COF provides no lasting price impact. Allendale 2024 meat projections out tomorrow.

Livestock

Cattle traded mixed today. Friday's COF report was not really an influence either way. Allendale will release its 2024 supply, demand and pricing outlook tomorrow.

Last week the South traded $173. The North sold at $173 live and $273/$274 dressed.

Showlists, offered finished cattle for packers to buy for next week's processing, was estimated +11,100 head from last week. Given the fact we still have a weather related processing backup this is expected.

USDA's monthly Cattle on Feed report on Friday. would be called neutral. December placements, inflows into feedlots, were counted at 1.704 million head, -4.5% from last year. The trade estimate was -4.6% from last year (ALDL -2.5%). December marketings of finished cattle were estimated at -0.9% from last year. The trade estimate was -0.7% (ALDL +0.7%). The December 1 count of all Cattle on Feed was reported at +2.1% from last year. The trade estimate was +2.1% (ALDL +2.2%).

Morning beef today was +2.31. The afternoon report revised that to +3.17. We expect to see beef stall in the coming days after the past two weeks of strong gains.

The one month rebound for April live cattle continues. Bulls are slowly getting control of this market. Bulls have many points to monitor. There is an intraday gap at the 11/15 close of 180.47 then two daily chart gaps, 187.30 - 187.55 and 189.02 - 190.27. Bears are now on the sidelines. Interestingly, they still have chart points that, so far, the trade is ignoring. There is still a gap open down to the 12/29 close, 172.25. Another is down at the December low, the the 12/7 close at 165.95.

The March feeder cattle chart shows a one month rebound from a terrible three month break. There are many points suggesting further gains ahead. There is a daily gap at 244.75 - 245.37 then intraday to the 10/18 at 253.60. We did not get any real down move to fill bearish points on the chart. Those points are gaps the 12/13 close of 217.85 and the 12/7 close of 211.17.

Summary: Last week saw a new high for this one month uptrend. This is typically a seasonally supportive time of year so we'll see how much upside is still ahead. We're using a 50% retracement of the downtrend as an upside target. On the April fats it is at 182.60. Between fats and feeders we would suggest feeders have a more valid upside discussion. Fats will have to wait for Q4 to see the next phase of tightening supplies. For feeders, that comes a few months ahead..Rich Nelson

Working Trade:

(12/28) Sold February live cattle 164 put 1.45, risk 2.80, objective 0. Closed 0.02.

Hogs

Mixed trade was noted for futures. We have a cash hog bottom but we are not rallying much. There is a processing backlog we need to work through. Allendale will release its 2024 supply, demand and pricing outlook tomorrow.

USDA revised last week's 2.395 million head hog slaughter estimate down to 2.360 in today's update. Last week's run did make up from the previous week's 569,000 head shortfall. But that make up was only 38,000 head.

Light gains for cash hogs have pushed the Lean Hog Index to 68.40. The current low is 65.05 from 12/29.

As of this afternoon cash pork is 8.82 off the current 12/21 low.

The chart perspective for lean hog futures has changed. Bulls still have many upside targets to discuss. On the April they are the intraday gaps 75.05 from the 11/20 close, 77.02 from 11/13, 78.60 from 9/28 and 80.90 from 9/20.

Summary: The downtrend is broken and prices have recovered. This is still not exactly a solid market for bulls though. Prices have simply returned back to economic value/where they should be. The next goal ahead is to clear out this processing backlog quickly...Rich Nelson

Working Trades:

(11/15) Sold February 66 hog put 1.90, 1/16 move risk to 1.80, objective 0. Closed 0.15.

(11/30) Sold February 66 hog put 1.45, 1/16 move risk to 1.80, objective 0. Closed 0.15.

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