Positive end for the week for cattle. Cattle on Feed called neutral.

Livestock

Cattle ended the week higher with a focus on both rising beef and last week's weather. The focus over the next two weeks will be on the pace of make up kills.

USDA's monthly Cattle on Feed report 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%).

We estimate last week's kill was short by 119,000 head due to weather. This week was also a little short. Our 633,000 head estimate for this week was overly optimistic. USDA reported 617,000 on today's afternoon report.

Weekly beef export sales were lightly positive at +24% from last year in the same week. But the 21,381 tonne sale today is not yet enough to fix our current shortfall. Year to date bookings are -12% from last year. USDA’s whole-year goal is -8%.

For the first week of January dressed steers were coming in 18 lbs. over last year, heifers were 20 lbs. over. Separate from quantity of head going into plants higher weights would be adding 2.1% to beef production. Next Thursday's update for this report will cover last week's weather stress impact. That stress impact will take two weeks to filter into these numbers.

Through Wednesday 22.55 had been added to choice wholesale beef over nine days. Thursday was -2.16 and today's morning report was -0.34. We'll likely see beef stall in the coming days.

This week's cash cattle trade has mostly been quiet. A few sales were reported this morning in the North at $274 dressed. That would be a light gain. Cash cattle last week, $172 in the South, was under the prior week. Nebraska traded $173 and $273 on average last week for live and dressed.

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: This 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 0.07.

Hogs

Hogs ended the week with a light loss. Cash hogs and pork have confirmed their seasonal low. There is a bit of a backlog in processing still ahead this month.

We estimate last week's kill was short by 569,000 head due to weather. This week may make up about 60,000 head of that.

Weekly pork export sales were reported at 33,428 tonnes. That was -2% from last year. Year to date export sales are +18% vs. last year. USDA's whole-year goal is +1%.

This week China's General Administration of Customs reported December pork imports at 90,000 tonnes. That was -54% from last year's December. It is also the lowest monthly import since February of 2019. Their 2023 calendar year, January - December, saw imports of only 1.55 million tonnes, -11.7% from last year. With China's excess pork production annual imports have fallen sharply from 2021's large 3.71 mt import.

Much of the trade falsely believes China's multi-month effort to liquidate the sow herd means that pork production is falling. This is like turning a cruise ship. We are not yet at that point of lower than last year production. China's National Bureau of Statistics reports 2023 pork production, January - December, at 57.94 million tonnes. This is a new all-time record and a large 4.6% increase over last year. Even in Q4, when sow liquidation was ongoing, production was +7% from 2022.

Dressed barrow/gilt weights are -1 lb. from last year.

Light gains for cash hogs have pushed the Lean Hog Index to 68.06. The current low is 65.05 from 12/29.

As of yesterday cash pork is 7.38 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. Please use a risk order for all speculative trades...Rich Nelson

Working Trades:

(11/15) Sold February 66 hog put 1.90, 1/16 move risk to 1.80, objective 0. Closed 0.20.

(11/30) Sold February 66 hog put 1.45, 1/16 move risk to 1.80, objective 0. Closed 0.20.

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