Thursday Morning Livestock Market Update - Cash Cattle Trade Should Take Place Today

GENERAL COMMENTS:

Today is Jimmy Carter's National Day of Mourning. The agricultural futures markets will close at 12:15 pm Central time. Keep that in mind as you make decisions regarding risk management and track the markets. Cattle futures fell on Wednesday as traders did not want to wait to see the results of the cash cattle trade, but decided to take some profits. Cash trade is expected to be higher, but if feedlots settle for steady money, further liquidation could be triggered. However, the packers seem short-bought and may need to pay higher prices again this week. Boxed beef continues to improve with choice up $2.82 and select up $1.46. Slaughter data released for the week ending December 21, 2024, showed a three-pound increase in dressed steer weights at 953 pounds, up 3 pounds from the previous week. Dressed heifer weights reached 871 pounds, a new record.

Hog futures continue to struggle with most contracts posting losses. The April contract closed at the lowest level since October 18, 2024. The packers were not aggressive in the cash market with the National Daily Direct Afternoon Hog report down $0.38. It seems the packers have purchased sufficient supply and may not be aggressive the rest of the week. Thankfully, cutouts were able to surge higher posting a gain of $2.13. There needs to be much more support for cutouts to turn the bearish trend. Slaughter continues to hold a strong pace. Saturday slaughter is estimated at 163,000 head.

	BULL SIDE		BEAR SIDE
1)	The trend in cattle futures remains up with the selling pressure on the market on Wednesday likely a price correction from traders banking some profits.	1)	Cattle traders became nervous at the high prices in an overbought market. There is uncertainty if cash will be higher this week and traders did not want to wait to see.
2)	Consumer demand for beef remains strong with boxed beef prices continuing to increase. Packers must meet that demand and will pay higher prices to obtain the cattle.	2)	Beef prices may be near a level at which demand may slow. Consumers will not pay the high beef prices indefinitely.
3)	The lower pork prices should stimulate demand in light of the high beef prices. The seasonal weakness seems to have been overdone.	3)	Hog weights averaged 293.2 pounds last week, up 0.9 pounds from the previous week. This is 0.1 pounds higher than a year ago.
4)	June and later hog contracts seem to be building support and moving in a sideways pattern.	4)	The packers may be finished buying for the week and will remain less aggressive. Hog supplies remain sufficient for demand leaving packers confident they will have sufficient for slaughter.

Wednesday Closing Livestock Market Update - Traders Anxious to See What Pans Out in this Week's Cash Cattle Market

GENERAL COMMENTS:

The livestock complex closed mostly lower as the support that was helping push the lean hog complex higher dwindled throughout the day and the cattle complex grew weary of supporting the contracts anymore ahead of seeing what develops in this week's cash market. Asking prices are noted at $200 in the South but otherwise, the market is silent. March corn is down 4 cents per bushel and March soybean meal is down $2.70. The Dow Jones Industrial Average is up 106.84 points.

LIVE CATTLE:

It was a mixed day for the live cattle complex because although the futures contracts closed lower, the market was still able to successfully walk away with some fundamental wins. For starters, it was relieving to see the choice cut close higher after it dipped slightly lower Tuesday afternoon. Although traders may be getting anxious that no cash cattle trade has developed yet, it's positive fundamentally to see feedlot managers confident in their ability to market cattle later in the week as that continues to show that they still possess the majority of the market's leverage and aren't desperate to unload cattle. Asking prices are noted in the South at $200, but otherwise not a word was heard from the cash cattle complex throughout the day. February live cattle closed $1.87 lower at $193.70, April live cattle closed $2.25 lower at $195.52 and June live cattle closed $2.30 lower at $190.47. 

Wednesday's slaughter is estimated at 122,000 head -- incomparable to last week but 7,000 head more than a year ago.

Boxed beef prices closed higher: choice up $2.82 ($328.61) and select up $1.46 ($306.89) with a movement of 181 loads (120.55 loads of choice, 26.51 loads of select, 14.87 loads of trim and 19.38 loads of ground beef).

THURSDAY'S CATTLE CALL: Higher. I believe trade will be higher again this week as packers are still short bought – but in rallying bull markets like this, the hardest part is pinpointing how much higher prices will be. And how refreshing it is to see true price discovery again in the fed cattle market.

FEEDER CATTLE:

The feeder cattle contracts were not going to be risking it all while the live cattle contracts traded lower throughout the day. Upon seeing the retreat in the live cattle complex, the feeder cattle contracts followed suit as traders weren't willing to risk much at all at these historically high prices. But once again, please note how there is a stark difference between today's close on the CME versus the attitude, moral and sheer prices being seen in the countryside. Traders may have been skeptical about advancing the board without the support of the live cattle contracts, but buyers in the countryside aren't holding back. At Winter Livestock Auction in La Junta, Colorado compared to their last sale feeder steers traded $8.00 to $12.00 higher across all weight classes. Feeder heifers sold $6.00 to $11.00 higher across all weighted classes. Feeder cattle supply over 600 pounds was 48%. The CME feeder cattle index 1/7/2025: up $0.57, $272.86.

LEAN HOGS:

So much for the lean hog market's momentum earlier today! Ahead of today's noon hour, the complex was trading fully higher but as the afternoon played out, time passed and traders' belief that the market should be trading higher ran thin. February lean hogs closed $0.30 higher at $79.47, April lean hogs closed $0.65 lower at $85.07 and June lean hogs closed $0.62 lower at $98.72. But the one positive note about today's hog complex was the higher end again in pork cutout values as the carcass closed $2.13 higher mainly thanks to the $3.48 jump in the ham. Hog prices closed lower on the Daily Direct Afternoon Hog Report, down $0.38 with a weighted average price of $78.51 on 6,087 head. Pork cutouts totaled 418.42 loads with 379.46 loads of pork cuts and 38.95 loads of trim. Pork cutout values: up $2.13, $90.53. Wednesday's slaughter is estimated at 490,000 head -- incomparable to last week but 15,000 head more than a year ago. The CME lean hog index 1/6/2025: down $0.42, $81.59.

THURSDAY'S HOG CALL: Lower. At this point, it's likely that packers have secured the vast majority of their needs this week in the cash complex.

Wednesday Midday Livestock Market Update - Cattle Dip Lower While Waiting to See what Happens in this Week's Cash Cattle Market

GENERAL COMMENTS:

The livestock complex has seen a bit of change in morale as Wednesday's trade plays out as the cattle contracts are now trading lower while the hogs trade higher. The lower dip in the cattle complex is likely stemming from the fact that traders want to hold up the market's powerful roll until they're reassured that this week's cash cattle market is indeed going to trade higher. March corn is down 3 1/4 cents per bushel and March soybean meal is down $0.90. The Dow Jones Industrial Average is down 100.45 points.

LIVE CATTLE:

The live cattle complex is trading gingerly into Wednesday's noon hour as the market is seeming to hold its breath until developments surface for the week's cash cattle trade. It's believed that again this week cash cattle prices will trade higher -- but traders want to see that assumption come to fruition before they advance the contracts much more. Asking prices are noted in Kansas at $200, but otherwise, there are no other asking prices listed, and no bids have surfaced. Trade will likely be delayed until Thursday or Friday as feedlot managers aren't in any rush to trade cattle. Tuesday afternoon the choice cut did close lower, and so it's comforting to note that prices are again higher this morning, but prices will need to continue to be monitored in this afternoon's close. February live cattle are up $0.07 at $195.62, April live cattle are down $0.12 at $197.70 and June live cattle are down $0.90 at $191.87.

Boxed beef prices are higher: choice up $1.59 ($327.38) and select up $0.97 ($306.40) with a movement of 87 loads (54.47 loads of choice, 10.94 loads of select, 9.07 loads of trim and 12.26 loads of ground beef).

FEEDER CATTLE:

Without the technical support of the live cattle complex, the feeder cattle contracts are also trading lower. But todays lower descend is solely a technical decision as demand is the countryside remains red-hot and is continuing to be evidenced by the CME feeder cattle index which closed $3.66 higher Tuesday afternoon at $272.29. January feeders are down $2.35 at $266.05, March feeders are down $2.57 at $265.27 and April feeders are down $2.30 at $266.17.

LEAN HOGS:

The lean hog complex is now trading higher as the market may have potentially found some technical footing after nearly trading lower all of this past week. February lean hogs are up $0.42 at $79.60, April lean hogs are up $0.60 at $86.32 and June lean hogs are up $0.50 at $99.85. It is helping matters that this morning the carcass is up $3.43, but that's mainly because of the $5.52 jump in the ham and the $5.41 gain in the belly.

Hog prices on the Daily Direct Morning Hog Report are unavailable because of confidentiality. However, we can see that 5,516 head have traded, and that the market's five-day rolling average now sits at $79.56. Prices are noted in Iowa/Minnesota, and in the Western Corn Belt, so packer demand/activity is lagging in the Eastern Corn Belt. Pork cutouts total 243.88 loads with 216.32 loads of pork cuts and 27.56 loads of trim. Pork cutout values: up $3.43, $91.83.

Wednesday Morning Livestock Market Update - Futures Should See Further Support

GENERAL COMMENTS:

There seems to be nothing to stop the cattle market from moving higher. Futures spent part of Tuesday in negative territory but traders became more aggressive as the day progressed. Feeder cattle led the way with triple-digit gains and new contract highs in March and later contracts. The expectation is for cash to trade higher this week. Feedlots have been able to hold for higher cash and this week will be no exception. Boxed beef prices closed mixed Tuesday with choice down $1.31 and select up $2.10. The weakness of choice cuts will have little impact on the market. Overall, demand remains very strong and packers need to slaughter cattle to meet that demand. There has been no indication of the lifting of the ban on cattle from Mexico and seemingly no concern from traders if it is lifted at some point. Feeder cattle continue to command higher prices in the country as the outlook for strong beef prices remains.

Hog futures were mixed on Tuesday with slight pressure on nearby months. One thing that can be said for hogs is they have been resilient despite fundamental pressure. Packers did not open their wallets on Tuesday with the National Daily Direct Hog report down $0.76. They may step in more aggressively Wednesday as they have not purchased a large volume of hogs so far this week. Pork cutouts were higher, posting a gain of $0.57. Traders need to see consistent support for cash and cutouts to generate buying interest and turn the market higher.

	BULL SIDE		BEAR SIDE
1)	Packers are short-bought and need to pay more to obtain the cattle they need to meet demand. This will continue as long as boxed beef prices remain supported.	1)	The cattle market is overbought and prime for a market correction. It is estimated that managed money traders have established a record-long position over the past week.
2)	Cattle futures continue to make new highs, generating increased buying interest from traders. April live cattle are knocking on the door of $200.	2)	If cash cattle prices are steady this week, the trade may be disappointed and sell the market.
3)	Hog futures seem to be building support at the current levels. This may build a base if consumer demand for pork increases.	3)	Pork cutouts have not been able to find support with a 10% decline in price over the past three weeks. This keeps pressure on the market.
4)	Hog supplies are current and the decline may be a short-term seasonal factor. Consumer demand may increase as beef prices become too high.	4)	The past few days of stability in hog futures may be short-lived with another leg down due to demand weakness.