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Futures

Fund Traders' Record-Long Hog Futures Position: An Update

2024-12-09

Even though cash cattle traded higher last week, live and feeder cattle futures closed lower for the week. Northern dressed cattle traded $2.00 higher with Southern live cattle trading steady to $2.00 higher. Traders did not get too excited over the higher cash but remained cautious over the upside price potential. Boxed beef prices were mixed with choice up $4.20 and down select down $0.37. Packers will try their best to improve margins and may continue to slow the slaughter pace to accomplish that task. Cattle imports from Mexico remain restricted, which may continue to provide support as long as that remains in place. It is uncertain how many cattle packers have purchased for deferred delivery but one major packer had already purchased some cattle for delivery during the last week of December. The fund traders added 5,528 long futures positions in live cattle over the week ended Dec. 3, increasing their net-long positions to 123,878 contracts. They added 2,054 futures positions bringing their net-long position in feeder cattle to 17,521.

Steady to Higher Cash May Continue

Cattle imports from Mexico remaining restricted is likely to keep the cash market steady to higher. This supply restriction has the potential to further tighten the supply situation in the long run. Traders are closely monitoring this situation as it could have a significant impact on the cattle market.There is a sense of uncertainty among traders regarding the future direction of the cash market. However, the ongoing restriction on cattle imports from Mexico provides a certain level of support and stability.

Cattle Futures May Be Rolling Over

With the end of the year approaching, there is a possibility of further liquidation in cattle futures. This could lead to a rolling over of the futures market, with more downside risk than upside potential. Traders are cautious about this situation and are closely observing the market trends.The current market conditions suggest that cattle futures may be entering a phase of consolidation or correction. The uncertainty surrounding the end-of-year period and the potential for liquidation is causing some traders to adopt a more conservative approach.

Choice Boxed Beef Prices Continue to Push Higher

The choice boxed beef prices have been on an upward trend, moving the choice/select spread to a wide $35.31. This indicates strong demand in the market for choice beef. Traders are taking note of this trend and are adjusting their strategies accordingly.The continuous increase in choice boxed beef prices is a positive sign for the beef industry. It reflects the growing demand for high-quality beef and provides an opportunity for producers to capitalize on this trend.

Hog Traders Continue to Trade the Trend

Hog traders are actively trading the trend and are not hesitant to add to their long positions to support it. This shows their confidence in the hog market and their belief that the upward trend will continue.The trading behavior of hog traders indicates a positive sentiment in the market. They are willing to take risks and invest in the hog market, which is likely to have a positive impact on the market dynamics.

The Large Drop in Cash Hogs Friday

The large drop in cash hogs on Friday has put some pressure on the market. Traders are cautious about adding to their long positions in the wake of this drop.The market is likely to be affected by the Friday's drop in cash hogs. Traders will need to carefully assess the situation and make informed decisions regarding their positions.For our next livestock update, please visit our Midday Livestock comments between 11 a.m. and noon CST. Also, stay tuned to our Quick Takes throughout the day for periodic updates on the futures markets.**As a new administration prepares to take office, farmers are preparing for the next growing season. In this year’s DTN Ag Summit, we’ll examine the state of national farm policy, including timing on a farm bill, makeup of the ag committees and new leadership at USDA. A few of the winners of this year’s America’s Best Farmers and Ranchers award share what they’ve learned from selling directly to consumers, and the DTN markets and weather team will offer their perspective on what’s in store for 2025.The DTN Ag Summit is scheduled for Dec. 5-6, 2024. Use this link to sign up: https://dtn.link/…Robin Schmahl can be reached at rschmahl@agdairy.com

Real Madrid head coach Carlo Ancelotti has shed light on the immediate futures of two of his most promising young players ahead of Tuesday's crucial Champions League clash with Atalanta. The young talents, Arda Guler and Endrick, have been in the spotlight with their recent game involvements and transfer speculations.

Real Madrid's Youngsters' Fate Decided

Arda Guler's Journey at Real Madrid

Though the young Turk has started two of Madrid's last three games and even scored in a 3-0 win over Girona on Saturday, he has faced a general lack of minutes. MARCA reported on Sunday that Endrick had closed the door to a potential exit, and Ancelotti effectively did that with his comments at a prematch press conference on Monday. "Endrick stays here, as does Guler," Ancelotti stated. They may need more minutes, but Ancelotti doesn't have prejudices with anyone. He only tries to put the best in every game, whether they are 18 or 40 years old. Sometimes it can be this with Endrick, with Guler or without them. You have to be patient with young people, as they bring enthusiasm but also have to learn certain things. Ancelotti reminded us that he doesn't have prejudices against young people and has put 17 or 18-year-olds in if he thought it was the right thing to play the games.

Endrick's Decision and Ancelotti's Stand

Endrick's potential move away from the club in January was a topic of discussion. However, Ancelotti's clear statement that "Endrick stays here" has put an end to those rumors for now. This shows Ancelotti's confidence in the young player and his belief in giving them the opportunity to grow at Real Madrid. Despite the lack of minutes, Ancelotti is focused on developing these young talents and integrating them into the team in the right way.

Impact on the Team with Vinicius and Others

With Vinicius making a surprise addition to the matchday squad and arriving back ahead of schedule from an injury, Ancelotti wouldn't say whether the Brazilian will start in Bergamo. He explained that today's training will be very important for Vinicius and Rodrygo, along with Bellingham who went on a long drought at the start of the season but has now scored in each of his last five games. Ancelotti claimed that what has changed with Bellingham is the dynamic of the team, with more mobility up front allowing him to take advantage. His attitude remains the same, and scoring is important but not the only aspect.

Natural gas futures witnessed a significant surge on Monday, with key technical levels being crossed. The 50-day moving average at $3.115 and the 50% retracement at $3.118 became immediate support zones. This upward movement sets the stage for potential further rallies, with the next major resistance at the 200-day moving average at $3.383, followed by $3.444, a crucial pivot point. A breach of $3.444 could potentially open the door to a rally towards the main top at $3.647.

Unraveling the Intricacies of Daily Natural Gas Markets

Technical Breakout and Support Zones

Natural gas futures on Monday showed remarkable strength as they surged past critical technical levels. The 50-day moving average at $3.115 and the 50% retracement at $3.118 acted as strong support, indicating a potential shift in market sentiment. This breakout above these levels suggests that the market may be entering a new phase of upward momentum. Traders are closely watching these support zones as they provide a crucial reference point for future price movements. If the market manages to hold these support levels, it could pave the way for further gains. However, a failure to do so could lead to a significant pullback.The 200-day moving average at $3.383 now stands as the next major resistance level. Breaking above this level would be a significant milestone and could trigger a more substantial rally. Additionally, the key pivot at $3.444 holds importance as it represents a potential turning point. If prices can overcome this resistance, it could open up the path to the main top at $3.647.

Colder Weather and Demand Outlook

Over the weekend, weather models took a turn towards colder temperatures. Heating degree days (HDDs) increased by 20 in the Global Forecast System (GFS) and over 10 in the European model. This change is particularly significant as a cold front is forecasted to sweep across the U.S. East and Midwest from December 20-23. Temperatures during this period are expected to drop into the 10s to 30s, with lows reaching as cold as -0s in some areas.Although milder conditions dominate much of the 15-day forecast, the new colder pattern is less bearish than earlier expectations. This indicates that the demand for natural gas for heating purposes may increase, providing some support to the market. However, it remains to be seen how long this colder weather will persist and how it will impact overall demand.

Oversupply and Headwinds

Production remains at a high level of over 104 Bcf/day, while the latest EIA report showed a smaller-than-expected 30 Bcf withdrawal. Total storage currently stands at 3,937 Bcf, which is 284 Bcf above the five-year average. These figures highlight the ongoing concerns about oversupply in the natural gas market, even as seasonal demand for heating intensifies.The high production levels and relatively large storage levels pose a challenge to the market, as they put downward pressure on prices. Traders will need to closely monitor inventory reports and production data to assess the balance between supply and demand. Any significant changes in these factors could have a significant impact on market sentiment and price movements.

Market Forecast and Risks

The short-term outlook for natural gas futures is cautiously bullish, supported by the strong technical breakout above $3.115 and the colder weather forecasts. Prices are positioned to test the resistance at $3.383 and $3.444, with a potential move towards $3.647 if demand expectations continue to improve and technical momentum holds.However, downside risks remain. If support at $3.115 fails, the market could retrace to $2.993, and if selling pressure intensifies, prices could potentially test $2.762. A failure to sustain the colder weather patterns or further underwhelming storage withdrawals could weaken bullish sentiment and lead to increased selling pressure. Traders must closely monitor weather updates and inventory reports to accurately gauge market direction and make informed trading decisions.