Wednesday Closing Livestock Market Summary - Strong Gains Develop in Livestock Futures

GENERAL COMMENTS

Cash cattle activity quickly came to a halt Wednesday afternoon following a few cattle selling in Nebraska on a live basis at $117 per cwt. These prices are generally steady with Tuesday's trade, but $4 per cwt under last week. Additional bids developed early at $185 to $188 dressed basis, and $116 live basis. The support in futures trade has caused both sides to go back to the drawing board, which may push active trade to the end of the week. The Fed Cattle Exchange Auction Wednesday listed a total of 373 head, with 156 actually sold, 121 head listed as unsold, and 96 head listed as PO (Passed Offer). The state by state breakdown looks like this: Kansas 252 total head, with 156 head sold at $117.00, 0 head unsold, 96 head listed as PO ($116.00); Nebraska no cattle reported; Texas 121 total head, with 0 head sold, 121 head unsold, and 0 head listed as PO; Colorado no cattle reported; Iowa no cattle reported; other states (Oklahoma, South Dakota, Minnesota) no cattle reported. The delivery date/weighted averages breakdown is as listed: 1-9 day delivery: 373 head total, 156 head sold, with a weighted average price of $117.00; 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 0.64 lower compared with the Prior Day settlement ($43.00-$47.00) weighted average $45.20. The corn futures are lower in light activity. May futures were 7 cents lower Wednesday. The Dow Jones Index is 230 points higher with the Nasdaq up 100 points.

LIVE CATTLE

Buyer support quickly and aggressively moved into the complex despite sharp losses during the morning Wednesday ($0.65 to $2.70 higher). Sharp losses seen early in the session, with pressure in all cattle markets and most outside trade based on renewed concerns of additional tariffs in the coming months. But this pressure quickly evaporated as traders focused on the lack of follow-through pressure moving into the already oversold market complex. It is uncertain just how much long-term support will develop over the next couple of days, but prices have been able to solidify buyer interest and the potential for increased market gains. Beef cut-outs: lower, $3.15 lower (select, $206.18) and down $1.49 (choice, $218.19) with good demand and heavy offerings (86 loads of choice cuts, 42 loads of select cuts, 24 load of trimmings, 18 loads of coarse grinds).

THURSDAY'S CASH CATTLE CALL:

$2 to $4 lower. Any interest in cash market activity quickly dried up Wednesday morning following a strong bounce in futures trade. This is likely causing both sides to reassess price levels. At this point, it is expected that additional trade needed will be pushed off until the end of the week.

FEEDER CATTLE:

Strong late-day support flooded into feeder cattle markets, offsetting any sense of early morning pressure ($2.22 to $4.15 higher). The widespread pressure seen through the cattle complex that added even more weakness to the complex through most of the morning quickly evaporated and led to aggressive short-covering and aggressive triple-digit gains. Nearby futures posted gains at or near $4 per cwt with the overall support in the complex seemingly looking past concerns of tariff talk at this point. Although the recent gains in the cattle market do very little to the significant damage done over the last couple of weeks, if continued buying develops, the tone of the market may quickly change. CME cash feeder index for 4/3 is $134.50 down $0.44.

LEAN HOGS:

Strong triple-digit gains quickly moved back into the pork complex late Wednesday following underlying support that slowly developed through the morning ($1.22 to $2.02 higher). The focus has shifted off the lean hog markets at this point and to many other commodity markets, which have been hit hard by the concern that additional tariffs could severely impact overall demand of products other than pork. Nearby contracts posted gains of $1.40 to $2 per cwt during late-day trade. Pork prices tumbled lower as recent market pressure is being worked through the pork complex. Most primal cuts posted moderate to firm losses Wednesday, leading to additional market softness. Pork cut-out: $70.09, down $1.07. CME cash lean index for 4/2 $56.00 down $72. DTN Projected lean index for 4/3 $55.60 down $0.40.

THURSDAY'S CASH HOG CALL:

Steady to $1 lower. Strong buyer support seen in lean hog futures late Wednesday is expected to create some needed stability in cash hog markets through the end of the week. Packers still have access to ample amounts of hogs for schedules, but the firm market support is likely to limit downward pressure through the rest of the week. Most bids are expected to be seen steady to 50 cents per cwt lower. Total slaughter numbers Thursday are expected to be 465,000 head with an estimated 157,000 head Saturday.