Tuesday Morning Livestock Market Update - Futures Should See Further Support

GENERAL COMMENTS:

Cattle futures opened higher Monday and extended the gains to new contract highs before buying interest ran out. Futures then fell back into negative territory. Live cattle rebounded into the close while feeder cattle closed with losses. The exception was the January feeder cattle contract, which stops trading Thursday. The friendly Cattle on Feed report should fuel the fire for higher prices. Feedlots will hold for high cash again this week. Packers have lost control over the market and would need to cut slaughter drastically to avoid paying higher cash for cattle. This is not likely as boxed beef was up strongly with choice gaining $2.16 and select up $4.26. Demand is strong and the packers need to meet it. The packers continue to purchase some cattle for deferred delivery but have not purchased a sufficient supply and continue to pay more for cattle. Feeder cattle closed lower, but that does not change the trend. Feeder cattle are in demand.

Hog futures closed higher through the October contract and were slightly lower thereafter. Trader optimism is bullish and is carrying the market despite limited support from the underlying cash and cutouts. The National Daily Direct Afternoon Hog report showed cash up $0.01 and begins the week on a stronger note similar to last week. Pork cutouts gained $1.47, indicating demand may be improving. The record-high beef prices should move more demand over to pork as consumers may not continue to pay the high beef prices.

	BULL SIDE		BEAR SIDE
1)	New contract highs in live and feeder cattle keep traders confident over higher prices. This is supported by strong demand and higher boxed beef prices.	1)	Each day the cattle market moves higher means it is closer to the top. The market will not go up forever. High prices always cure high prices.
2)	The feedlots are in control and will ask for higher prices again this week as supplies remain tight and packers need to maintain slaughter to meet demand.	2)	Record-long future positions may trigger a significant price correction once the fundamentals and traders' attitudes change.
3)	Hog futures are poised to move back to the highs as traders are friendly to the market for the long term.	3)	Hog futures will need continued support from cash and cutouts to keep the interest of traders in the market, otherwise the market could sell off again.
4)	The high beef prices seem to be turning more demand over to pork. Consumers will not continue to pay higher beef prices.	4)	Packers have not had to be very aggressive in the cash market as there has been a sufficient supply of hogs. Cash may have limited upside potential.

Monday Closing Livestock Market Update - Live Cattle and Lean Hogs Push Higher

GENERAL COMMENTS:

Live cattle and lean hog contracts rounded out the day higher as traders were thankful for the continued fundamental support. Meanwhile, the feeder cattle complex isn't taking anything for granted and wants to see how this week's fed cash cattle trade pans out before advancing the contracts. March corn is down 4 1/2 cents per bushel and March soybean meal is down $4.10. The Dow Jones Industrial Average is up 289.33 points.

LIVE CATTLE:

The live cattle market's unwavering rally continued into Monday's trade as the contracts were once again pushed higher by strong trader support and were able to end the day higher yet again. February live cattle closed $0.90 higher at $206.67, April live cattle closed $0.80 higher at $203.82 and June live cattle closed $0.82 higher at $198.20. It's utterly incredible that the market is continuing to run as aggressively as it is given that both fed cattle prices are trading at new all-time highs and that the futures contracts are trading at life-of-the-contract highs as well. And last but certainly not least, it was helpful that boxed beef prices were supportive again today although we know that box prices could endure some seasonal pressure in the weeks ahead as it's a long time until grilling season. New showlists appear to be mixed, slightly higher in Texas and Nebraska, but lower in Kansas. Monday's slaughter is estimated at 114,000 head -- 1,000 head more than a week ago and 8,000 head less than a year ago.

Last week Southern live cattle traded at mostly $201 to $202 which is steady to $1.00 higher than the previous week's weighted average, and Northern dressed cattle traded anywhere from $328 to $330 which is $6.00 to $8.00 higher than the previous week's weighted average. Last week's negotiated cash cattle trade totaled 82,583 head. Of that 76% (62,966 head) were committed to the nearby delivery, while the remaining 24% (19,617 head) were committed to the deferred delivery.

Boxed beef prices are higher: choice up $2.16 ($330.08) and select up $4.26 ($320.55) with a movement of 137 loads (92.93 loads of choice, 29.97 loads of select, zero loads of trim and 13.80 loads of ground beef).

TUESDAY'S CATTLE CALL: Higher. Until packers get a plethora of cattle bought up, feedlot managers are going to continue to push the market higher.

FEEDER CATTLE:

Although the live cattle contracts rounded out the day higher and corn prices were slightly lower at Monday's close, the feeder cattle market wasn't as confident and consequently fell lower. March feeders are down $1.32 at $275.25, April feeders are down $1.02 at $274.42 and May feeders are down $0.60 at $272.80. Today's lower move wasn't a decision made because of fundamental indications, but rather because traders are aware of just how high the market's prices currently are and want to see how the week's fed cash cattle trade is going to pan out before advancing the contracts anymore. At the midsession point at Oklahoma National Stockyards in Oklahoma City, Oklahoma, compared to last week feeder steers were trading $5.00 to $10.00 higher, and feeder heifers were trading $5.00 to $8.00 stronger. Steer and heifer calves were selling unevenly steady. Feeder cattle supply over 600 pounds was 65%. The CME feeder cattle index 1/24/2025: down $0.35, $277.93.

LEAN HOGS:

With the help of traders and continued support from consumers -- the lean hog complex was able to push an aggressive rally through Monday's close. February lean hogs closed $0.75 higher at $83.05, April lean hogs closed $1.67 higher at $89.87 and June lean hogs closed $1.82 higher at $103.30. It was mostly because of the $5.24 jump in the butt and the $3.53 jump in the loin that the afternoon's carcass price was able to close higher – but more than anything traders remain pleased with the continued support of consumers which is helping advance the contracts. Hog prices are higher on the Daily Direct Afternoon Hog Report up $0.01 with a weighted average price of $80.39 on 1,011 head. Pork cutouts totaled 306.14 loads with 273.69 loads of pork cuts and 32.46 loads of trim. Pork cutout values: up $1.47, $93.16. Monday's slaughter is estimated at 483,000 head -- 61,000 head more than a week ago and 6,000 head less than a year ago. The CME lean hog index 1/23/2025: down $0.01, $81.92.

TUESDAY'S HOG CALL: Higher. Monday's cash hog trade was minimal so packers will likely be more aggressive in the market on Tuesday/Wednesday.

Monday Midday Livestock Market Summary - Mixed Tones Summarize the Complex

GENERAL COMMENTS:

The livestock complex is entering the new week mixed as traders want to advance the cattle contracts again but are somewhat skeptical of doing so without knowing what this week's cash cattle market will do. Meanwhile, the lean hog complex is rallying as it's thankful to see the continued support of strong consumer demand. March corn is down 5 3/4 cents per bushel and March soybean meal is down $4.20. The Dow Jones Industrial Average is up 123.86 points.

LIVE CATTLE:

The live cattle complex is trading mostly mixed into Monday's noon hour as the market wants to continue to thrive and embrace its rallying momentum. Still, on the other hand, traders aren't naive to the fact that the contracts and the cash market are currently trading at price points some never believed they ever would. February live cattle are up $0.87 at $205.65, April live cattle are up $0.05 at $203.10 and June live cattle are up $0.12 at $197.50. This week will be a big one for the cattle complex as later this week the Cattle Inventory report is set to be released which will help market participants determine whether or not any cowherd rebuild build has begun. I don't believe that we will see any signs of that just yet, and if I'm wrong and there has been a small percentage of heifers kept back for breeding -- I still don't believe it will be to a large enough effect to add a significant number of calves into the marketplace. New showlists appear to be mixed, slightly higher in Texas and Nebraska, but lower in Kansas.

Last week Southern live cattle traded at mostly $201 to $202 which is steady to $1.00 higher than the previous week's weighted average, and Northern dressed cattle traded anywhere from $328 to $330 which is $6.00 to $8.00 higher than the previous week's weighted average.

Boxed beef prices are higher: choice up $0.35 ($328.27) and select up $1.73 ($318.02) with a movement of 86 loads (55.40 loads of choice, 23.09 loads of select, zero loads of trim and 7.18 loads of ground beef).

FEEDER CATTLE:

Although the nearby live cattle contracts are trading higher, and it's widely accepted that Friday's Cattle on Feed Report was indeed bullish -- the feeder cattle contracts are trading steady/somewhat lower as the market seems to be apprehensive about trading any higher given that the contracts are already trading at contract high price points. March feeders are down $0.67 at $275.90, April feeders are down $0.20 at $275.90 and May feeders are down $0.30 at $273.10. The complex could regain some strength later this week -- but much of the market's fate is going to rely on the live cattle market's direction, how this week's fed cash cattle market pans out as well as the overall sediment and moral of traders this week.

LEAN HOGS:

The lean hog complex is rallying aggressively this morning as traders have run the contracts back up to resistance levels, most likely because of the continued support in which they're seeing from consumer demand. February lean hogs are up $0.55 at $82.85, April lean hogs are up $2.02 at $90.22 and June lean hogs are up $1.90 at $103.37. And so long as the market continues to see support from consumers, it's likely that traders could attempt to surpass that resistance threshold at $91.00.

The projected lean hog index for 1/24/2025 is up $0.02 at $81.94, and the actual index for 1/23/205 is up $0.01 at $81.92. Hog prices are lower on the Daily Direct Morning Hog Report, down $0.12 with a weighted average price of $78.00, ranging from $77.00 to $79.00 on 471 head and a five-day rolling average of $80.53. Pork cutouts total 172.03 loads with 151.42 loads of pork cuts and 20.61 loads of trim. Pork cutout values: up $1.64, $93.33.

Monday Morning Livestock Market Update - Mixed Futures Trade Expected to Begin Week

GENERAL COMMENTS:

Cattle futures are a sight to behold with new all-time highs made last week. Packers held back most of the week in hopes that feedlots would need to sell cattle at even money as some early initial cash trade indicated. But the feedlots had none of it and were determined to hold cattle another week if they did not receive higher prices. Southern cattle traded up to $5.00 higher with Northern dressed cattle as much as $6.00 to $8.00 higher Friday. Cattle futures continue to defy gravity as cattle supplies remain tight and demand remains strong. The Cattle on Feed report was supportive to the market with on-feed numbers on Jan. 1 at 99% compared to the estimate of 99.8%. Placements were 97% compared to the estimate of 101.8% and marketings were 101% compared to the estimate of 101.3%. The report may be factored, in leaving futures mixed Monday as traders wait for further direction. The Commitments of Traders report showed the funds adding just 31 contracts to their net-long position in live cattle bringing their total to 149,756 contracts. The funds added 1,215 long futures contracts, bringing their net-long futures position to 27,983 contracts and the third week of a record-long position.

Hog futures traded on both sides of unchanged Friday, but eventually found the support needed to push the market higher into the close. This was somewhat of a feat as both cash and cutouts were lower. The National Dairy Direct Afternoon Hog report was $1.87 lower with cutouts down $0.08. Last week, cash traded higher on Monday, but packers are not expected to be as aggressive to begin this week. Technically, the futures might be developing a sideways trading pattern in the June through August contracts but also a potential head-and-shoulders bottom. However, it will take supportive cash and cutouts to turn the market higher. The Commitments of Traders report showed fund traders reducing their net-long futures positions by 7,622 contracts with their net-long position at 90,693.

	BULL SIDE		BEAR SIDE
1)	New contract highs and new all-time highs in cattle futures keep the upward momentum strong and traders bullish.	1)	Cattle futures are overbought and with another week of record-long feeder cattle futures, it is only a matter of time before a price correction will take place.
2)	Feedlots had a big win last week with higher cash. They will try to do the same this week as the fundamentals remain supportive.	2)	Boxed beef prices show signs of weakness as demand may become impacted as beef prices remain high.
3)	Hog futures are finding sufficient support from traders for the long term. They continue to buy the break with the anticipation that strong prices will unfold.	3)	Hogs have been unable to find consistent support from cash and cutouts. This will leave the upside limited.
4)	Hog slaughter remains strong to fulfill demand. This will keep supplies from backing up in the market.	4)	Some hog contracts may be developing a sideways trading pattern, leaving the market choppy in the near term.