Wednesday Closing Livestock Market Summary

Closing Comments 

Cash cattle trade on the Fed Cattle Exchange Auction report Wednesday listed a total of 3,928 head, with 2,195 actually sold and 1,733 head listed as unsold. The state-by-state breakdown looks like this: KS 147 head at $130.00; NE 1,825 head at $133.00-$136.50; TX 223 head, at $128.00-$129.50; CO no test; IA no test; other states, no test. The weighted average was $133.35, up $4.96 from last week's weighted average of $128.39. Feedlot trade remains undeveloped at the time of this writing, although bids have continued to develop through the day Wednesday. Bids in the South are seen at $126 per cwt on a live basis, with dressed Northern bids seen from $210 to $215 per cwt. Bids at the high range in the North are delivered by regional packers. Asking prices have also firmed due to support in the rest of the market with cattle priced at $132 to $134 in the South and $215 to $217 in the North. There could be some late-day trade Wednesday, but most likely active trade will be pushed off until Thursday or Friday. According to the closing report, the national hog base is $0.52 lower compared with the Prior Day settlement ($60.00-$67.00, weighted average $65.67). The corn trade slipped lower in light activity. May futures posted a 2-cent loss Wednesday. The Dow Jones Index is 17 points lower with the Nasdaq up 21 points.

LIVE CATTLE

Aggressive buyer support developed across live cattle futures ($1.70 to $2.72 per cwt higher) as traders focused on the potential for additional cash market support as well as developing technical support moving into the complex. With nearby contracts breaking through resistance levels Tuesday, commercial buying activity quickly jumped back into the complex. This pushed April live cattle futures $2.55 per cwt higher, closing at $122.45 per cwt. These price levels are testing January 2016 highs in the April contract. Despite the strength through the entire complex, little headway is being made in reducing the premium April contracts hold over the rest of the complex. Beef cut-outs: mixed, $0.39 higher (select, $215.80) to down $1.93 (choice, $223.00) with light-to-moderate demand and offerings (84 loads of choice cuts, 27 loads of select cuts, no loads of trimmings, 26 loads of coarse grinds).

THURSDAY'S CASH CATTLE CALL:

Steady to $4 higher. The combination of strong buyer support in the Fed Cattle Exchange Auction Wednesday and aggressive moves in futures trade is likely to prime the pump for higher prices. The fact that packers have increased bids Wednesday indicates that steady money may not be able to buy cattle through the week.

FEEDER CATTLE

Feeder cattle futures continue to skyrocket higher with additional sharp gains developing Wednesday. April contracts have posted a $14-per-cwt rally in the last two weeks with prices showing no sign of slowdown at this point and very little hesitancy to show a correction in the past several days. All contracts posted triple-digit gains ($2 to $4.17 higher) with March contracts posting the slowest growth due to overall lack of trade activity in the complex. April contracts settled $3.72 per cwt higher as traders continue to focus on additional market support developing across the complex. CME cash feeder index is unavailable.

LEAN HOGS

Pressure through the end of the trading session Wednesday pushed lean hog futures mixed to mostly lower ($0.57 lower to $0.22 Higher) as concerns surrounding cash market instability and eroding pork values have led to summer contracts backing away from previous price levels. April futures edged higher with a 5-cent gain while June futures posted a 57-cent loss. Additional spreading activity following the surge in cattle trade added to the market pressure. Carcass values are lower. Moderate to strong losses in all primals except bellies lead to an aggressive downturn in pork values. Pork cut-out: $79.04 down $1.92. CME cash lean index is unavailable.

THURSDAY'S CASH HOG CALL

Steady to $1 lower. Most bids are expected to remain steady early Thursday, although the entire range is likely to remain steady to lower. With packers focusing on the recent pressure in futures trade and inability to spark additional buyer support in pork products, there is likely to be some incentive for packers to erode price levels through the end of the week. Plant runs Thursday are estimated at 430,000 head. Saturday runs are expected to be at 135,000 head.