Live cattle reject a snow storm premium.

Livestock

An attempt at higher prices was rejected for both fats and feeders. This week's snows will not hit all major feedlot areas, we already had high weights, and wholesale beef is looking rough.

Snows of 3 - 9 inches will be seen for Kansas and Nebraska. These will be focused in the Eastern halves of those states so it will miss the bulk of Kansas feedlots.

Snows are normally a bullish issue for cash and futures. Plants will pay up for any cattle that can make it in. Additionally, there may be some weight gain issues. One counter to this concern this time around is that this winter's feeding performance, due to warm weather, has been great. Steers were dressing out +22 lbs. from last year in the week before Christmas, heifers +4.

Additionally, will packers pay up with this beef pricing problem. Another -12.55 was removed from choice last week. It was +1.18 this morning.

Last week Texas traded few cattle, prices were $172/$173. Kansas traded mostly $174 with some $173's. Three weeks ago both were at $170. Last week Nebraska saw mostly $174 with some $173's on a live basis. Dressed traded at $295. Three weeks ago they were at $169/$270.

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 over the past month and a half. Today's Outside Day closing lower would imply a lower start tomorrow. Perhaps we can fill that downside intraday gap at the 12/29 close at 168.50. 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. We certainly should fill the gap left today to the 1/5 close of 224.15. 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 snows this week are a lightly positive story. But they are hitting in a time of mixed news. We consider ourselves bulls here but only expect a limited rally to the 50% retracement mark, 179.50 on the February live cattle contract. Even that low hope seems optimistic with this wholesale beef trade. 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 may be interested in the idea of “…no new cash hog lows for four days”. February currently has a moderate premium already in place if cash has bottomed.

Cash hogs were -0.03 on Friday. The LHI is at 65.74. We are minimally over the low posted at 65.05.

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.

Last week cash pork ended -0.56. Friday's 84.20 price was only +2.85 from the main lows posted 12/21. Today's morning report was +1.04.

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 four days of gains over 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. 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 0.57.

(11/30) Sold February 66 hog put 1.45, risk 3.80, objective 0. Closed 0.57.