GENERAL COMMENTS
Cash cattle trade has slowly trickled into the market over the past couple of days. Prices are seen once again at $128 live basis, steady with Wednesday's trade, but still $2 per cwt lower than last week. Dressed activity is slightly more defined with trade at $204 to $205 per cwt. This is steady to $1 per cwt lower than last week. It is expected that even though more trade may develop Friday, the tone of the market has been set at these price levels. There could be some additional market shifts in futures, but not a lot of direction is expected to cash trade. According to the closing report, the national hog base is $0.43 lower compared with the Prior Day settlement ($57-$64.25) weighted average $63.50. March corn futures were 1 cent higher in light trade activity Thursday. The Dow Jones Index is 164 points higher with the Nasdaq down 8 points.
LIVE CATTLE
Mixed trade developed in the last half of the trading day with early pressure giving way to narrow gains in deferred contracts ($0.22 higher to $1.30 lower). The underlying tone of the market remains extremely weak with front-month February futures holding triple-digit losses. But the inability to follow the aggressive pressure seen midweek is actually helping to stimulate some expectations that prices may bounce higher at the end of the week. Beef cut-outs: higher, $0.14 higher (select, $212.06) and up $1.03 (choice, $218.40) with light demand and offerings (70 loads of choice cuts, 12 loads of select cuts, 5 load of trimmings, 11 loads of coarse grinds).
FRIDAY'S CASH CATTLE CALL:
Steady with early week Trade. It is expected that some additional trade will develop Friday unless another round of activity is seen late Thursday afternoon or evening. But the tone of the market is likely to be set, with prices through the rest of the week likely to be seen at $128 live basis and $204 to $205 dressed.
FEEDER CATTLE:
Light-to-moderate pressure redeveloped in feeder cattle trade. This left prices looking for longer-term support, but unable to find a sense of stability Thursday ($0.27 to $1.02 lower). Moderate nearby contract weakness led the complex lower with April futures holding a $1.02-per-cwt loss. Even the expected stability in overall feeder cattle placements in January that likely will be seen in the Cattle on Feed report was unable to draw buyers back to the market. Deferred futures posted narrow losses, with the more intensive pressure reserved for nearby trade. CME cash feeder index for 2/21 is $148.05 up $0.06.
LEAN HOGS:
Strong gains redeveloped in lean hog futures as traders focused on follow-through pressure in the cattle trade, but pushed higher as follow-through buyer interest developed (0.47 to 1.37 higher). Triple-digit gains were seen at closing bell in all 2018 contracts as the overall support in the complex is helping to not only bring firm commercial buyer support back to the market, but is also helping to add even more strength to the lean hog complex. The moves helped to push prices above last week's highs, although the strong pressure in the market seems to be still limiting the buyer activity as prices remain well below short-term resistance levels. Narrow pressure was posted in pork prices with mixed primal moves seen Thursday. This could lead to additional end-of-the-market shifts through the complex. Pork cut-out: $78.70 down $0.03. CME cash lean index for 2/20 $70.78 down $0.63. DTN Projected lean index for 2/21 $70.17 down $0.61.
FRIDAY'S CASH HOG CALL:
Steady to $1 lower. Early morning cash market calls seem to be a broken record as of late. Even though futures trade has found renewed support, packers are able to continue to offer starting bids at steady to $1 per cwt lower. Most trade is expected to remain steady to weak early Friday, but the need to access weekend procurement levels is likely to help draw additional support. Processing schedules are expected to be 452,000 head Friday. Saturday runs are expected at 135,000 head.
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