Wednesday Closing Livestock Market Summary - Light Buyer Support Develops in Deferred Cattle Futures

GENERAL COMMENTS

Cash cattle trade is still undeveloped, although a few additional bids have surfaced midweek. But the two sides are no closer together than they were earlier in the week with bids restated at $124 live basis in both the North and South, while dressed bids in the North are seen at $196-to-$198 per cwt. Asking prices for live cattle remain at $129-to-$130 per cwt, while it is still hard to pin down dressed asking prices at this point. Active trade is likely to be delayed until sometime late Thursday or Friday. The Fed Cattle Exchange Auction Wednesday listed a total of 892 head, with 148 actually sold, 744 head listed as unsold, and 0 head listed as PO (Passed Offer). The state by state breakdown looks like this: KS 65 total head, with 0 head sold, 65 head unsold, 0 head listed as PO; NE 558 total head, with 0 head sold, 558 head unsold, and 0 head listed as PO; TX 269 total head, with 148 head sold at $126.00, 121 head unsold, and 0 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: 892 head total, 148 head sold, with a weighted average price of $126.00; 1-17 day delivery – no cattle reported; 10-17 day delivery – no cattle reported; 17-30 day delivery – no cattle reported. According to the closing report, the national hog base is $1.45 per cwt lower with an average price of $71.15 per cwt (trading range: $62.00-to-$72.79).The corn futures are higher in light activity. March futures were 1 cent higher Wednesday. The Dow Jones Index is 229 points higher with the Nasdaq down 8 points.

LIVE CATTLE

Early support seemed to erode through the last hour of trade with trade mixed as nearby pressure developed across the complex ($0.60 lower to $0.67 higher). Front month February futures slipped just 2 cents per cwt while the most aggressive pressure redeveloped in the April contracts, falling 60 cents per cwt. This late day pressure seen in the complex has pushed contracts to $123.97 per cwt while traders continue to focus on the ability to draw additional support to the market. Deferred futures posted moderate to firm gains with traders able to hold support of 30-to-67 cents per cwt at closing bell. The limited buyer activity that eroded during the session seemed to be more focused on concerns of short term demand for beef than any long term indication seen across the complex. Beef cut-outs: higher, $0.41 higher (select, $203.14) and up $0.94 (choice, $209.37) with light demand and offerings (60 loads of choice cuts, 34 loads of select cuts, 6 load of trimmings, 14 loads of coarse grinds).

THURSDAY'S CASH CATTLE CALL:

Steady. Even though bids became more evident midweek, cash cattle activity may still be a ways away as there continues to be a wide gap between bids and asking prices. At this point neither side is willing to budge, which could easily push trade into Friday. Bids are likely to redevelop in the same range early Thursday.

FEEDER CATTLE:

Mixed trade was seen at closing bell following the back and forth shifts developing during the midweek session ($0.42 lower to $0.97 higher). Buyer support quickly developed across the feeder cattle and entire cattle market early Wednesday morning. This helped to set the tone for the market firmness, although late day pressure seemed to erode any nearby buyer support in the market and caused some trade activity to focus on additional market pressure, especially in March and April futures. The stability seen in most markets is helping to calm many traders following early week losses, and could bring additional buyer activity back to the table in the next few days. CME cash feeder index for 2/6 is $148.10 up $0.15.

LEAN HOGS:

Aggressive losses have quickly developed across the lean hog complex with sharp triple-digit losses seen in most nearby contracts ($0.32 to $2.20 lower). April and May contracts posted losses at $2 per cwt or greater by the time markets closed as traders continue to focus on technical weakness. The latest round of selling pressure pushed April futures well below support levels set in November and December. Prices are now trading at the lowest price since September 2017, and closed below $70 per cwt in the April contract. Carcass values are still showing moderate to strong losses. Even though higher prices were seen in most primal cuts, Ham and belly posted moderate. Pork cut-out: $77.34 down $0.89.CME cash lean index for 2/5 $74.84 up $0.36. DTN Projected lean index for 2/6 $75.38 up $0.54. 

THURSDAY'S CASH HOG CALL:

Steady to $2 lower. Follow through pressure in futures trade is expected to have a direct impact on cash bids early Thursday morning. This may spark some additional weakness in all markets with most bids likely to be seen $1 per cwt lower Thursday. Thursday plant runs are expected to hit 465,000 head. Estimated Saturday runs are at 85,000 head.