Monday Closing Livestock Market Update - Cattle Futures Lead Complex Lower

GENERAL COMMENTS

Cash cattle activity remains at a standstill Monday following mixed showlist distribution. Offered cattle are higher across the South and steady to lower in the North. Bids and asking prices are not likely to be seen until midweek or later. But activity last week shows that early trade and interest is possible. According to the closing report, the national hog base is $0.05 lower compared with the Prior Day settlement ($63-$73.50) weighted average $72.63. Corn futures are lower in light activity. March futures were 2 cents lower Monday. The Dow Jones Index is 463 points lower with the Nasdaq down 85 points.

LIVE CATTLE

Strong market pressure followed the shift lower in feeder cattle trade as live cattle markets weakened through the end of the session (0.45 to $1.15 lower). Moderate losses held in nearby contracts with prices falling 65 to 75 cents per cwt despite light buyer support seen early in the trading day. But the combination of strong pressure in feeder cattle trade and uncertainty from outside markets moving lower has caused summer and fall contracts to close triple digits lower with very limited additional support expected in the near future. Beef cut-outs: higher, $0.71 higher (select, $204.16) and up $0.33 (choice, $209.43) with light demand and offerings (40 loads of choice cuts, 22 loads of select cuts, 7 load of trimmings, 16 loads of coarse grinds).

TUESDAY'S CASH CATTLE CALL:

Steady. At this point, activity in the cash markets is expected to be pushed off until midweek or later, although the lighter trade last week could increase the interest. Asking prices and bids are still unavailable, and more than likely will remain that way through Tuesday morning.

FEEDER CATTLE:

Moderate-to-strong losses developed through the feeder cattle complex following a mixed and volatile trading range Monday ($0.75 to $1.45 lower). Triple-digit losses swept through feeder cattle trade late in the day despite light buyer support early in the session. This move countered the late-week gains seen in all cattle trade last week. The tone of the market still remains extremely strong given the $5-per-cwt rally seen last week. More position-taking may still develop in the complex over the next couple of days, but traders are also cautious due to the weakness in outside markets. CME cash feeder index for 2/2 is $148.12 up $0.09.

LEAN HOGS:

Lean hog futures shifted mostly lower Monday following firm support late last week ($1.02 lower to $0.62 higher). Front-month February futures were the only contracts to hold gains into closing bell with traders focusing on current market support and also an attempt to roll contracts to the April contract due to the premium still holding in spot February contracts. This may add even more volatility to the market with nearby contracts losing nearly $1 per cwt in May through July contract months. Carcass values tumbled lower following an aggressive loss of $8.41 per cwt in belly markets. Primal prices were all over the board with an unsettled tone seen through the wholesale pork complex. Pork cut-out: $80.12 down $1.51. CME cash lean index for 2/2 $74.48 up $0.38. DTN Projected lean index for 2/1 $74.10 up $0.23. 

TUESDAY'S CASH HOG CALL:

Mixed. Overall, trade is expected to remain mixed with bids likely to be seen $1 lower to $1 per cwt higher. Although most bids will remain steady to weak, the overall tone of support seen in the hog complex over the last couple of weeks is bringing some underlying support to the cash complex. There are still questions as to just how available hog numbers are at this point, and if this will limit weekend plant schedules.