Wednesday Closing Livestock Market Summary - Strong Pressure Redevelops in Cattle Futures

GENERAL COMMENTS

Cash cattle trade developed across the North on Wednesday afternoon with prices at $126 live and $203 dressed. Even though prices are generally $2 per cwt lower than last week, they remain stable with the limited trade seen in the North Tuesday. The sharp losses in futures trade have weakened any resolve of feedlot managers. Some clean-up trade is likely to develop through the end of the week, but the tone of the market is likely set. The Fed Cattle Exchange Auction on Wednesday listed a total of 166 head, with 166 actually sold, zero head listed as unsold and zero head listed as PO (Passed Offer). The state-by-state breakdown looks like this: KS 166 total head, with 166 head sold at $125.00-$126.00, zero head unsold, zero head listed as PO; NE -- no cattle reported; TX -- no cattle reported; CO -- no cattle reported; IA -- no cattle reported; other states (OK, SD, MN) -- no cattle reported. The delivery date/weighted averages breakdown is as listed: 1-9 day delivery: 166 head total, 166 head sold, with a weighted average price of $125.63; 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 $0.51 lower compared with the prior day settlement ($51-$56, weighted average $55.04). Corn futures are higher in light activity. May futures were 1/2 cent higher Wednesday. The Dow Jones Index is 77 points higher with the Nasdaq up 2 points.

LIVE CATTLE

Strong pressure redeveloped in live cattle futures with triple-digit losses seen in all nearby contracts ($0.65 to $1.87 lower). The most aggressive weakness developed in spot-month April contracts as traders continue to focus on widespread market liquidation. The concern is that additional pressure will spread through beef values and continue to erode cash cattle trade over the coming weeks. Beef cut-outs: mixed, $0.35 lower (select, $216.39) and up $1.03 (choice, $224.38) with moderate demand and light offerings (63 loads of choice cuts, 31 loads of select cuts, 7 load of trimmings, 22 loads of coarse grinds).

THURSDAY'S CASH CATTLE CALL:

Steady. Light-to-moderate trade seen over the last two days is expected to have already set the tone with cash prices at $1 to $2 per cwt lower than last week's level. Some additional clean-up trade is likely to develop over the next two days, although prices seem to be set unless significant shifts develop in futures activity.

FEEDER CATTLE:

Triple-digit losses developed in feeder cattle even though early trade seemed to show so much promise for market stability ($1 to $1.47 lower). The initial buyer support that moved into the feeder cattle futures was unable to hold on through the end of the session, as strong pressure in live cattle markets and general market weakness limited interest. The weaker tone of the market has continued to draw sellers into the market. CME cash feeder index for 3/20 is $140.95, down $0.30.

LEAN HOGS:

Once again, trade in lean hog futures markets remained sluggish with little to no long-term direction ($0.92 lower to $0.47 higher). Front-month April futures posted strong losses of 67 cents per cwt as most of the trade activity has now moved to the June contracts. Even though May futures will remain on the board, current open interest in May contracts is just 10% of the eroding April trading interest and nearly 3% of total open interest in June contracts. This makes May futures not only lightly traded, but unreliable to price hogs and overall pork values on. Besides April futures eroding through the day, narrow gains were seen in other nearby contracts, signaling that traders are trying to build some market stability. Pork prices fell in all primals except for hams. The focus on the Easter holidays is helping to curb price pressure, although traders are more focused on ham needs than the entire pork complex. Pork cut-out: $71.45, down $0.62. CME cash lean index for 3/19: $64.29, down $0.68. DTN Projected lean index for 3/20: $63.63 down $0.66.

THURSDAY'S CASH HOG CALL:

Steady to $1 lower. The broken record of early morning bids is expected to continue Thursday. Early bids are expected to remain steady to $1 per cwt lower, although most bids are likely to be seen 50 cents per cwt lower in early trade. This trend is not expected to change over the near future and will likely be the pattern during the rest of the week. Plant processing schedules Thursday are expected to be at 462,000. Saturday runs are estimated at 110,000 head.