Wednesday Closing Livestock Market Summary - Hog Markets Lead Complex Higher

GENERAL COMMENTS

Cash cattle activity remains generally undeveloped with a few scattered bids redeveloping midweek. Bids are seen at $116 per cwt live basis in Kansas, while dressed bids have surfaced at $190 per cwt in Nebraska. At this point, both sides appear to remain well rooted in their plan to hold onto price points. This is likely to push active trade toward the end of the week. Asking prices are still somewhat hard to pinpoint, but overall asking prices are likely to be around $122 and higher live basis and $192 and higher dressed. The Fed Cattle Exchange Auction on Wednesday listed a total of 3,220 head, with 499 actually sold, 2,721 head listed as unsold, and zero head listed as PO (passed offer). The state-by-state breakdown looks like this: KS 171 total head, with 0 head sold, 171 head unsold, 0 head listed as PO; NE 3,049 total head, with 499 head sold at $120.00-$122.00, 2,550 head unsold, and 0 head listed as PO; 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: 2,882 head total, 161 head sold, with a weighted average price of $122.00; 1-17 day delivery: 338 head total, 338 head sold, with a weighted average price of $120.00; 10-17 day: no cattle reported; 17-30 day delivery: no cattle reported. According to the closing report, the national hog base is $1.92 higher compared with the Prior Day settlement ($46-$57.50, weighted average $54.19). The corn futures are higher in light activity. May futures were 2 cents higher Wednesday. The Dow Jones Index is 7 points lower with the Nasdaq up 28 points.

LIVE CATTLE

Live cattle futures bounced higher Wednesday, though overall activity remained sluggish. Prices held firm gains with consistent buyer support seen in commercial and investment sectors. Futures closed $0.37 to $0.92 higher. April futures led the market higher with a 92-cent-per-cwt gain, while June contracts lagged the rest of the complex during what turned out to be a light-to-moderately traded session. The focus on potential follow-through activity could spark some increased momentum late in the week. Beef cut-outs: lower, $1.01 lower (select, $198.57) to down $0.49 (choice, $211.64) with light demand and moderate offerings (101 loads of choice cuts, 35 loads of select cuts, 10 load of trimmings, 23 loads of coarse grinds).

THURSDAY'S CASH CATTLE CALL:

Steady to $2 higher. Limited activity has developed across the cash cattle complex midweek. The limited trading interest, which is focused on light bids and asking prices, doesn't fully convey the fact that both sides are likely to dig in their heels until late week to try to create longer-term influence over the market. The move higher last week, combined with strong futures trade, is creating an expectation that feeders may be able to demand higher prices through the end of the month. But packers are unwilling to budge at this point with a desire to control spending as much as possible.

FEEDER CATTLE:

Light activity developed in most feeder cattle trade with the focus turning to the hog complex. Feeder cattle futures closed $0.02 to $1.05 higher. Renewed buyer support was seen across fall and winter feeder cattle futures. Additional buyer activity could add interest to the spring and summer trade, and traders will continue to look for tighter supplies as strong demand is expected to build over the near future. The CME cash feeder index for 4/17 is $137.90, up $0.15.

LEAN HOGS:

Increased buyer support quickly flooded into nearby lean hog futures with the most aggressive support developing in summer contracts. Futures closed $0.40 to $1.95 higher. Strong interest quickly moved into May through July futures as May contracts, despite being lightly traded, led the market higher with a $1.95 per cwt rally. The focus on increased buyer support in pork, as well as appreciating cash hog values, has sparked underlying commercial support in the market. Some additional adjustments are likely over the near future, though prices may focus on combined outside market shifts as well over the next several days. Pork prices bounced higher Wednesday as most primals posted triple-digit gains. Strong buyer support in butt, picnic and rib markets was offset by light-to-moderate pressure in the ham and belly trade. Pork cut-out: $68.46, up $0.23. CME cash lean index for 4/16 $54.02, up $49. DTN Projected lean index for 4/17 $55.05, up $1.03.

THURSDAY'S CASH HOG CALL:

Steady to $1.50 higher. The most recent round of support that quickly developed in lean hog futures is likely to add even more fuel to the higher cash market fire. Bids are expected to be mostly $1 to $1.50 per cwt higher as packers continue to gain access to market-ready hogs. The ability to move pork product through the spring and summer will continue to be the main factor in buyer support. Packers are willing to move as many hogs through plants as they can handle before further price gains are seen in the market. Total slaughter numbers Thursday are expected to be 465,000 head with an estimated 118,000 head Saturday.