No seasonal low yet for cash hogs.

Livestock

Moderately higher trade was noted for futures after yesterday's new downtrend lows. We cannot suggest a seasonal low, normally seen on December 9, is in hand yet.

Last week's cash cattle trade was $174/$175 in the South. The prior week was $177. Nebraska traded $174/$175 live last week, $176 the week before. Dressed sales were at $274/$275 last week. This was down from $278/$279 the prior week.

CME Group live cattle futures, with a normal basis applied, are suggesting Southern cash will fall to $168 later this month. Futures are suggesting a general sideways trade in the first half of the year $166 - $168. The peak of this year's pricing, back in June, was $185/$186.

February Live Cattle 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 generally 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 in two weeks. Given the extreme severity of the decline already seen we hesitate to suggest seasonals will be on target this year.

February fats remain in a downtrend on the chart. Bears will point out we did the needed job of filling that downside intraday gap from the 12/27 close today at 168.82. The problem is, after the downside gap fill the market kept falling. Additionally, the day's close was near the low. Bulls have plenty to discuss for upside IF a low can be posted. So far, that's not in the cards. You've got a minor upside intraday gap from the 11/22 close at 175.27. Two daily chart gaps are way up there at 184.70 - 184.90 then 186.65 - 187.52. Higher than that are two intraday gaps, the 10/18 close of 191.07 and the 10/2 close of 193.17.

March Feeder Cattle Seasonal: We monitor seasonal price trends but are not tied to them. The 15 year seasonal average price trend for feeder futures is for a significant peak for the year on August 1 then a good moderate low on December 9. After that low we get about 50% of the big downtrend back with a rally to January 1. Then the bear move restarts and lasts into Q1. We did not mention in yesterday's comment on the seasonal that the May and August contracts are different. They hit that same December 9 low as January and March. The May rallies up to remove the entire downtrend and posts new highs to a peak on 2/19. Then it posts a clear downtrend to new lows into expiration. The August is really different. It posts a MAJOR low on 12/9, rallies to new contract highs to a peak on 2/19. Though it does see weakness into the month of May it does not make a new contract low. From May to August is posts a second strong rally until the year's seasonal peak for the year in the month of August. IF/WHEN we do hit a low in the coming days/weeks you want to be onboard the May or August contracts.

The feeder cattle chart still remains in a significant downtrend. As with fats the January feeder filled the open downside gap, the 11/27 close at 212.80. After the gap fill the market kept falling. The day's close, near the low, is an additional bear point. Bulls would like to have a discussion about upside gaps on the chart. The daily shows one at 242.37 - 242.65. Intraday charts show unfilled closes from 10/18 at 250.90 and contract high's 9/15 close at 268.32.

Summary: New lows for this general downtrend were noted again in fat and feeder futures on Monday. It would be valid to suggest the first part of this downtrend was made from revised views of first half 2024 beef production. Much of this second half is from concerns over demand via a recession. How much of this is the normal seasonal bear market in early December is a question. We would hesitate to suggest the seasonal of a bull market 12/9 to 1/1 with come with normal extreme strength. For now, bears remain firmly in control. We would expect that to remain this week. We'll see if the seasonal bottom shows up on time late this week/early next. As discussed before, it is the random extreme moves that clean out accounts. Please have a risk in place for all speculative trades...Rich Nelson

Trade Recommendation:

(11/27) Stand aside.

Hogs

A gap lower today has now added another upside discussion for the chart. These upside gaps may be discussion points after cash markets post their seasonal lows. Considering the general concerns over a recession, Prop 12 on January 1 and Chinese news this US lean hog futures market is doing okay. February has not broken the 50% retracement at 71.80 but it would be hard to suggest we should at this point in December.

The French government raised its view of the risk level from avian flu from moderate to high. Bird flu cases have seen an upward trend in Europe in recent weeks. Low termperatures from November to February, and migratory movements were seen as seasonal threats. This upgrade from the government comes with an advisory to keep all birds indoors. Bird flu is not a threat to meat. It is seen as a production issue. Allendale does not like suggesting poultry to price pricing influence. It is quite sloppy statistically. We also hesitate to suggest EU poultry production declines mean higher US pork exports. It's a story we'll cover from a psychological basis mainly.

Cash hogs were -0.03 Monday. The LHI falls to 69.60. re still seeing pressure. LHZ now at 66.82 suggests -2.77 for cash hogs over the next 8 days, -0.35 per day. We don't have a seasonal cash hog low for the year yet. Futures are suggesting it is nearing.

Cash pork has fallen in the prior three weeks. Monday's trade was +0.88 while today's morning report was +0.48. We cannot suggest a seasonal low just yet for pork.

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. If you are looking at this year's price action our moderate October 25 to November 7 rally would be the first step. We would therefore be on the second step to major lows right now if this seasonal holds.

Lean hog futures were able to rally enough to fill that daily chart gap last week, 71.40 - 71.57. It has not moved past the the 50% retracement mark at 71.80 though. Bears are now getting a second chance to trade down in the 68 - 70 range to verify is there is any volume waiting. A later push past that 50% mark will open up a discussion of several upside gaps on the intraday chart. They are at the closes of 75.05 from 11/20, 78.60 from 9/28 and 80.90 from 9/20. Today's gap lower start has now left another intraday gap waiting at higher prices, the 12/4 close of 70.80.

Summary: There is no positive news that we can hold onto and suggest the bear move is over. Seasonal pressure is still ahead for cash markets. The only argument is that futures are simply too low. February is holding a discount to last year's unnaturally low February. It is also a sharp -23% from the last normal February trade from 2022. We still estimate a $72 expiration for the December but that is not a high confidence claim. Please use a risk order in place if you are trading this market from any direction...Rich Nelson

Working Trades:

(11/15) Sold February 66 hog put 1.90, risk 3.80, objective 0. Closed 1.85.

(11/30) Sold February 66 hog put 1.45, risk 3.80, objective 0. Closed 1.85.