Cattle:

AgLeaders Conference: It is conference week! On Friday Allendale will release the bi-annual Allendale AgLeaders Conference. The January conference typically has more depth than the July one. For this year we have made important changes. 1) The conference is now only to Allendale brokerage account subscribers, not the general public. 2) This specific one will also be more streamlined. Yes, we have given full day conferences with one hour for each of the outlooks before. Personally, I love that. However, in this environment US producers are feeling on edge. They want a clear message and clear direction on both old and new crop marketing. With that in mind the entire grouping of corn/soybean/wheat/cattle/hog speeches will run just over one hour total. Separate from that will be Drew's hour long coverage of world weather. 3) The conference is now free (for account holders). 4) The other change is we'll adjust the marketing recommendations to now only a conversation with a crop marketer. In plain speak, we have found producers love our conferences for both general information as well as clear marketing ideas. However, as we have seen in the past two years there is often a problem with the “taking action” part of that information. After the conference is released your assigned crop marketer will have a conversation with you for your farm. Account holders can insure they will get the conference by calling 800-262-7538 or by contacting their Allendale marketing representative.

Tariffs: On Tuesday afternoon President Trump did confirm that 25% tariffs against Mexico and Canada could be coming on February 1. He also discussed a 10% tariff for China. Bulls could argue import tariffs could restrict a portion of the live animals we get from them. We import 4% of our cattle from Mexico. 2% come from Canada.

No Border Re-opening Yet: The other bullish story is that we have no confirmation from USDA yet on any planned border re-opening. The Mexican border, which supplies us with 4% of our cattle, has been closed since their November 22 finding of New World Screwworm. While we have heard many rumors in cattle country about a re-opening, some even say it is open right now, we do not believe them.

Stable Cash Cattle: Cash cattle have pushed from $185 to now $201 in the South since the border has been closed. We are hearing of stable cash cattle trade today in the South at $201.

Stable Cash Trade But Higher Futures?: Remember, futures are trying to guess where cash cattle will be in the future. All during this “short term” cash cattle rally futures have been dragging their feet. The border story was supposed to be only a short term issue so they did not want to imply these cash gains will stick. Even though cash will move at steady $201 this week, futures are considering removing their discount. Futures, even with today's rally, imply cash will fall to $198 in February then $197 by June. As you may remember from last week, we feel the cash cattle rally has about factored in the known bullish issues. Let's be realistic. Prices are +17% from last year. We still feel futures, if they wanted to, could rally further and remove a little more of the current discount.

Warmer Weather Ahead: The cold weather story is now over. A clear warm up is forecast for the Plains. By Tuesday Norfolk, Nebraska will see highs of 49, Garden City, Kansas will be near 53 and Amarillo, Texas will see 52. In normal times this warm up would be a reason to sell futures.

Falling Wholesale Beef?: The current beef rally peaked on 1/15. It ran +30.80 over 40 days. Of that, 26.73 came since the 11/22 border closure. Of the 2 ½ days of trade so far this week, beef is -1.83.

Cattle on Feed: The next COF report will be out Friday. Given the Mexican border closure in all of December it may be a surprise to learn that the trade expects an increase in placements vs. the prior year. That is the case though. The trade guess for December placements is even with last year (ALDL+0.8%). We saw a good deal of producer marketing at the sale barn last month as prices were rocketing higher. December placements determine a part of July - October fed cattle marketings. Due to a difference in days on the calendar the trade sees December marketings +1.3% from last year (ALDL +1.1%). These numbers will help put the January 1 On Feed total to -0.4% from last year (ALDL -0.3%).

April live cattle are still in an uptrend and just pushed to new highs. Bears, who do not have control of this market, will note two open intraday gaps at lower prices. They are the 195.52 close from 1/8 and the 189.55 close from 12/24.

March feeder cattle are in an uptrend and just pushed to new highs. Bulls remain in control. This market has left open gaps at lower prices. An important point to note is that, so far, it has shown no interest in filling them. We have downside gaps at the 1/21 close of 267.25, the 1/8 close of 264.97 and the 12/24 close of 255.00…Rich Nelson

Hogs: 

Cash Hogs: The market is feeling a little more confidence about calling a cash hog low for winter. Light gains have occurred over the past nine sessions totaling +1.28. The Lean Hog Index is 81.72.

February Futures: In 13 of the past 20 years cash hog prices were higher in February than December. It is a normal occurrence given the usual light decline in supply after the supply peak for the year in early winter. February is still at a discount vs. the 83.84 cash settled December price. The current February contract implies cash hogs will fall -0.02 each day over the next 19 days. We disagree with this view and would like to suggest futures are undervalued.

Wholesale Pork: The current major low for wholesale pork, in line with seasonals, was on 1/6. Current pricing, twelve days later, is +2.97 from that point.

USDA Pork: The 1/10 monthly supply/demand report also holds meat balance sheets. USDA added 140 million lbs. to their prior view of 2025 pork production. Now at 28.510 billion they are +2.6% from 2024. This is in reaction to the lightly bearish 12/23 Hogs & Pigs report. Allendale's view is +1.0%.

On the chart, April lean hog futures are no longer in a longer term uptrend. The past two months have traded sideways. Bulls note there is an unfilled upside gap at 90.55 from the 1/16 close. Bears have their downside gap to monitor, the 1/8 close of 85.07...Rich Nelson