DTN Midday Livestock Comments          12/09 11:15

   Live Cattle Futures Bounce Amid Low Volume

   Futures trading volume has been relatively quiet so far Friday morning, 
which may explain why some live cattle contracts have been able to zoom higher 
by triple digits amid a void of sell orders. 

Elaine Kub
Contributing Analyst

GENERAL COMMENTS:

   Futures trading volume has been relatively quiet so far Friday morning, 
which may explain why some live cattle contracts have been able to zoom higher 
by triple digits amid a void of sell orders. Southern cash cattle business 
continues to hold out for real volume, but a light to moderate trade has been 
reported this week in the North at mostly $247, which is $2 lower than last 
week's number. Meanwhile, the generally quiet or lightly bullish flavor of the 
outside markets has left feeder cattle and lean hog contracts mixed. December 
corn is up 5 cents per bushel and December soybean meal is up $4.10 per ton. 
The Dow Jones Industrial Average is up 47 points.

LIVE CATTLE:

   Now that the surge of sell orders from earlier in the week has passed, and 
relative low trading volume allows the market to streak in one direction or the 
other, it's natural that the live cattle market is choosing the "up" direction 
Friday morning, to correct previous losses and get in line with the physical 
market. December live cattle are up $1.20 at $153.625, February live cattle are 
up $1.40 at $155.325, and April live cattle are up $1.15 at $159.20. Packers 
may need to get aggressive Friday afternoon to buy the necessary cattle, if 
they intend to maintain their recent hefty line speeds (although that may not 
be their intention, looking at Friday's pace). Nevertheless, with the board 
rallying, the owners of market-ready cattle may feel emboldened to ask for at 
least a steady market. So far, Southern cash cattle business continues to hold 
out for real volume, but a light to moderate trade has been reported this week 
in the North at mostly $247, which is $2 lower than last week's number. 
Friday's slaughter is estimated at only 117,000 head, which is 6,000 fewer than 
a week ago and also 6,000 fewer than a year ago at this time. It's expected to 
be followed by a Saturday kill of 33,000 head, which is 5,000 fewer than a week 
ago and 24,000 fewer than a year ago.  

   Boxed beef prices are higher Friday morning: choice up $0.66 ($247.94) and 
select up $0.71 ($221.26), with a movement of 66 loads (45.01 loads of choice, 
7.85 loads of select, 0 loads of trim and 13.03 loads of ground beef).

FEEDER CATTLE:

   Upward movement in the live cattle futures are lending feeder cattle futures 
some mild bullishness Friday morning. Contracts are narrowly mixed and could 
certainly change direction if trading volume picks up in the afternoon. January 
feeders are up $0.175 at $183.65, March feeders are down $0.10 at $184.95 and 
April feeders are up $0.20 at $188.55. Other outside markets are also providing 
some tentative support to livestock trade Friday morning, with crude oil up and 
the stock market up and a general flavor of economic stability. However, feed 
values are also lightly higher Friday, and if the trading algorithms are 
fixated on that particular intermarket relationship, then feeder cattle 
contracts could turn lower as the session wears on.

LEAN HOGS:

   The lean hog futures charts have explored such a wide trading range in 
recent weeks, the contracts can flail in either direction on any given day and 
barely change the market's overall momentum. Most -- but not all -- contracts 
have picked a lower direction Friday morning. December lean hogs are down $0.70 
at $81.30, February lean hogs are down $0.675 at $84.025 and April lean hogs 
are down $0.075 at $90.675. Although there are still concerns about China's 
strategy to manage COVID without damaging consumers' demand for commodities, 
like pork, the Shanghai Composite Index -- a stock market proxy for the 
country's economic outlook -- has continued confidently rallying through the 
past few weeks. Also in support of exported U.S. commodities, the U.S. dollar 
is staying in quiet retreat this week. Still, the lean hog futures market seems 
to be struggling to attract buyers Friday amid a low volume of trading 
activity. Friday's slaughter is projected at 488,000 head, which is 1,000 more 
than a week ago and 20,000 more than a year ago at this time. Saturday's hog 
slaughter is projected at 137,000 head, which is 2,000 fewer than a week ago 
and 96,000 fewer than the big catch-up a year ago.

   The projected CME Lean Hog Index for 12/7/2022 is down $0.31 at $82.47 and 
the actual index for 12/6/2022 was down $0.16 at $82.78. Friday's Daily Direct 
Morning Hog Report showed a weighted average price of $82.51 (up $1.52) on 
6,066 head. Prices ranged from $74 to $85, and the 5-day rolling average is now 
$83.75. Pork cutouts total 153.72 loads with 144.89 loads of pork cuts and 8.84 
loads of trim. Pork cutout values: up a whopping $6.13 to $91.10 (led by the 
seasonally popular picnic primal, up $20.29).

   **

   Cattlemen are eager for supply and demand mechanics to swing their way, but 
the market isn't completely free of hurdles as bearish concerns about the U.S. 
and global economies loom. Hear DTN Livestock Analyst ShayLe Stewart's thoughts 
on the 2023 cattle market at the all-virtual DTN Ag Summit on Dec. 12-13. Full 
details available at http://www.dtn.com/agsummit




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