Hogs: February hogs have posted gains in nine of the past 15 days over Thanksgiving. The average of those nine gains was a moderate 67 cents. Given the strong trade going into this week in most contracts, it would not be surprising to see this year’s action follow the same pattern.
For short-term fundamentals, though, cash hog prices did fall in the early start to the day on Tuesday as the industry is in more agreement than we are about being done with this bear move in cash markets.
After next week’s kill finishes up, potentially the peak supply of the year, the market is pricing in a quick recovery in prices as supplies fall. On top of this supply issue, we can also point to Fiscal Cliff/Israel. We remain bullish for 2013 contracts and have a target of $105 for summer hog futures…Rich Nelson
Cattle: Generally, February live cattle futures post gains over Thanksgiving. These are not big gains, averaging just 37 cents in those positive years, but it is something we’ll watch on Friday.
As for fundamentals, we saw packer bids surface Tuesday at $122 and $123. Last week’s action was $125 and $126. The trade has hopes for steady to possibly higher cash trade this week. Support was also seen Tuesday based on hopes for a resolution to this Israel/Hamas issue.
In the big picture, we look for bears to slowly relinquish their control over this market. As most of the industry believes Fiscal Cliff negotiations will be concluded before the end of the year, and we have the supply shortfall right around the corner, we are long term supportive here. We do expect feeders to post higher trade as well but that will only happen after fats get moving…Rich Nelson