Tuesday Midday Livestock Market Summary - Lean Hog Futures Rally

GENERAL COMMENTS:

Trader attention returned to the lean hog futures complex Tuesday morning as continued buyer interest has steadily but systematically moved into nearby lean hog contracts. February contracts are trading over $2 per cwt higher at midday, following strong support in spot month contracts through the entire trading session. Cattle futures seem to have settled into a more stable routine through early week trade with prices mixed within a narrow to moderate range. The ability to sustain current market trends is slightly encouraging given the volatility seen over the past couple of months, but traders continue to focus on light to moderate market growth through early 2024.

The direction of cash cattle trade and beef values will have a significant impact in drawing additional fundamental buyer support to the table over the next few weeks.

March corn is up 3 at $4.58 and March soybean meal is down $1.20 at $367.3. The Dow Jones Industrial Average is down 149.82 at 37,533.19.

LIVE CATTLE:

Live cattle futures are mixed once again Tuesday morning following the late-day pullback in live cattle futures Monday afternoon. Firm gains are holding in front-month February contracts, with underlying support seen in all spring and summer contract months during morning trade.

Overall volume is expected to be light to moderate through most of the trading session, although live cattle futures currently find themselves well entrenched within a sideways trading range with very little indication that prices will be able to break outside of this range any time soon. The slow but steady support based on potential fundamental beef support over the upcoming days and weeks is the focus of many traders, which could help stimulate additional steady gains in nearby contracts as the week continues.

Cash cattle markets remain at a standstill with asking prices and bids are still undeveloped. It is likely that active trade will be delayed until the end of the week.

February live cattle are $0.60 higher at $170.55, April live cattle are $0.33 higher at $173.35, June live cattle are $0.15 higher at $170.5. 

Boxed beef prices are higher: choice up $1.96 ($280.79) and select up $3.30 ($262.66) with a movement of 53.76 loads (27.00 loads of choice, 12.52 loads of select, zero loads of trim and 14.24 loads of ground beef).

FEEDER CATTLE:

Feeder cattle trade is mixed to mostly lower Tuesday morning with prices slipping near midday. Nearby futures are under pressure, focusing on losses of around $1 per cwt in March contracts as traders back away from early week gains. It is likely that very little long-term direction in the market will develop with traders becoming comfortable trading back and forth within a narrow to moderate trading range this week.

January feeders are $0.63 lower at $223.25, March feeders are $1.03 lower at $224.05 and April feeders are $0.40 lower at $229.70.

LEAN HOGS:

Lean hog futures are trading higher Tuesday morning with aggressive triple-digit gains holding in nearby contracts. The recent shift higher has led to a four-day market swing higher and moving front-month contracts over $4 per cwt above support levels seen at the first of the year. A combination of steady technical buyer support combined with fundamental support from cash hog and pork values has allowed for renewed trade volume to step back to the table.

At current levels, technical support may start to ease as traders may start looking for position taking opportunities in the upcoming days, but the underlying support surrounding the lean hog complex continues to be firm.

February lean hogs are $2.10 higher at $72.7, April lean hogs are $1.28 higher at $78.80 and May lean hogs are $0.55 higher at $84.50. Hog Prices are lower on the Daily Direct Morning Hog report, down $0.78 with a weighted average of $43.6, ranging from $43.00 to $46.00 on 2,973 head with a five-day rolling average of $44.73. Pork Cutouts totaled 186.07 loads with 169.32 loads of pork cuts and 16.75 loads of trim. Pork cutout values are down $0.25 at $83.12.

Tuesday Morning Livestock Market Update - Hog Futures May Take a Breather

GENERAL COMMENTS:

The cattle complex showed strong optimism early Monday, only to see the buying interest wane as the day progressed. This keeps the market in the trading range it has recently developed. The winter storm seems to have been factored into the market, resulting in little support from that event. No bids or offers were posted Monday, as usual, leaving traders guessing as to cash activity. Feedlots will hold for at least steady cash. Packers may need to step up to the plate to procure the needed cattle for slaughter. Boxed beef was mixed with choice up $1.67 and select down $0.17. Feeder cattle contracts were mixed with some spreading activity putting pressure on the May and August contracts.

Hog futures were able to post another day of gains, pushing contracts to the top end of the trading range. If it has been a short-covering rally by the funds, it may cease moving higher Tuesday. If it is the result of traders establishing long-term positions, prices will hold and begin to trend higher. The National Daily Direct Afternoon Hog report showed cash up $0.34, moving the weighted average to $44.90. Cutouts also found strength with a gain of $0.82. Generally, this will provide support to trading activity Tuesday, but the past three days of gains may have this factored in.

	BULL SIDE		BEAR SIDE
1)	Cattle futures seem to be building support as the market continues to move sideways. Higher cash trade might trigger more long-term buying interest.	1)	The inability of cattle futures to hold early, higher prices may indicate upside price potential is limited for the time being.
2)	Both live and feeder cattle futures have charts gaps significantly above the current market. Chart gaps are usually filled at some point.	2)	Boxed beef prices still lack solid footing. Packers will not be very willing to bid higher to procure the beef they need.
3)	Hog futures have rebounded substantially over the past three days. Greater demand optimism may be developing.	3)	The 3-day rally of hog futures has not been supported by fundamentals but more so by short-covering and optimism. That may provide shaky support.
4)	Higher cash hogs and cutouts on Monday could provide further support Tuesday as packers may remain aggressive.	4)	Short-covering by fund traders generally lasts three days and the market stabilizes or corrects. This is day four.

Monday Closing Livestock Market Update - Live Cattle Futures Erode

GENERAL COMMENTS:

Livestock futures have traded in a moderately mixed direction through the e Monday trading session. The movement of outside markets has had a direct impact on the overall movement and activity in most livestock futures Monday, although with some outside markets making a direct shift from significant losses to active gains.

Live cattle futures gave back lightly mixed trade at midday, closing lower in all contracts, while feeder cattle futures backed away session highs, closing mixed to mostly higher. Lean hog futures, on the other hand, have regained buyer support in the last hour of trade, helping to advance last week's gains, and spark renewed underlying fundamental and technical support.

Hog prices closed higher on the Daily Direct Afternoon hog report, up $0.34 with a weighted average of $44.9 on 928 hogs. March corn closed down 5 3/4 at $4.55 and March soybean meal closed down $0.90 at $368.5. The Dow Jones Industrial Average is up 216.90 at 37,683.01.

LIVE CATTLE:

Live cattle futures closed lower in all contract months Monday afternoon after spending much of the trading session within a narrowly mixed trading range. The rebound in stock markets during the end of the day limited live cattle traders who were focusing on slowly moving back into commodity trade.

Sharp losses in most ag commodity markets initially brought about renewed buyer support back to the complex, but with only limited support in beef values and sluggish cash cattle interest early in the week, buy orders quickly ran out of gas.

Cash cattle trade activity remains quiet, which is typical for a Monday. Trade last week was higher in all areas, creating optimism as feeders get ready to price cattle for this week's trade.

The five-Area weekly average moved to $174.01 per cwt, which is $1.77 per cwt higher than the previous week. Showlists appear to be mixed this week, but this still may not indicate early week trade.

February live cattle closed $0.63 lower at $169.95, April live cattle closed $0.38 lower at $173.025 and June live cattle closed $0.20 lower at $170.35. 

Monday's slaughter is estimated at 115,000 head, 115,000 head more than a week ago and 12,000 head less than a year ago. 

Boxed beef prices closed mixed: choice up $1.67 ($278.83) and select down $0.17 ($259.36) with a movement of 131.17 loads (73.31 loads of choice, 29.93 loads of select, 5.11 loads of trim and 22.82 loads of ground beef).

TUESDAY'S CATTLE CALL: Steady. Feeders are focusing on steady to higher money through the week, although bids and asking prices may not develop until midweek or later.

FEEDER CATTLE:

Feeder cattle futures closed mixed following a late day pullback in most feeder cattle contracts. Despite grain and feed prices falling firmly in futures trade, buyer support which was very evident early in the session seemed to cool in the last hour of trade. Even though prices cut session highs nearly by half in several nearby contracts, the focus on follow through gains in nearby contracts is still limiting any significant market pressure and concern that prices may not be able to hold current market trends in the coming days and weeks.

January feeders closed $0.75 higher at $223.875, March feeders closed $0.93 higher at $225.075 and April feeders closed $0.33 higher at $230.1. The CME Feeder Cattle Index for Jan. 4: up $0.93, $229.02.

LEAN HOGS:

Lean hog futures led the livestock complex higher Monday, sparking another trading session of positive market moves. There continues to be underlying support seen in nearby and deferred contract months as traders are focusing on the potential that demand for pork may bounce higher than expected, especially given firming economic news. This helped to push April contract to triple-digit gains Monday, sparking follow-through buyer interest in all contract months at the end of a very positive trading session.

February lean hogs closed $0.60 higher at $70.6, April lean hogs closed $1.15 higher at $77.525 and May lean hogs closed $0.80 higher at $83.95. Monday's hog slaughter is estimated at 440,000 head, 39,000 head less than a week ago and 48,000 head less than a year ago. Pork Cutouts totaled 302.46 loads with 250.65 loads of pork cuts and 51.81 loads of trim. Pork cutout values are up $0.82 at $85.02. The CME Lean Hog Index for January 4: down $0.01, $65.85.

TUESDAY'S HOG CALL: Steady to $1 higher. The combined support of a full procurement week and additional futures market gains, cash bids are expected to be steady to firm early Tuesday morning.

Monday Midday Livestock Market Update - Limited Trade Leaves Livestock Markets

GENERAL COMMENTS:

This week is the first full week of trade in the last two weeks, creating more interest in the market following the New Year's Day holiday. Price support over the last couple of weeks in both cattle and hog futures has helped to move the focus away from bearish market intentions and current production levels to possible demand support developing through the upcoming weeks and months.

Mixed trade is seen across livestock trade Monday morning, but prices have moved away from session lows as the session has continued with firm gains seen in feeder cattle futures and light to moderate buying trickling into the lean hog complex.

Outside market pressure is also helping to put more technical support into livestock trade as the grain and stock markets are showing early week uncertainty. March corn is down 6 1/2 at $4.543 and March soybean meal is down $0.70 at $368.7. The Dow Jones Industrial Average is down 65.11 at 37,401.00.

LIVE CATTLE:

Live cattle futures are mixed Monday morning with a midday trading range from 40 cents lower to 40 cents higher. The overall lack of aggressive direction in the futures market is not surprising, despite firmer gains holding in feeder cattle futures. Traders in the live cattle complex continue to be still searching for longer-term answers surrounding consistent support in cash values as well as the ability to steadily move beef values higher. Nearby live cattle futures remain well rooted above support levels, which may limit additional active market growth with a lot of questions and uncertainty surrounding the long-term production levels over the next six months as well as beef demand growth during 2024.

Cash cattle activity remains at a standstill with show list distribution and inventory taking seen in all areas.

Winter storms moving through much of the Northern cattle country over the next couple of days could limit overall movement from feedlots, but feeders still are focusing on the potential for steady to higher cash cattle trade by the end of the week.

February live cattle are $0.53 higher at $171.1, April live cattle are $0.15 higher at $173.55, June live cattle are $0.18 higher at $170.725. 

Boxed beef prices are mixed: choice up $1.18 ($278.34) and select down $0.10 ($259.43) with a movement of 55.03 loads (35.48 loads of choice, 9.09 loads of select, zero loads of trim and 10.46 loads of ground beef).

FEEDER CATTLE:

Feeder cattle futures have been the bright spot of livestock trade Monday morning with triple-digit gains seen in nearby contracts during much of the morning. The combination of firming cash cattle trade over the last two weeks as well as a strong pullback in grain prices and overall production costs, feeder cattle buyers are taking advantage of outside market moves while they can.

All feeder cattle contracts are trading higher at midday, which is the only livestock market posting solid gains through the entire complex Monday morning.

January feeders are $1.38 higher at $224.5, March feeders are $1.48 higher at $225.625 and April feeders are $0.98 higher at $230.75.

LEAN HOGS:

Lean hog futures have posted moderate to firm gains in nearby contract months, although deferred futures have become much more hesitant to move in a positive direction. The mixed trade direction seen in early week activity is still focusing on lack of market consistency. Although nearby contracts are willing to extend last week's gains, the opportunity for position taking in the last half of 2024 while overall pork demand uncertainty continues is allowing for the mixed movement in price levels.

February lean hogs are $0.55 higher at $70.55, April lean hogs are $1.00 higher at $77.375 and May lean hogs are $0.45 higher at $83.60. Hog Prices are unreported due to confidentiality on the Daily Direct Morning Hog report. Pork Cutouts totaled 183.26 loads with 147.05 loads of pork cuts and 36.21 loads of trim. Pork cutout values are down $0.25 at $83.12.