Monday Morning Livestock Market Update - Uncertainty Will Dominate Trading

GENERAL COMMENTS:

Traders were a bit disappointed that cash did not trade more aggressively Friday and was not as high as expected. Most live trade took place at $173 and dressed $274 to $275. Traders seemed to be thinking higher prices would unfold. The weakness of choice cutouts during the week was a concern, even though choice increased $1.26 and select gained $0.71 Friday. What is more interesting is that cash and boxed beef are nearly at the same level. This is unusual and could make for an interesting week. Weekly export sales were a bit better than the previous week at 9,500 metric tons (mt). Strong sales were not expected due to the holiday week. The movement of cattle may be hindered this week with another storm system that will be moving across a good portion of cattle country. It will also impact cattle performance and may result in reduced weights in the near term. The Commitment of Traders report showed funds increasing their long positions by 980 contracts to a net-long position of 17,852 futures contracts. Feeder cattle showed funds reducing their short positions by 275 contracts, bringing their net-short positions to 2,817 futures contracts.

Hogs had another strong day as further short-covering dominated trading Friday. It will be interesting to see whether the market will be able to hold the strong gains with cash trading lower Friday. The National Direct Afternoon Hog report showed a decrease of $0.75 with a weighted average of $44.56. It is likely cash will be lower to start the week as packers wait to see what product movement was over the weekend. Cutouts were also lower with a decline of $0.30. That may have a negative influence on trading Monday. Packers have a full week ahead, which needs to be filled and may result in them being more aggressive earlier in the week. The Commitment of Traders report showed funds selling 4,710 contracts, bringing their net-short position to 17,286 as of Jan. 2.

	BULL SIDE		BEAR SIDE
1)	Cash cattle was higher last week with a strong possibility of at least steady trade this week, which would be supportive to the market.	1)	Packers paid more than they wanted to last week due to the weakness of boxed beef. That may keep them less aggressive this week.
2)	Another strong storm system moving across cattle country may hinder movement and impact weight gains.	2)	Cattle futures may remain rangebound for the week as futures could not hold the gains of last week.
3)	Two strong days of price gains moved hog futures back into the range that had been established since early December. Futures may hold in this range for a time.	3)	Hog futures had two days of strong short-covering, which may have run its course. Fundamentals did not support the strength.
4)	Hog futures closing near the highs Friday suggests further follow-through buying today.	4)	Traders may trade the lower cash and cutouts of Friday, being cautious about cash and cutout strength this week. Market-ready hogs are readily available.

Friday Closing Livestock Market Update - Cattle Futures Slip Lower

GENERAL COMMENTS:

From Friday to Friday, livestock futures scored the following changes: February Live cattle off $3.10, April Live cattle up $1.15; January Feeder cattle up $0.82, March Feeder cattle up $1.05; February Lean hogs up $2.03, February Lean hogs up $2.03; February Pork cutout up $1.18, February Pork cutout off $0.00.

Livestock futures closed higher for the week in most livestock contracts as hog and cattle markets seemed to focus on a completely different strategy to accomplish this upward movement. Cattle trade posted aggressive early week gains, but quickly pulled back from this buyer support in the last half of the week. On the other hand, lean hog trade posted additional pressure early in the week, only to roar back with active triple-digit gains the past two trading sessions. Next week will be the first full week of trade since the holiday season, which will likely help set the tone for increased trade activity during early January.

Hog prices closed lower on the Daily Direct Afternoon hog report, down $0.75 with a weighted average of $44.56 on 3,830 hogs. March corn closed down 5 3/4 at $4.608 and March soybean meal closed down $6.80 at $369.4. The Dow Jones Industrial Average is up 25.77 at 37,466.11.

LIVE CATTLE:

Live cattle futures traded lower Friday, following the developing pressure seen Thursday and strong underlying losses seen in feeder cattle trade. February futures closed lower for the week as traders focused on the February contracts now being the official spot month contract following December contract expiration at the end of the month.

The overall lack of buyer interest in the last half of the week is somewhat surprising, although at current price levels, market prices remain well confined within a sideways trading range.

In the first weekly export sales report of 2024, net sales of 9,500 mt for 2023 were up noticeably from the previous week and up 69% from the prior four-week average. Increases primarily for China (3,200 mt, including decreases of 100 mt), Japan (2,200 mt, including decreases of 900 mt), Mexico (2,100 mt), Canada (900 mt), and South Korea (500 mt, including decreases of 1,100 mt). Exports of 17,000 mt were up 29% from the previous week and 17 percent from the prior four-week average. The destinations were primarily to South Korea (4,800 mt), Japan (3,300 mt), China (3,000 mt), Mexico (2,100 mt), and Canada (1,400 mt).

Cash cattle trade remains generally quiet with only a few deals reported at this time. It is likely that some additional movement will be seen before the end of the day, although these may not be fully reported until early next week. Trade of $173 is seen in the North on a live basis, although bids of $173 live in the South and $273 dressed in the North are still being passed by feeders. Higher trade earlier in the week may limit the interest to sell significant amounts of cattle at current bided price levels.

February live cattle closed $0.55 lower at $170.575, April live cattle closed $0.90 lower at $173.4 and June live cattle closed $1.00 lower at $170.55. 

Friday's slaughter is estimated at 124,000 head, 1,000 head less than a week ago and 22,000 head less than a year ago. Saturday slaughter is estimated at 52,000 head. This will bring weekly estimated slaughter totals to 556,000 head. 

Boxed beef prices closed higher: choice up $1.26 ($277.16) and select up $0.71 ($259.53) with a movement of 106.23 loads (60.81 loads of choice, 17.97 loads of select, 5.62 loads of trim and 21.83 loads of ground beef).

MONDAY'S CATTLE CALL: Steady. Limited activity is expected early next week with show list distribution and inventory taking consuming most of Monday's activity.

FEEDER CATTLE:

Feeder cattle futures led the complex lower with consistent and active losses developing Friday. Although firm pressure was seen through the entire session, additional late-day pressure flooded the market in the last hour of trade. January through May contracts all posted losses of $1.50 to $1.55 per cwt, creating unusual consistency of price movements not usually seen in any futures market, let alone the feeder cattle market. January feeders closed $1.55 lower at $223.125, March feeders closed $1.50 lower at $224.15 and April feeders closed $1.50 lower at $229.775. The CME Feeder Cattle Index for Jan. 3: down $0.56, $228.09.

LEAN HOGS:

Lean hog futures posted strong gains for the second consecutive trading session, helping to build even more confidence that Thursday's market shift higher was more than just short covering activity. This helped to post a strong weekly close through lean hog futures trade, helping to bring additional interest back to the complex.

In the weekly export sales report, which was released Friday morning due to Monday's holiday, net sales of 17,800 mt for 2023 were down 25% from the previous week and 35% from the prior four-week average. Exports of 22,000 mt were down 24% from the previous week and 33% from the prior four-week average. The destinations were primarily to Mexico (8,400 mt), South Korea (3,200 mt), Japan (2,500 mt), China (2,300 mt), and Colombia (1,400 mt).

February lean hogs closed $0.95 higher at $70., April lean hogs closed $1.43 higher at $76.375 and May lean hogs closed $1.35 higher at $83.15. Friday's hog slaughter is estimated at 489,000 head, 10,000 head higher than a week ago and 27,000 head more than a year ago. Due to plants being closed last Monday, Saturday slaughter is estimated at 440,000 head. This will move the estimated weekly slaughter to 2.38 million head, 160,000 head above week ago levels. Pork Cutouts totaled 313.04 loads with 280.59 loads of pork cuts and 32.45 loads of trim. Pork cutout values are down $0.30 at $84.20. The CME Lean Hog Index for Jan. 3: up $0.67, $65.86.

MONDAY'S HOG CALL: Steady to $1 higher. With a full week of plant activity ahead, following two weeks of reduced procurement, and firming futures trade, packers are expected to start the week with steady to higher cash bids.

Friday Midday Livestock Market Update - Markets Mixed

GENERAL COMMENTS:

Livestock futures markets Friday morning have essentially become a continuation of Thursday's market moves with moderate to firm losses redeveloping in live cattle and feeder cattle trade, while lean hog futures have continued to advance higher. The intensity of the market has slowed at midday Friday, although given early morning market moves, it appears that markets will remain moving in this mixed price direction through the end of the session without a significant shift in outside market factors.

March corn is down 5 1/2 at $4.61 and March soybean meal is down $4.70 at $371.5. The Dow Jones Industrial Average is down 77.25 at 37,363.09.

LIVE CATTLE:

Live cattle futures continued to move moderately lower Friday morning as traders still are trying to find a market equilibrium following strong gains early in the week and only limited cash and beef value support through the last couple of weeks. Front month futures are posting less significant losses than late spring and summer contracts based on the underlying concern that the still moderate to strong supplies over the summer months could limit active price support through much of the year.

Cash cattle markets are still quiet Friday morning, although packer inquiry should improve as the day continues. Bids of $273 per cwt are seen in the North as the softness in futures trade has limited packer offerings at the end of the week. Asking prices remain at $174 and higher live basis in the South and $275 and higher in the North on a dressed basis.

February live cattle are $0.30 lower at $170.825, April live cattle are $0.55 lower at $173.75, June live cattle are $0.80 lower at $170.75. 

Boxed beef prices are higher: choice up $1.98 ($277.88) and select up $0.29 ($259.11) with a movement of 63.43 loads (39.58 loads of choice, 10.74 loads of select, 5.32 loads of trim and 7.79 loads of ground beef).

FEEDER CATTLE:

Feeder cattle futures are once again leading the cattle market lower Friday morning. The pressure in nearby futures trade over the past three days has not totally eroded early week gains, but the week is ending on much more of a neutral status than many had hoped and most had expected following the long holiday weekend. Wide variability in outside markets and shifts in grain prices are not only affecting technical buyer activity, but also market fundamentals and cost of production are taking a larger focus than seen over the past few weeks. Triple-digit losses in nearby contracts may hold through the end of the week, which could limit market support early next week.

January feeders are $1.53 lower at $223.15, March feeders are $1.23 lower at $224.425 and April feeders are $1.38 lower at $229.90.

LEAN HOGS:

Lean hog futures are continuing to move higher through Friday morning, but have backed away from session highs at midday. The underlying buyer interest which has started to actively move into what has long been considered an oversold market, is still very evident. But buy orders seem to be thinning at the end of the week, allowing early gains to erode slightly. The ability to continue to build market momentum into the weekend may quickly bring about renewed market interest early next week.

February lean hogs are $0.40 higher at $69.45, April lean hogs are $0.85 higher at $75.80 and May lean hogs are $0.95 higher at $82.75. Hog Prices are lower on the Daily Direct Morning Hog report, down $1.16 with a weighted average of $44.38, ranging from $41.00 to $47.00 on 1,731 head with a five-day rolling average of $44.98. Pork Cutouts totaled 199.34 loads with 183.91 loads of pork cuts and 15.43 loads of trim. Pork cutout values are up $1.30 at $83.37.

Friday Morning Livestock Market Update - Hog Futures May See Initial Follow-Through Buying

GENERAL COMMENTS:

Cash cattle trade remained light so far this week with business pushed back to Friday. Packers seem to provide the idea they will not need many cattle due to the shorter week, but the numbers they had purchased ahead do not indicate that is the case. They need to purchase to stay ahead of slaughter with cattle movement possibly being hindered somewhat by the upcoming storm system that will spread across a large portion of the country in the coming days. Cash is expected to trade in line with the limited trade which took place earlier in the week. The bearish aspect of the market is the further weakness of boxed beef Thursday. Choice cuts have been hit hard this week with another loss of $2.13 on Thursday. Select cuts declined $0.03.

Hogs finally put in a positive day with February leading the complex higher Thursday. This may find further support Friday as the National Daily Direct Afternoon Hog report showed cash up $0.43. Cutouts were higher, posting a gain of $1.72. Either the trade anticipated higher cash and cutouts to be posted by the end of Thursday or will be supported by them Friday. It was unusual to see the strength of nearby contracts in relation to later months. February eliminated the entire loss suffered Tuesday, moving futures back up into the range they had traded in since late November. Packers are making up for being dark Monday with strong slaughter. Saturday slaughter is estimated at 430,000 head.

	BULL SIDE		BEAR SIDE
1)	Higher cash trade should provide support to cattle futures despite the weakness of boxed beef this week.	1)	The substantial decline of choice boxed beef this week may limit the upside potential as slower demand may impact the aggressiveness of packers.
2)	Better beef export sales than last week would provide some support for the market.	2)	Light weekly export sales of beef may leave traders less aggressive and continue to keep futures at a discount to cash.
3)	The rebound of hog futures Thursday may indicate the large decline of Tuesday was as aberration impacted by outside markets rather than market fundamentals.	3)	Hog futures may have difficulty following through to the upside after Thursday's strength due to overall fundamental weakness.
4)	There is some anticipation that hog runs will shorten up in the next few months, which could provide support to the market.	4)	Further strength in hog futures may be difficult to develop with futures potentially moving back into the sideways trading range for a while. Cash and cutouts have difficulty with consistent strength.