Monday Closing Livestock Market Update - Livestock Futures Rally

GENERAL COMMENTS

Cash cattle activity Monday was quiet with bids and asking prices undeveloped. Following the sluggish cash cattle trade that developed late Friday, there is an expectation packers will need to become more aggressive in the near future. But both sides have been in this position many times and this is not a sure bet to spark active trade earlier than the end of the week. According to the closing report, the national hog base is $0.60 per cwt lower with an average price of $68.88 per cwt (trading range: $61.00-$70.50). Corn futures are higher on light activity. March futures were 4 cents higher Monday. The Dow Jones Index is 410 points higher with the Nasdaq up 107 points.

LIVE CATTLE

Firm gains redeveloped across the complex with traders looking for increased buyer activity in all areas (0.60 higher to $1.37 higher). Strong support helped drive commercial buyers back into the market. This moved the April contract $1.37 per cwt higher at the end of the session. Increased buying interest may develop in most contracts. Beef cut-outs: higher, $1.23 higher (select, $203.97) and up $1.72 (choice, $208.24) with light demand and offerings (45 loads of choice cuts, 24 loads of select cuts, 13 load of trimmings, 16 loads of coarse grinds).

TUESDAY'S CASH CATTLE CALL:

Steady. Following general inactivity during the Monday session with showlist distribution the major development, most market watchers are expecting to see trade develop in the last half of the week. Some initial bids may come out Tuesday and, with packers being short-bought could speed the process.

FEEDER CATTLE:

Moderate to strong gains developed Monday in feeder cattle futures following recent market volatility ($0.87 to $1.77 higher). Sharp, triple-digit gains in most nearby contracts brought renewed buyer interest to the complex. But the fact that one positive day is not enough to build much confidence or try to establish any sort of market direction is still leaving many traders cautious. April and May futures led the market higher with gains near $2 per cwt. This could continue to spark increased overall support across all livestock markets, and may add to the price shifts through the end of the week. CME cash feeder index for 2/9 is $147.63 up $0.06.

LEAN HOGS:

Lean hog futures traded mostly higher with most contracts holding triple-digit gains (0.10 lower to $1.67 higher). Aggressive buyer support was seen in April through February 2019 contracts as prices posted triple-digit gains. The move above $1 per cwt gains was received with strong support as traders view the overall complex as being oversold over the last couple of weeks. Increased volatility is expected in the market, which may bring price shifts through the rest of the week. Carcass values rallied higher with moderate to strong support seen in most primals early in the week. Pork cut-out: $76.71 up $2.27. CME cash lean index for 2/8 $75.38 down $0.25. DTN Projected lean index for 2/9 $74.72 down $0.66.

TUESDAY'S CASH HOG CALL:

Steady to $2 lower. Follow-through cash market pressure is expected early Tuesday morning despite the strong futures rally Monday. Most cash bids are expected to be steady to $1 per cwt lower, although the potential for late-week market strength seems to be slowly trying to gain momentum. Tuesday processing schedules are expected to hit 465,000 head once again as steady movement is expected through the week.