Date: December 27, 2023
Selling pressure only lasted for a few hours for cattle futures while lean hogs held losses into the close on Tuesday. The bearish cattle on feed report kicked feeders triple digits lower at the open but that was quickly tossed aside as trading volume was light and support from higher cash fed cattle trade last week won out. December live cattle will expire at the end of the week and converged with cash last week at $170. I would expect we try to hold steady this week as well but no bids or offers have been reported yet.
NATIONAL FEEDER & STOCKER CATTLE SUMMARY – WEEK ENDING 12/23/2023
RECEIPTS: Auctions Direct Video/Internet Total
This Week: 103,100 36,300 1,300 140,700
Last Week: 191,800 36,600 46,100 274,500
Compared to last week, a light test of steers and heifers sold 4.00 to 10.00 higher. A much lighter offering as many auction markets did not host a sale because of the Christmas holiday and this coming week will be much in the same. Good to very good demand for calves and limited number of yearlings. The auction receipts on this report is nearly 500K less than the previous five-year average, alluding that the smaller cow herd has not been rebuilding yet at this point in time.
Cattle slaughter on Tuesday estimated at 100,000 head, down 24,000 from last week and down 25,000 from last year. Hog slaughter on Tuesday estimated at 463,000 head, down 28,000 compared to last week and down 16,000 compared to a year ago.
Boxed beef cutout values on Tuesday steady to higher on moderate to weak demand with 69 loads sold.
Choice Cutout +.38 @ 293.31, Select Cutout +.04 @ 261.19
CME Feeder Cattle Index @ 221.03, Lean Hog Index @ 65.59
Pork Carcass Cutout -.09 @ 82.12
December live cattle and cash again converging last week at $170 with only a couple days left until expiration. The February contract still trading at a discount to December, although that spread closed down sharply yesterday. Nearby support for the Feb contract at $167, the low for December at $162.40 and resistance up at $171. January feeders holding a higher trend this month and taking out the 3-month long lower trend. Last week’s high up to $225.22 with resistance next at $232.20 and nearby support at $218.50 then $217. February lean hogs have been very choppy over the past month with a recent high last week at $72.45, resistance next up at $77 and taking out nearby support yesterday with then next down around the $67 level.
Over in the grains, it took a little bit longer, but steady to lower markets all turned higher by late morning with gains holding into the close on Tuesday. I thought it may be the soybeans leading the charge higher as China continues to buy U.S. soybeans and Brazil’s weather is still concerning. It was actually the wheat markets that led the way as technical buying took hold after contracts tested but held nearby support levels. Ukraine took out another Russian warship and it has been reported that nearly 25% of the Black Sea fleet has been destroyed in the just the past few months. Russian wheat prices also higher this week and right in line with both France and Romanian offers. Outside markets were also supportive with the US$ down to new 5-month lows and energies rallying.
Weekly Export Inspections out yesterday for the week ending December 21 show corn volume improving but soybeans already starting to drift lower. This switch typically doesn’t happen until the 1st quarter. It is only 1 week of data, but concerning for beans and bullish for corn if the trend continues. Corn inspections totaled 42.6 MBU with year to date now at 442.3 MBU vs. 351.1 MBU at this time a year ago. Mexico remains the top destination followed by Colombia, China and Japan. Soybean inspections dropping back to 39.3 MBU with YTD now at 817.6 MBU vs. 1.003 BBU at this time a year ago. China remains the top destination followed by Mexico, Germany and Japan. Wheat inspections right at the average needed of 15.8 MBU with YTD at 342.9 MBU vs. 433.8 MBU a year ago. South Korea, Mexico, Japan and Thailand all taking 2+ MBU each. Milo inspections remain impressive at 10.3 MBU, 10.15 MBU heading to China. YTD milo inspections now 61 MBU ahead of last year.
Grains were steady to lower overnight with corn finishing 1 lower, soybeans 2 to 4 lower and wheat 4 to 7 lower. Outside markets have equities steady to lower, US$ again lower and energies lower with crude oil down $1/barrel.
Holiday trading continues and volume will be thin especially towards the end of the week. Markets are open normal hours through Friday but closed again on Monday. Money flow in or out can significantly impact price movement especially on thin volume and this of course is the last trading week for 2023. First notice day for January grain contracts is on Friday, this would be the soy complex.
Winding conditions across CO, NE, SD and KS today keeping some highways closed. Scattered moisture the rest of this week for the eastern half of the U.S. The 6-10 day outlook showing above normal temps out West and for the Northern Border States and below normal temps in the Southeast with above normal precipitation across the southern half of the U.S. and below normal for the PNW and Great Lakes to the Northeast. Brazil still only expected to see very scattered and light showers this week with better chances into next week.
March corn down to a new contract low last week at $4.68 ¼ with resistance at $4.81 then $4.94. January soybeans very choppy this month with support at $12.94 and resistance at $13.28 then $13.44, the high so far in December. March Chicago wheat has support around $6.10 with the next at $6.02 and resistance at $6.50. March KC wheat has support around $6.20 with resistance at $6.60. March MPLS wheat has support at $7.09 with resistance at $7.31. January soybean meal holding a two-month long lower trend with support at $394 and resistance at $413.
Loewen and Associates, Inc.
Pete Loewen / Matt Hines / Doug Biswell / Tyson Loewen
www.loewenassociates.com matt@loewenassociates.com
785-537-3336
IMPORTANT—PLEASE NOTE
This does constitute a solicitation to buy or sell commodities futures and/or options. The information contained herein is provided for informational purposes only. The information is not guaranteed as to its accuracy or completeness, although the information was taken from sources we believe to be reliable. The market recommendations of Loewen and Associates, Inc. are based solely on the judgment of Loewen and Associates, Inc. personnel. We do not guarantee or warranty, either expressed or implied, of success to you in the use of this information. Loewen and Associates, Inc. disclaims responsibility for or loss associated with use of information from our commentary, analysis or recommendations. There is risk of loss in trading commodity futures and options. The risk in trading can be substantial; therefore only genuine “risk” funds should be used.