DTN Midday Livestock Comments 12/07 11:41
Cattle Futures Stabilize Thursday Morning
The break away from aggressive losses is a relief in all cattle markets,
although the downside pressure seen over the last few weeks is creating
significant uncertainty about just how much short-term upside market potential
can be expected before the end of the year. Hog futures continue to erode
following lackluster interest midweek, but remain lightly traded, still in the
current sideways trading pattern.
Moderate gains have developed and held in feeder cattle futures as traders
are focusing on covering short positions after the aggressive market tumble
seen Wednesday. The support across feeder cattle trade is helping to instill
limited but supportive spillover buying in the live cattle complex, although
these gains are very limited through most of the morning trade.
Lean hog futures are showing firm market pressure, although this has not
broken out of the current sideways trading pattern. The fundamental market
weakness seen in cash values and pork values in early December is creating some
underlying concern through the entire futures complex.
March corn is up 3 1/2 at $4.878 and January soybean meal is down $1.00 at
$407.50. The Dow Jones Industrial Average is up 5.53 at 36,059.96.
Price stability is seen in live cattle futures early Thursday morning.
Nearby contracts are steady to moderately higher at midday as firm support has
trickled back into the feeder cattle futures. The aggressive triple-digit price
freefall seen in live cattle and feeder cattle trade late Wednesday has limited
additional selling pressure and allowed for light to moderate short covering in
what is still expected to be an oversold market. Despite the complex remaining
in an oversold status, the combination of technical and fundamental weakness is
making traders extremely hesitant to actively step into the complex.
In the weekly export sales report, net sales of 200 mt for 2023 -- a
marketing-year low -- were down 98% from the previous week and from the prior
four-week average. Increases primarily for Japan (1,800 mt, including decreases
of 1,100 mt), Mexico (1,300 mt, including decreases of 100 mt), China (900 mt,
including decreases of 700 mt). Exports of 13,700 mt were up 7% from the
previous week, but down 2% from the prior four-week average. The destinations
were primarily to South Korea (3,900 mt).
Cash cattle activity remains quiet Thursday morning following light trade in
all areas Wednesday. It is expected that some additional cattle trade will need
to develop over the next couple of days, but it is still uncertain just how
solid the previous price tone is and the potential to break away from the
recent market pressure. Cattle trade in the South is reported at $171 per cwt,
$3 per cwt lower than last week's weighted average, but generally steady with
earlier week trade. Northern dressed trade was reported at $271 per cwt, $4 per
cwt below last week's weighted average.
December live cattle are $0.18 higher at $163.625, February live cattle are
$0.18 higher at $163.725, April live cattle are $0.20 higher at $166.875. Boxed
beef prices are mixed: choice down $1.94 ($288.62) and select up $0.44
($260.34) with a movement of 106.73 loads (60.21 loads of choice, 10.54 loads
of select, zero loads of trim and 35.98 loads of ground beef).
Moderate gains have developed and held through the morning in feeder cattle
futures. The ability to draw even light to moderate support into the complex
following aggressive $5 per cwt losses midweek is indicating that selling
pressure may be slowing significantly as the week continues. Technically, the
overall tone of the market remains weak with prices Front month January
contracts set contract lows Wednesday, with the hope that buyer support can
continue to firm and move off these recent support levels. This means that the
January feeder cattle contract has traded back and forth within a $58 per cwt
trading range during the life of the contract.
January feeders are $1.68 higher at $211.825, March feeders are $0.88 higher
at $212.625 and April feeders are $0.43 higher at $216.075.
Lean hog futures have eroded through morning trade with nearby contracts
holding losses of $1 to $2 per cwt. The recent softness in cattle futures is
having some spillover impact on 2024 lean hog buying support, but traders
remain focused on prices remaining within the previous short-term market range.
Although prices are working closer to support levels due to the most recent
market pullback, technical support remains at this point.
In the weekly export sales report, net sales of 25,900 mt for 2023 were up
23% from the previous week, but down 14% from the prior four-week average.
Increases primarily for South Korea (10,100 mt, including decreases of 500 mt),
Mexico (7,800 mt, including decreases of 1,000 mt), Japan (2,700 mt, including
decreases of 700 mt). Exports of 32,300 mt were up 16% from the previous week
and 2% from the prior four-week average. The destinations were primarily to
Mexico (12,700 mt), South Korea (4,500 mt), Japan (3,800 mt), China (2,500 mt),
and Canada (2,000 mt).
December lean hogs are $0.03 lower at $67.525, February lean hogs are $1.05
lower at $68.25 and April lean hogs are $1.45 lower at $74.50. Hog Prices are
lower on the Daily Direct Morning Hog report, down $0.97 with a weighted
average of $53.92, ranging from $48.00 to $55.00 on 895 head with a five-day
rolling average of $55.05. Pork Cutouts totaled 156.62 loads with 136.84 loads
of pork cuts and 19.78 loads of trim. Pork cutout values are down $0.28 at
Rick Kment can be reached at email@example.com
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