GENERAL COMMENTS
Cash cattle trade is inactive at this point and likely will be delayed until the second half of the week. Bids are more evident in all areas with live bids consistently seen at $126 per cwt, while dressed bids are hovering near $202 per cwt. Some asking prices are seen in the South at $128 and higher, while Northern asking prices are still hard to pinpoint due to feeders not yet publicly setting their expectations. According to the closing report, the national hog base is $0.16 higher compared with the prior day settlement ($56.00-$63.50) weighted average $62.51. Corn futures are higher in light activity. March futures were 2 cents higher Tuesday. The Dow Jones Index is 38 points higher with the Nasdaq up 52 points.
LIVE CATTLE
Mixed trade developed across live cattle futures Tuesday. The choppy, up-and-down moves through the session led to market uncertainty in many contracts (0.67 lower to $0.65 higher). Pressure in nearby contracts focused on the overall lack of support seen in feeder cattle trade through most of the session. There are questions as to just how much underlying buyer support will develop across the complex and how active trade will be over the coming days and weeks. The concern is that a bump higher in prices may add even more volatility to the entire cattle complex. Beef cut-outs: higher, $0.36 higher (select, $215.20) and up $0.12 (choice, $223.35) with moderate demand and offerings (53 loads of choice cuts, 24 loads of select cuts, 14 load of trimmings, 14 loads of coarse grinds).
WEDNESDAY'S CASH CATTLE CALL:
Steady. At this point, little to no additional direction is developing in cash markets following sluggish bid activity Tuesday. It is likely active trade will be delayed until Thursday and Friday. The weaker tone in futures trade continues to cause some underlying concern in the market despite the need for packers to gain access to more cattle over the coming days and weeks.
FEEDER CATTLE:
Firm pressure developed across the complex Tuesday with increased weakness in all nearby trade ($0.85 lower to $0.37 higher). Even though early buyer support tried to step back into the cattle market, the underlying pressure quickly moved into nearby futures. This eroded a portion of Monday's support, but left the market generally directionless. With prices still well above short-term lows of $1.4367 per cwt, traders may be able to hold in this trading range over the near future. The tone of the cattle complex continues to remain weak with traders focusing on large supplies limiting trade activity through the complex. CME cash feeder index for 3/5 is $145.25 down $0.19.
LEAN HOGS:
Early morning market shifts left the complex unsettled and allowed a wide variety of market activity and unsettled direction to move into the futures (1.50 lower to 0.10 higher). Despite the early expectations that light to moderate buyer support would move back into the complex through the entire day, buyer support quickly dried up. This left most contracts searching for any form of support, and pushed nearby contracts lower. April through October contracts closed under pressure while narrow gains were able to hold in deferred futures. The concern that recent market support may be under supported going through the upcoming days and weeks is leading to market pressure in nearby contract months. Pork prices tumbled lower following triple-digit losses in rib and belly markets. This overall lack of support in the complex continues to drive additional pressure into pork market fundamentals. Pork cut-out: $77.92 down $1.70. CME cash lean index for 3/2 $67.69 down $0.40. DTN Projected lean index for 3/5 $67.52 down $0.17.
WEDNESDAY'S CASH HOG CALL:
Early bids are expected to remain steady to weak with most bids expected steady. The winter storms moving through so many northern and eastern states are creating concerns of further plant delays which may add even more uncertainty to the cash markets. Wednesday plant runs are expected to hit 465,000 head. Saturday runs are now pegged at 110,000 head.
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