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DTN Midday Livestock Comments 12/08 11:54
Livestock Futures Find Support Friday Morning
Late-week buyer support is seen in early trade through both cattle and hog
futures. The ability to maintain these initial gains through the rest of the
trading session seems to be needed to help instill additional confidence going
into next week.
Rick Kment
DTN Analyst
GENERAL COMMENTS:
Once again, the feeder cattle complex is the leader of the pack when it
comes to price moves Friday morning. For now, the direction of markets is
higher, with feeder cattle and live cattle trade holding moderate to strong
gains, while lean hog futures are hanging onto limited midday gains, but unable
to draw much market momentum at the end of the week.
Cattle futures continue to struggle to gain enough long-lasting support to
move prices from long-term support levels, with underlying technical and
fundamental weakness seen across the market. The ability to push prices higher
at the end of the week may not help bring quick relief to the oversold market
structure, but it would help set the tone for more consistent buyer interest
early next week.
March corn is up 1 3/4 at $4.898 and January soybean meal is up $4.50 at
$411.3. The Dow Jones Industrial Average is up 1.16 at 36,118.54.
LIVE CATTLE:
Live cattle futures have gained support through the morning with early gains
holding, but additional buyer interest moving into the complex following the
release of the December WASDE report. The report has not significantly changed
the overall direction of the market, but the report posted unchanged production
expectations for 2023, and a 180-million-pound increase for 2024 from last
month's estimate. The increased feeder cattle placement numbers over the past
two months has increased the focus of beef production gains.
Even with this production boost reported, traders feel that this has already
been factored into the market, and the current increase is causing a calming
effect on price levels, allowing buyers the room to expand gains from early
trade. It is still uncertain if price support will be able to hold through the
end of the session, but the positive Friday moves are a welcome sight.
Cash cattle activity remains slow and generally quiet Friday morning with no
bids redeveloping following midweek trade. Asking prices on cattle are listed
around $172 live basis in the South and $272 per cwt dressed in the North. Even
though overall estimated numbers remain generally light, the bulk of the weekly
business could be wrapped up. There is the possibility that some clean up
activity may develop through the rest of the day.
Reported cash cattle trade earlier this week is listed at $171 live basis,
$3 per cwt lower than last week's weighted average, and $271 per cwt dressed in
the North which is $4 per cwt lower than last week. December live cattle are
$2.40 higher at $164.75, February live cattle are $2.75 higher at $165.275,
April live cattle are $2.60 higher at $168.55. Boxed beef prices are mixed:
choice down $1.54 ($288.30) and select up $0.08 ($258.91) with a movement of
119.00 loads (77.21 loads of choice, 16.94 loads of select, 5.82 loads of trim
and 19.03 loads of ground beef).
FEEDER CATTLE:
Feeder cattle futures have gained additional momentum at midday following
the December WASDE report. The increase in beef production levels from
November's report confirmed what the market has already known, but with overall
production expected to increase 180 million pounds over previous estimates,
traders feel that this has already been factored into the market.
Nearby contracts are trading $4 to $5 per cwt higher with active support
already in the complex.
The ability to minimize the weekly damage seen in feeder cattle trade at the
end of the week is likely to help instill follow-through buyer support early
next week.
January feeders are $5.03 higher at $215.3, March feeders are $4.70 higher
at $215.875 and April feeders are $4.23 higher at $218.65.
LEAN HOGS:
Lean hog futures are holding moderate support midday after struggling to
find any secure footing through much of the morning. The December WASDE report
released midmorning was generally neutral to lean hog markets, but the lack of
bearishness in the report is taken as a breath of fresh air and has allowed
limited but supportive buying activity to move back into the complex. The
potential to create firm and consistent buying activity over the upcoming days
and weeks is likely to add additional technical support to the entire complex.
December lean hogs are $0.40 higher at $67.95, February lean hogs are $0.50
higher at $68.275 and April lean hogs are $0.63 higher at $75.25. Hog Prices
are lower on the Daily Direct Morning Hog report, down $1.33 with a weighted
average of $52.59, ranging from $49.00 to $54.00 on 2,976 head with a five-day
rolling average of $54.46. Pork Cutouts totaled 143.34 loads with 130.97 loads
of pork cuts and 12.37 loads of trim. Pork cutout values are down $2.16 at
$81.35.
Rick Kment can be reached at kmentrick@gmail.com
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