Wednesday Closing Livestock Market Summary - Livestock Futures Turn Lower Wednesday

GENERAL COMMENTS

Cash cattle trade slowly developed Wednesday afternoon with clean-up activity seen in Kanas at $120 per hundredweight (cwt). This is in line with previous week's trade activity and once again confirms that the overall market tone and price levels have already been set by the early week trade. There could be some additional cattle moved over the next couple of days, but prices are not likely to change significantly before the end of the week. The Fed Cattle Exchange Auction on Wednesday listed a total of 711 head, with 401 actually sold, 310 head listed as unsold, and zero head listed as PO (Passed Offer). The state-by-state breakdown looks like this: KS 529 total head, with 401 head sold at $119.00, 128 head unsold, zero head listed as PO; NE 60 total head, with zero head sold, 60 head unsold, and zero head listed as PO; TX 122 total head, with zero head sold, 122 head unsold, and zero head listed as PO; CO -- no cattle reported; IA -- no cattle reported; other states -- no cattle reported. The delivery date/weighted averages breakdown is as listed: 1-9 day delivery: 651 head total, 401 head sold, with a weighted average price of $119.00; 1-17 day delivery -- no cattle reported; 10-17 day delivery -- 60 head total, zero head sold; 17-30 day delivery -- no cattle reported. According to the closing report, the national hog base is $1.87 higher compared with the Prior Day settlement ($61-$71.25) weighted average $69.43. The corn futures are mixed in light activity. March futures were steady Wednesday. The Dow Jones Index is 41 points lower with the Nasdaq down 29 points.

LIVE CATTLE

Live cattle futures eroded through the day with firm to strong losses seen at closing bell ($0.17 to $0.90 lower). Early support that quickly flooded into the market Wednesday morning was unable to hold on as traders moved back to the market pressure that has swiftly developed during early January trade. This caused futures to break through short-term support levels set this week and moved to the lowest close in February contracts in four months. There is likely to be some renewed uncertainty seen through the end of the week as traders try to find a sense of market support over the near future. Beef cut-outs: lower, $0.46 lower (select, $203.23) and down $0.43 (choice, $210.06) with good demand and moderate offerings (71 loads of choice cuts, 27 loads of select cuts, 16 load of trimmings, 20 loads of coarse grinds).

THURSDAY'S CASH CATTLE CALL:

Steady with early week trade. Packers are expected to be slow to enter the market Thursday morning following the trade that was seen early in the week. With most of the needed activity seen on Tuesday, there is expected to be very little emphasis on shifting market prices through the end of the week.

FEEDER CATTLE:

Strong price pressure swept into nearby feeder cattle futures late Wednesday following the inability to draw buyers back to the cattle complex ($0.30 to $1.10 lower). Despite pushing to strong triple-digit gains early in the session, traders quickly focused on the inability to regain buyer support during the midweek session. This limited trade activity across the feeder cattle market through most of the morning, allowing prices to hover in a narrowly mixed trading range during late morning. But the underlying pressure in live cattle futures quickly gained momentum in all livestock markets, pushing firm losses into the feeder cattle complex, despite light trade seen at the end of the session. CME cash feeder index for 1/9 is $151.57 down $0.85.

LEAN HOGS:

Moderate-to-firm pressure developed in nearby lean hog futures late morning following the inability to sustain pork market support in the morning cutout report. This left traders looking for additional market weakness over the near future ($1 lower to $0.20 higher). The aggressive pullback in nearby futures trade not only caused most buyers to quickly step back out of the complex, but also created additional softness in the market and could limit increased follow-through support through the end of the week. Even though firm cash market support is developing, the lack of consistency in lean hog futures is likely to cause some additional market volatility. Carcass values slipped Wednesday as primal cuts remained extremely volatile given the shift in market values. Pork cut-out: $79.45 down $0.08. CME cash lean index for 1/08 $66.37, up $0.72. DTN Projected lean index for 1/09 $67.28, up $0.91.

THURSDAY'S CASH HOG CALL:

Steady to $2 higher. Despite the pullback in futures prices midweek, cash buying activity is expected to remain aggressive with packers likely to start out bids Thursday anywhere steady to $2 per cwt higher. Although most bids are expected to be 50 cents to $1 per cwt higher, the focus on gaining access to larger numbers of market ready hogs will be the focus in most markets. Plant runs are expected to be at 465,000 Thursday, but dependent on weather conditions. Saturday runs are expected to be at 160,000 head.