Wednesday Morning Livestock Market Update - Futures May Retrace

GENERAL COMMENTS:

The strength of the December contract going off the board permeated through the cattle market Tuesday, led by the February contract. The discount it was holding to cash and the December contract was nearly made up Tuesday as traders became aggressive in the entire cattle complex. Deferred live cattle contracts were not as strong, but showed nice gains. Feeder cattle showed consistent gains throughout the year. There was no indication of cash potential this week with bids and offers not yet established. The anticipation is packers will need to be more aggressive to obtain the cattle they need. Most of the cattle they purchased last week were for nearby delivery, which means they need cattle to keep sufficient supply for slaughter. The negative aspect of the market was the large decline in boxed beef prices. Choice fell $5.37, while select declined $1.47.

Hogs fell through price support, making new contract lows. The movement was technically driven with stops triggered once futures broke through support. Hog futures seemed to be more influenced by many of the other commodities that suffered declines Tuesday. Cash was higher with the National Daily Direct Afternoon Hog report showing a gain of $1.56. Cutouts also showed a gain of $0.34. That may provide some support to futures prices Wednesday, but it will take consistent gains to turn the market higher. The previous contract lows will now be price resistance that may limit upside potential technically.

	BULL SIDE		BEAR SIDE
1)	The February live cattle contract still has more upside before moving to the level where December closed out.	1)	The decline of boxed beef and the large decline of choice cuts may put some pressure on the market as movement over the holidays may not have been as good as anticipated.
2)	Packers seem to be a bit short-bought, which may result in them being more aggressive with their purchases this week. Feedlots will hold for higher cash.	2)	The cattle market will need further fundamental strength to result in the market establishing an uptrend. Boxed beef has been in a downtrend.
3)	The decline of hogs may have been more of a knee-jerk reaction to the pressure in other commodities. Futures could rebound Wednesday.	3)	The previous contract lows in hog futures will now be price resistance. Demand has not been sufficiently stimulated even with lower prices.
4)	Higher cash and cutout prices should provide some support as retail needed to stock up after the holidays. Further cash strength is possible Wednesday.	4)	The amount of hogs available to packers on a weekly basis leaves them less aggressive as they have sufficient supply to choose from. Cash continues to trend lower.

Tuesday Closing Livestock Market Update - Active Market Shifts Develop

GENERAL COMMENTS:

Livestock futures started the New Year off with a bang, as cattle futures surged higher with aggressive triple-digit buyer support, and active triple-digit losses flooded into lean hog trade. The overall lack of trade volume and lackluster market activity discussed much of last week came to an end with traders resumed normal duties as they put holiday schedules in the rearview mirror and focused on moving price levels and supply expectations forward for the new year. Nearby live cattle and feeder cattle futures ended the day with a $3 per cwt rally, while $2 per cwt losses quickly developed and held in nearby lean hog trade.

Hog prices closed higher on the Daily Direct Afternoon hog report, up $1.56 with a weighted average of $45.13 on 8,884 hogs. March corn closed down 7 1/2 at $4.638 and March soybean meal closed down $6.50 at $379.5. The Dow Jones Industrial Average is up 25.50 at 37,715.04.

LIVE CATTLE:

Live cattle had a great day of trade Tuesday as buyers who seemingly had a great holiday break aggressively moved back into the market following the lack of overall activity and volume last week. With end-of-the-year apathy and holiday schedules, traders seemed to have very little interest in any sense of market direction until today. However, regaining market support and a slightly less bearish outlook for the upcoming weeks and months seemed to be the focus of all traders. The most aggressive support developed in February futures, but all contracts were able to secure triple digit gains at closing bell, creating some sense of market support heading into the month of January.

Cash cattle activity remains very quiet with bids and asking prices yet to be established. Showlists appear to be generally mixed, higher in Kansas and Nebraska, while lower in Texas. It is likely to be midweek or last before active interest is seen, but given the early week support in futures trade and price gains at the end of the year, feeders are likely to be content with nothing less than steady to higher money.

February live cattle closed $3.43 higher at $171.925, April live cattle closed $2.25 higher at $174.5 and June live cattle closed $1.88 higher at $171.925. 

Tuesday's slaughter is estimated at 126,000 head, 26,000 head higher than a week ago and 2,000 head higher than a year ago. 

Boxed beef prices closed lower: choice down $5.37 ($284.34) and select down $1.47 ($258.86) with a movement of 139.06 loads (79.13 loads of choice, 26.75 loads of select, 12.04 loads of trim and 21.14 loads of ground beef).

WEDNESDAY'S CATTLE CALL: Steady. With markets and plants closed Monday due to the New Year's Day holiday, trade activity is expected to remain delayed this week. Late-week activity is not unlikely and could easily stretch into Friday.

FEEDER CATTLE:

Feeder cattle futures led the market higher Tuesday with gains over $4 per cwt seen in nearby contracts during morning trade. Although prices were unable to close at session highs, the overall support across the complex was uniform and focused on increased overall market momentum across the entire complex. The limited volume and light activity left markets ripe for a market rebound Tuesday once traders returned from the long holiday weekend. Sharp losses across grain trade and most other commodity markets also added to the underlying support in feeder cattle trade, helping to secure $3 per cwt gains in all nearby contracts.

Cash feeder cattle sales at Joplin Regional Stockyards posted sales $2 to $12 per cwt higher than the last sale two weeks ago. This underlying support through the market is expected to be seen in other markets over the coming days, and could help to build even more support in all areas of the feeder cattle complex.

January feeders closed $3.13 higher at $225.425, March feeders closed $3.35 higher at $226.45 and April feeders closed $3.25 higher at $232.15. The CME Feeder Cattle Index for Dec. 28: up $12.21, $228.19.

LEAN HOGS:

Lean hog futures are having a very hard time finding any sense of market stability or price support following the pre-Christmas release of the quarterly hogs and pigs report. Even though last week posted very lethargic market activity, the tone of the market has steadily declined over the past couple of weeks. The announcement that the nation's hog herd did not contract as expected at the end of 2023 continues to be a disappointing factor that traders are still not fully working into price points and market expectations.

Nearby lean hog futures quickly broke through previous support levels, setting contract low prices, and creating significant questions about where the market bottom may be. This could lead to additional market uncertainty over the next few days as traders try to establish a new support level heading into the month of January.

February lean hogs closed $2.65 lower at $65.325, April lean hogs closed $2.35 lower at $72.5 and May lean hogs closed $1.65 lower at $79.85. Tuesday's hog slaughter is estimated at 492,000 head, 41,000 head more than a week ago and 58,000 head more than a year ago. Pork Cutouts totaled 305.68 loads with 255.54 loads of pork cuts and 50.14 loads of trim. Pork cutout values are up $0.34 at $85.1. The CME Lean Hog Index for Dec. 28: down $0.22, $65.35.

WEDNESDAY'S HOG CALL: Steady to $1 lower. The strong pressure in futures trade early in the week is going to create follow-through cash market support as challenge despite early week gains in cash and pork cutout values.

Tuesday Midday Livestock Market Summary - Cattle Markets Rally

GENERAL COMMENTS:

Following the last week of lackluster trade surrounding the Christmas and New Year's Day holiday, traders have quickly moved into the market Tuesday morning as traders are focusing on a new year as well as much more usual volume levels on the first trading session of January. Active gains have flooded into nearby cattle futures with traders focusing on the oversold status of the cattle market. This has helped to push spot month contracts $3 to $4 per cwt higher.

Hog futures are once again actively traded, but moving in the opposite direction of cattle prices. Firm triple digit losses are scattered through the lean hog complex Tuesday morning. The active weakness in grain markets and most other commodity markets is allowing for even more interest to develop in the cattle trade this week.

March corn is down 8 1/4 at $4.63 and March soybean meal is down $8.50 at $377.5. The Dow Jones Industrial Average is up 71.29 at 37,760.83.

LIVE CATTLE:

Live cattle futures have finally once again come alive after the last couple weeks of holiday subdued trade activity at the end of the year. The lack of overall volume and trade interest in the market in the last couple of weeks has been a challenge as fundamental and technical trade indicators were not being focused upon and markets shifted back and forth in a much less consistent pattern.

Following the holiday breaks, renewed buyer support has once again flooded into live cattle futures with spot February futures leading the market higher with gains above $3 per cwt through most of the morning.

Cash cattle activity is quiet Tuesday morning with asking prices and bids still unavailable. With the holiday Monday, activity will be moderately delayed with show list distribution and inventory taking being done Tuesday this week. It is likely that more interest will develop over the next couple of days, but significant activity could easily be delayed until Thursday or Friday.

February live cattle are $3.30 higher at $171.8, April live cattle are $2.08 higher at $174.325, June live cattle are $1.50 higher at $171.55. 

Boxed beef prices are mixed: choice down $4.99 ($284.72) and select up $0.07 ($260.40) with a movement of 43.42 loads (29.88 loads of choice, 7.52 loads of select, zero loads of trim and 6.02 loads of ground beef).

FEEDER CATTLE:

Feeder cattle futures are quickly leading the cattle complex higher Tuesday morning. Although underlying support has started to develop over the last week, the light trade and volume interest in the complex over the holidays has limited overall buyer support and price movements.

With trader interest getting back to normal levels during the first trading day of January and after the holiday break, sharp triple-digit gains are seen in all nearby contracts. Spring contracts are leading the upward shift with gains of $3 to $4 per cwt through the morning, although prices have pulled away from session highs at midday. The strong pressure in grain trade during the morning is also adding to the underlying short-term support in feeder cattle trade, but it is still uncertain if this optimism will hold through the rest of the week.

January feeders are $3.13 higher at $225.425, March feeders are $3.55 higher at $226.65 and April feeders are $3.10 higher at $232.00.

LEAN HOGS:

Lean hog futures have posted moderate to firm losses through Tuesday morning with most commodity markets besides the cattle futures posting moderate to strong losses on the first trading session of January. Given the lack of overall trade volume and sluggish holiday activity over the last week, the hog complex has not totally accounted for the lack of contraction in hog herd sizes seen in the quarterly hogs and pigs report. This may cause some additional early week market softness, as pork values and cash markets continue to remain weak starting out 2024. It is uncertain just how much pressure may be seen, as traders attempt to create support price levels in the coming days.

February lean hogs are $2.58 lower at $65.4, April lean hogs are $2.38 lower at $72.475 and May lean hogs are $1.73 lower at $79.775. Hog Prices are unreported due to confidentiality on the Daily Direct Morning Hog report. Pork Cutouts totaled 113.27 loads with 87.98 loads of pork cuts and 25.29 loads of trim. Pork cutout values are up $3.59 at $84.87.

Tuesday Morning Livestock Market Update - Markets to Open With Uncertainty

GENERAL COMMENTS:

The mixed trading activity Friday was not a surprise as lighter trading activity at the close of the year dominated the market. The December contract made a large adjustment as it ended trading and was impacted by the strength of cash. Cash cattle in the South traded $1 higher with Northern dressed sales $2 to $3 higher. The positive end to 2023 may provide feedlots more confidence of higher prices this week. Packers will need to purchase cattle to get back on track with regular business again, which may leave them more aggressive this week. Boxed beef was mixed with choice down $1.57 and select up $1.09. This does not provide any solid direction. However, the cash strength last week may provide support to the market. Weekly export sales were a dismal 2,100 metric tons (mt), down 78% from the previous week. The Commitments of Traders report showed funds trimming their long positions by 165 contracts, bringing their net-long futures positions to 16,872 contracts. Feeder cattle showed funds selling 834 contracts, bringing their net-short position to 3,092 contracts.

Hog futures closed the week mixed in lackluster trade. However, cash did not perform very well with the National Daily Direct Afternoon Hog report showing a drop of $2.79, bringing the weighted average down to $43.57. The bearishness of cash was offset to some extent by cutouts posting a gain of $2.15. Weekly export sales at 23,800 mt were down 23% from the previous week. This gave traders much to think about over the weekend, but it may not result in any solid price direction to begin the new year. With a strong Saturday slaughter pace, packers will not need to be very aggressive Tuesday. The Commitments of Traders report showed funds as active buyers of 2,348 futures contracts, reducing their net-short positions to 5,890 contracts.

	BULL SIDE		BEAR SIDE
1)	Higher cash cattle trade last week will provide confidence for feedlots to hold for higher cash again this week.	1)	Very low export sales do not bode well for international demand and the movement of beef. This leaves more beef available to the domestic market.
2)	February is now the lead live cattle contract with a discount of over $5.00 below the price December went off the board. Price may need to move higher based on cash.	2)	Variable boxed beef prices do not indicate consistent demand. This may limit cash potential.