to be seen Friday in front of the hogs and pigs report, but the upcoming holidays are also limiting overall trade interest and market volume.

February lean hogs closed $0.43 higher at $70.65, April lean hogs closed $0.03 higher at $76.95 and May lean hogs closed $0.18 lower at $83.55. Thursday's hog slaughter is estimated at 490,000 head, 1,000 head more than a week ago and 2,000 head more than a year ago. Pork Cutouts totaled 200.83 loads with 174.21 loads of pork cuts and 26.62 loads of trim. Pork cutout values are down $0.01 at $81.35. The CME Lean Hog Index for Dec. 19: up $0.17, $66.54.

FRIDAY'S HOG CALL: Steady. Limited support in futures trade this week and softness in pork values is likely to limit the ability for active cash market support through the end of the week, especially heading into a long holiday weekend.

Thursday Midday Livestock Market Summary - Livestock Futures Slip Lower

GENERAL COMMENTS:

Moderate price pressure has been seen in most livestock trade through the morning Thursday with increased softness developing as the few traders are actively involved in the market ahead of the holiday weekend.

The lean hog futures continue to erode lower as traders are trying to better pinpoint just where the upcoming hogs and pigs report will position expected short- and long-term pork production levels in the new year. With Friday's reports focusing both on cattle and hog reports, there is uncertainty as to just how much of the expected report findings will already be factored into the market and how much of an impact the reports will have next week.

With the week between Christmas and New Year's typically showing very limited trade volume, the potential that the limited volume could add even more volatility to the post report markets Tuesday morning.

March corn is up 2 1/2 at $4.723 and March soybean meal is down $1.10 at $387.6. The Dow Jones Industrial Average is up 98.39 at 37,180.39.

LIVE CATTLE:

Live cattle futures are trading mostly lower in limited trade volume as traders are adjusting and backing away from previous market support that developed late Wednesday. December is the only contract month holding a gain at midday, but the overall lack of volume and interest in the December contract has little impact on overall direction of the market as a whole. February futures are the most active contract month and is leading the complex lower with an 85-cent loss.

Over the next few days, limited volume and market interest may be the biggest factor affecting the cattle market, potentially allowing prices to make moderate to large price swings on very few trades. Traders are also trying to adjust positions in front of Friday's Cattle on Feed report, which is projected to show a 2.2% increase in on feed numbers from year ago. This estimate seems to be the tipping point, as an on-feed number above this level will account for a gain from November levels, and the highest on feed numbers since May 2022.

Cash cattle trade remains quiet with bids redeveloping in most areas during the morning Thursday. Live bids of $170 and Dressed bids of $270 per cwt are available. Asking prices are holding at $173 to $175 live and $272 per cwt dressed. It would not be out of character if active trade held out until sometime Friday, but some activity may start to develop before the day is over Thursday afternoon.

December live cattle are $0.28 higher at $170.3, February live cattle are $0.83 lower at $169.475, April live cattle are $0.80 lower at $173.025. 

Boxed beef prices are higher: choice up $2.28 ($291.41) and select up $0.70 ($262.30) with a movement of 80.43 loads (44.88 loads of choice, 11.76 loads of select, 8.45 loads of trim and 15.34 loads of ground beef).

FEEDER CATTLE:

Feeder cattle futures are showing the most pressure Thursday morning, with losses of $1 per cwt or higher in nearby contracts. The late-day rally in feeder cattle futures Wednesday following the pullback in stock prices seemed to be overdone, as trades focusing on market corrections ahead of the holiday weekend. Traders are also trying to assess just how proactive they should be in positioning ahead of Friday's cattle on feed report.

Over the last three months, overall cattle placements have been the focus of the report, and also has caused the cattle complex to go into a tailspin following the report. Cattle placements will once again be closely watched, but total on feed numbers may move back into the spotlight for the December report.

January feeders are $1.18 lower at $222.875, March feeders are $1.25 lower at $224.5 and April feeders are $1.18 lower at $229.35.

LEAN HOGS:

Lean hog futures are holding moderate to firm losses in most contracts, although limited gains are trickling into spot February contracts through the morning. May through August contracts are most aggressively being targeted with price pressure as traders continue to still be uncertain as to just how much herd liquidation will develop during 2024. This could limit market support in the near future, especially surrounding the holidays where limited trade volume and sluggish cash market direction will be seen.

Traders are looking for some direction from Friday's quarterly hogs and pigs report, but these numbers may not show significant herd reductions, and could continue to limit underlying market support.

February lean hogs are $0.15 higher at $70.375, April lean hogs are $0.38 lower at $76.55 and May lean hogs are $0.80 lower at $82.925. Hog Prices are unreported due to confidentiality on the Daily Direct Morning Hog report. Pork Cutouts totaled 124.14 loads with 111.82 loads of pork cuts and 12.32 loads of trim. Pork cutout values are down $0.89 at $80.33.

Thursday Morning Livestock Market Update - Cash Cattle Trade Starts to Develop

GENERAL COMMENTS:

Feedlots are holding with some light cash trade at $170 in Nebraska and some dressed at $270. Asking prices are generally $3 to $5 higher at the present time. This certainly will provide support in cattle futures if this continues through the rest of the week. December live cattle futures are reflecting this optimism with a close at $170.02 Wednesday. Be that as it may, traders will be turning some attention to the upcoming Cattle on Feed report Friday which may begin to limit volatility. More caution might develop as the report will be released after the close of trading and ahead of a three-day weekend. Boxed beef prices were mixed with choice up $0.30 with select down $1.56.

Hog futures Wednesday reflected the weakness of cash and cutouts we saw Tuesday with futures posting a lower high and a lower low. Higher cash on Wednesday with the National Daily Direct Afternoon report showing a gain of $0.85 moving the weighted average price to $47.82, might provide some support Thursday. However, cash is expected to be weaker the rest of the week. The better cash Wednesday is expected to be offset by cutouts posting a decline of $1.70. Traders will be cautious over underlying price strength as well as the upcoming Quarterly Hogs and Pigs report. All hogs and pigs on Dec. 1 are estimated at 99.6%, kept for breeding at 98.7%, and kept for marketing at 99.6%. Weekly export sales may have an influence on trade direction Thursday.

	BULL SIDE		BEAR SIDE
1)	Packers have raised bids to steady with last week and may need to increase those bids as feedlots are holding offers at $3 to $5 higher.	1)	If cash cattle trade steady this week, the futures already have that factored in, limiting further upside.
2)	There may be further short-covering heading into the Cattle on Feed report and the three-day weekend.	2)	Weekly export sales need to be better than last week or cattle futures could see some weakness with the ongoing concern of demand.
3)	Higher cash hogs Wednesday may provide some stability in futures Thursday balanced with the loss in cutouts.	3)	Pork demand continues to remain weak, which is reflected by struggling cash and cutouts. This will limit upside price potential.
4)	Positioning ahead of the Hogs and Pigs report may result in some short-covering and a rebound in futures.	4)	Weekly hog weights were 0.9 pounds below the previous week but remain 4.3 pounds above a year ago.

Wednesday Closing Livestock Market Update - Cattle Futures Rally in Late-Day Trade

GENERAL COMMENTS:

Strong late-day support developed through all cattle futures Wednesday afternoon. The sluggish market shifts seen early in the session in both live cattle and feeder cattle trade created limited market support and mixed price moves at midday. However, unlike the previous trading days where prices quickly eroded in the last hour of trade, Wednesday's market shifts helped to bring some additional momentum to the complex.

Hog futures remained under light to moderate pressure with traders still concerned that current production trends may not be quickly changing and could further oversupply demand through early 2024. Hog prices closed higher on the Daily Direct Afternoon hog report, up $0.85 with a weighted average of $47.82 on 3,279 hogs.

March corn closed down 3 at $4.698 and January soybean meal closed down $3.30 at $399.9. The Dow Jones Industrial Average is down 475.92 at 37,082.00.

LIVE CATTLE:

Live cattle futures moved above the $170 per cwt level for the first time in December as active buyer interest moved back into the complex during the last hour of trade. Although volume remains sluggish heading into the Christmas holiday week, the focus on increased underlying support in feeder cattle markets became the main driver once again for the renewed late day price surge. Deferred contracts closed higher but lacked the aggressive market support seen in nearby contracts.

Traders will remain cautiously optimistic heading into the last half of the week and the holiday weekend.

Cash cattle markets remain untraded for the most part, although bids are starting to become much more evident Wednesday afternoon. Live bids in the South are seen at $170 per cwt, with live bids in the North hovering around $168 to $170 per cwt. Dressed bids in the North are holding at $270 per cwt. Asking prices have started to now develop at $173 to $175 live. December live cattle closed $1.58 higher at $170.025, February live cattle closed $1.53 higher at $170.3 and April live cattle closed $1.15 higher at $173.825. 

Wednesday's slaughter is estimated at 123,000 head, 4,000 head less than a week ago and 1,000 head less than a year ago. 

Boxed beef prices closed mixed: choice up $0.30 ($289.13) and select down $1.56 ($261.6) with a movement of 123.67 loads (75.84 loads of choice, 19.91 loads of select, 5.50 loads of trim and 22.42 loads of ground beef).

THURSDAY'S CATTLE CALL: Steady. Increased bids and asking prices are starting to be seen Wednesday afternoon, although there remains a wide gap between feeders and packers at this point.

FEEDER CATTLE:

Feeder cattle futures rallied higher late Wednesday with all contracts posting gains over $2 per cwt. The softness over the last couple of days focusing on uncertainty in overall feeder cattle supplies seemed to lose its momentum in late day trade with active buyer support sweeping through the complex. The market remains generally oversold, but the combination of light volume through the end of the year and positioning in front of the cattle on feed report is helping to draw increased support to the entire market complex.

January feeders closed $2.15 higher at $224.05, March feeders closed $2.55 higher at $225.75 and April feeders closed $2.65 higher at $230.525. The CME Feeder Cattle Index for Dec. 18: up $0.40, $220.31.

LEAN HOGS:

Lean hog futures ended the session with another round of market losses as buyers are hard to find through the week, allowing prices to back away from last week's gains. The concern that pork production may remain strong through the first half of 2024 has continued to keep buyers at bay.

Continued softness in cash hog values and pork prices has also limited any sense of market support in nearby and deferred contract months. Traders are looking for some additional direction from the upcoming hogs and pigs report Friday, but generally this report shows limited market direction given the scope of the report and typical narrow production adjustments that are reported in these reports.

February lean hogs closed $0.33 lower at $70.225, April lean hogs closed $0.68 lower at $76.925 and May lean hogs closed $0.63 lower at $83.725. Wednesday's hog slaughter is estimated at 490,000 head, 1,000 head more than a week ago and 0 head less than a year ago. Pork Cutouts totaled 285.32 loads with 256.63 loads of pork cuts and 28.69 loads of trim. Pork cutout values are down $1.70 at $81.36. The CME Lean Hog Index for Dec. 18: down $0.22, $66.37.

THURSDAY'S HOG CALL: Steady. Limited support in futures trade this week and softness in pork values is likely to limit the ability for active cash market support through the end of the week, especially heading into a long holiday weekend.