Cattle and hogs end the week higher.

Livestock

An Outside Day lower was noted for fats and feeders. Prices saw both attempts at higher and lower trade than yesterday's range.

Monthy employment numbers have recently begun to change views on interest rates for 2024. The view now is that we will not see a recession in the next six months. Instead, consistent job growth would suggest we'll have a well-advertised soft landing. Today's update covered the month of December. Non-farm payrolls increase by 216,000 head. That was over the 170,000 trade expectation. The previously released November data, +199,000, was revised down to +173,000. The previously released October data, +150,000, was revised down to +105,000.

Beef export sales were reported at 9,540 tonnes for 2023 delivery and 7,126 for 2024. YTD shipments, through 12/28 for 2023 are -14% from last year. USDA’s whole-year goal is -14%. Bookings for 2024 are positive so far at +5%. USDA's 2024 goal is -6%.

This week's 556,000 head kill would be -1.5% from last year. Last week's run was -5.0%.

On a percentage vs. last year basis weights overall increased from +1.3% to now +1.7%. As a small heads up this weight data is for the period directly before Nebraska's moderate snow storm. Having said that, we don't expect a major drop in US weights from that system. Weights are only a minor factor is this general bear market.

Choice wholesale beef will end the week -11.83. And that includes the Friday morning +1.98 trade.

Can cash cattle traded at $173 - $175 live this week and $275 dressed. Last week traded $172 live and $273 dressed. The South is still quiet. Last week saw trades at $172.

February Live Cattle Futures Seasonal: We monitor seasonal price trends but are not tied to them. The seasonal for fed cattle futures is a general long term rally to November 26 then a quick and very sharp price break to December 9. After that significant low there is a general rally into expiration. We will point out this year the peak was a bit early on September 19. If the seasonal would hold true then a major low would be directly behind us. The current low was made December 7. Given the extreme severity of the decline already seen we hesitate to suggest seasonals will be on target this year.

The chart for February fats is lightly positive. The main downtrend line in this market has been broken. Futures are now neutral. Bears may have a small argument here as we still have an intraday gap open to the 12/29 close at 168.50. That may need to be filled before higher trade is accepted. We do not expect the much lower open gap, the 12/7 close at 162.52, to be filled. Bulls note a minor upside intraday gap from the 11/22 close at 175.27, two daily chart gaps way up there at 184.70 - 184.90 then 186.65 - 187.52 and two intraday gaps at even higher prices. They are at the 10/18 close of 191.07 and the 10/2 close of 193.17.

The feeder cattle chart had already broken its downtrend lines and is considered neutral. Bears will note there are two open chart gaps at lower prices but we are unsure if they will get filled. They are the 12/13 close of 217.85 and the 12/7 close, 211.17. Bulls have a few upside chart gaps to discuss. They may feel a little better about discussing these due to recent positive trade. The daily chart shows one at 244.75 - 245.37. Intraday charts show unfilled closes from 11/22 at 230.12 and 10/18 at 253.60.

Summary: The good news is futures, cash cattle, are so far not panicking about this terrible boxed beef action recently. The negative news is it keeps us from getting bullish in this highly discounted market. We consider ourselves bulls here but only expect a limited rally to the 50% retracement mark, 179.50 on the February live cattle contract. Please have a risk in place for all speculative trades...Rich Nelson

Working Trade:

(12/28) Sold February live cattle 164 put 1.45, risk 2.80, objective 0. Closed 0.77.

Hogs

Hog futures actually ended the week higher after four days. Prices are now near the short term downtrend and may be ready to return to neutral pricing. Cash hogs do not have a clear low established yet though.

Pork export sales were reported at 17,779 tonnes for 2023 delivery and 9,889 for 2024. 2023 shipments totaled +5 +15% vs. last year. USDA's goal was +6%. For 2024 bookings are -30%. USDA's goal is +1%.

Dressed barrow/gilt weights fell 1 lb. in this week to 213. Compared with last year weights increased from -1 to now even with last year.

This week's 2.381 million head kill would be +1.5% from last year. Last week's run was +1.7%.

Cash hogs were -0.19 on Wednesday. The LHI is at 65.85. We are minimally over the low posted on Friday.

If we are going to speculate about a potential cash hog low around $65 then a reasonable six week rally to February 14 would suggest something in the $68 - $71 range for February futures.

Cash pork on Thursday, 84.50, is +3.15 from the current main lows posted 12/21. Today's morning report was +0.33.

February Lean Hog Seasonal: We monitor seasonal price trends but are not tied to them. The seasonal for hog futures, not cash hogs, is for a rally from November 6 to November 25 then sharp break into December 17. That becomes the final major low. After a minor rally to January 5 then minor break to January 11 this contract then rallies into expiration.

Charts on futures remain bearish. New lows for this long term downtrend were made again this week. Bulls can point out that all needed downside chart points have now been filled. If today's high can be exceeded on Monday we'll be breaking out of the current downtrend. Bull points to monitor are currently on hold. They are the intraday gap to the 12/22 close at 71.35. Then you've got current resistance, 50% retracement at 71.80. Then there are multiple upside intraday gaps still open. They are 75.05 from 11/20, 77.02 from 11/13, 78.60 from 9/28 and 80.90 from 9/20.

Summary: We won't complain about higher futures but will note it did not come with any solid backing. Cash hogs only have two days of gains. Cash pork is still near the recent lows. Yes, this seasonally is a time when a low "should" be made. 2024 futures prices are at levels that “should” be considered a value. But those are not reasons to buy futures with both hands. We're still waiting for a seasonal low in cash markets which should have been weeks ago. Please use a risk order for all speculative trades...Rich Nelson

Working Trades:

(11/15) Sold February 66 hog put 1.90, risk 3.80, objective 0. Closed 0.72.

(11/30) Sold February 66 hog put 1.45, risk 3.80, objective 0. Closed 0.72.