Written Commentary
MORNING LIVESTOCK FUTURES OUTLOOK
CATTLE
December live cattle prices have recovered almost all their decline form the bearish Cattle on Feed report in October and have run up against the 50% retracement of the decline off the contract highs. September placements were the largest since October 2021 and the biggest change from year ago levels since December 2021, which suggests that the extreme tightness in cattle supply of the past year has started to ease.
However, US beef production is expected to decline by 460 million pounds in the 1st quarter, which is the largest decline for that period since 2014, and total 1st quarter beef production is expected to be the lowest since 2017. The cattle herd may be starting to rebuild, but it will take a while.
HOGS
December hogs traded to their higher level since October 10 yesterday and are pushing against a key retracement level at 73.52 that could be a bull/bear line today. Strong export sales, a weaker dollar and strength in the equity markets supported the move.
Mexico has reported its first outbreak of highly contagious H5N1 bird flu on a poultry farm. If this is not contained, it could support the pork market as consumers look for substitute protein. Mexico has been the biggest importer of US pork this year.
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