GENERAL COMMENTS: A bearish market tone swept through feeder cattle futures trade Thursday, which have been struggling to keep up with the strong moves in the live cattle complex all week. January feeder cattle futures posted aggressive triple-digit losses, sparking underlying pressure in all cattle trade. Hog markets tried to stabilize Thursday, although most contracts eroded late in the trading session. Cash cattle activity remains in slow gear with just a few bids redeveloping at $197 dressed basis in Nebraska. Asking prices are more evident, but getting little to no attention at this point. Cattle are prices at $128 and higher live, and $200 to $203 dressed. Trade is expected to hold off until Friday at this point. According to the closing report, the national hog base is $0.33 lower ($46-$53, weighted average of $51.44). Corn futures are higher in light activity. March futures were 6 cents higher. Dow Jones Index is 142 points higher with Nasdaq up 44 points.
LIVE CATTLE: Pressure developed in live cattle trade following sharp triple-digit losses in feeder cattle markets. Futures closed $0.40 to $0.82 lower. The turnaround from sharp gains early in the week was swift and aggressive as futures posted moderate-to-strong losses. Fundamentally and technically, the live cattle complex remains firm, although traders took this opportunity to square positions and post a market correction due to the aggressive downward shift in feeder cattle trade. Without renewed support in feeder cattle over the next couple of weeks, it is going to be extremely hard to build regain buyer support through the live cattle complex, even though beef values and cash markets may remain firm. Beef cut-outs: higher, up $0.70 (select, $207.64) to up $0.57 (choice, $212.50) with good demand and light offerings, 129 loads (55 loads of choice cuts, 25 loads of select cuts, 8 load of trimmings, 41 loads of coarse grinds).
FRIDAY'S CASH CATTLE CALL: Steady. It appears that late-week trade will once again be in store for traders on Friday. Limited interest earlier in the week may leave activity sluggish for the week. Asking prices are expected to redevelop at $128 to $130 live and $200 and higher dressed.
FEEDER CATTLE: Sharp losses flooded into feeder cattle trade, setting the tone for weakness through the entire cattle complex (0.72 to $2.35 lower). Triple-digit losses developed across the entire complex most of the session with front-month January futures leading the complex lower, and holding losses near $2.50 per cwt through most of the session. Even though losses eased at the end of the trading day, a bearish tone seen in feeder cattle futures as spot-month contract moved through support levels is adding to the softness in all cattle trade. CME cash feeder index for 1/16 is $143.09, down $1.10.
LEAN HOGS: Mixed trade developed in lean hog complex, allowing for firm pressure in most contracts. Futures closed mixed, $0.45 lower to $0.80 higher. Mixed trade developed Thursday as a combination of follow-through selling pressure and short-covering seemed to occupy traders' activities Thursday. Following the aggressive market shift lower Wednesday in nearby contracts that broke through short-term support levels, limited buyer interest stepped back into February futures. Spring and summer contracts continue to show follow-through market weakness as traders are trying to account for potential demand softness through the summer months. Based on current hog supplies and uncertainty when it comes to economic growth and trade agreements, traders are becoming very cautious. Pork carcass values firmed on strong gains in picnic and ham cuts, while light-to-moderate pressure was seen through other primal cuts. Pork cutout values added $0.46 per cwt, moving to $70.10 per cwt on 350 loads. CME cash lean index for 1/15 is $58.18, up $0.16. DTN Projected lean index for 1/16: $58.02 up $0.37.
FRIDAY'S CASH HOG CALL: Steady to $1 lower. Sluggish market direction is seen at the end of the week with traders focusing on increased underlying pressure likely to follow the lack of support in futures trade. Packers will continue to try to beat weekend storms, which is likely to keep most bids steady Friday morning. Friday plant runs are expected at 462,000 head. Saturday runs are scheduled for 150,000 head, but are dependent on weather conditions.
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