GENERAL COMMENTS
Cash cattle markets remain quiet Tuesday following some additional token bids developing in several areas. Live basis in the North and South is ranging from $118 to $121 per hundredweight (cwt), while dressed bids are posted at $196 per cwt. Given the back and forth of futures trade, little to no development is seen in asking prices. But any asking prices that do develop are expected to be well above current bids. Feedlot managers are willing to hold out until later in the week, as many feel end-of-month and end-of-quarter position-squaring may help to firm packer bids. According to the closing report, the national hog base is $1.41 lower compared with the prior day settlement ($45-$51.50, weighted average $50.11). Corn futures were mixed in light activity with May futures steady Tuesday. The Dow Jones Index is 17 points higher with the Nasdaq down 103 points.
LIVE CATTLE
Initial support helped bring buyers back to the live cattle market Tuesday. But lack of follow-through support allowed mixed trade to develop at closing bell with futures ending mixed ($0.05 lower to $0.30 higher). The narrow trading range at closing bell showed little resemblance to the strong triple-digit gains in morning trade. With buyer support unable to hold through the end of the session, there is growing concern that pressure may develop in the next couple of trading sessions. Beef cut-outs: $1.22 lower (select, $214.24) and down $0.17 (choice, $222.36) with moderate demand and offerings (63 loads of choice cuts, 28 loads of select cuts, 9 load of trimmings, 16 loads of coarse grinds).
WEDNESDAY'S CASH CATTLE CALL:
Steady to $2 lower. Bids have continued to develop through the week, although packer interest is expected to remain sluggish through most of Wednesday. With markets closed Friday, it's likely that both sides will try to wrap up business for the week by late Thursday.
FEEDER CATTLE:
Triple-digit gains early in the session helped keep buyers well rooted in the feeder cattle market. Even though prices pulled back from early highs, the ability to hold gains at closing bell was considered a minor victory. (Futures closed $0.17 to $1.05 higher). Even though moderate-to-strong support developed across the feeder cattle market, prices in several nearby contracts closed nearly $1.50 per cwt below session highs. This lack of follow-through support is more concerning than actual price moves at the end of the day. Significant uncertainty remains over just how much additional buyer activity will develop the rest of the week with many traders expected to exit early ahead of the long holiday weekend. CME cash feeder index for 3/26 is $136.22, down $0.46.
LEAN HOGS:
Limited trade volume allowed for early gains in lean hogs. But this support evaporated near closing bell as traders refocused on the underlying weak market structure. Futures closed mixed, $0.45 lower to $0.20 higher. The inability to hang on to market support is expected to create additional pressure as traders focus on a hog market that has given back nearly $20 per cwt in the first quarter of the year and over $10 per cwt in March alone. This may add even more weakness to the market as traders continue to focus on eroding cash market values and limited interest in futures markets through the end of the month. Pork prices posted strong losses with bellies losing $6.57 per cwt and ham prices down $1 per cwt. Pork cut-out: $69.72, down $1.20. CME cash lean index for 3/23: $61.35, down $0.97. DTN Projected lean index for 3/26: $60.58, down $0.77.
WEDNESDAY'S CASH HOG CALL:
Steady to $1 lower. Very little is expected to change the rest of the week with packers securing enough hogs for scheduled runs without having to dig deeper in their pockets. This may continue to limit any cash market support until after Easter. Plant processing schedules Wednesday are expected to be at 455,000. Friday runs are expected at 430,000 head, with Saturday at 106,000 head and Monday estimated at 320,000 head.
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