GENERAL COMMENTS: Continued fundamental strength in the hog trade helped to bring about additional price support in all markets. Nearby contracts led the complex higher with triple-digit gains seen in spring contract months. Cattle futures posted moderate losses due to limited direction. Live cattle markets were mixed to mostly lower with limited pressure most evident in nearby contracts. Cash cattle activity was limited, although cash sales are still a long way off given the gap between bids and asking prices. Both sides are still unwilling to show their entire hand with a few asking prices listed midweek at $126 live and $200 to $202 dressed. Early bids seen in the North are at $194. Given the underlying support in the market, trade is likely to be delayed until Friday. According to the closing report, the national hog base is $1.02 higher ($46.50 to $52.50, weighted average $51.19). Corn futures were higher in light activity with March futures closing up 2 cents. The Dow Jones Index was 156 points higher with Nasdaq up 78 points.
LIVE CATTLE: Limited softness developed in nearby trade as traders tried to position holdings following the sharp market rally early in the week. Futures closed $0.80 lower to $0.32 higher. Mixed trade was seen through much of the session, although traders were unable to break prices out of the narrow-to-moderate trading pattern and move away from the recent strength that had developed early in the week. Even though February futures pulled back from contract highs, the 50-cent loss Wednesday is nothing more than price-positioning, allowing traders to adjust with the tone of the market still extremely firm. Beef cut-outs are unavailable at this time.
THURSDAY'S CASH CATTLE CALL: Steady to $2 higher. Cash markets are expected to remain untraded until late in the week. Bids are expected to become more available early Thursday, but this is still not expected to close the gap between bids and asking prices until late Thursday or sometime Friday.
FEEDER CATTLE: Moderate price pressure led the cattle complex lower as spot-month feeder cattle futures set the tone for market correction Wednesday. Futures closed $0.22 to $0.80 lower. Even though markets turned lower Wednesday, the overall support continues to add underlying support following early week gains. Unlike live cattle trade, which backed away from contract highs on Wednesday, feeder cattle markets are still well entrenched in a sideways range with prices still over $1 per cwt below recent highs set in December. This could allow for market shifts through the coming weeks. CME cash feeder index for 1/8 is $145.70, up $0.07.
LEAN HOGS: Strong buyer support quickly and aggressively moved into the lean hog market Wednesday, allowing for steady support with futures closing $0.37 to $1.52 higher. Triple-digit gains moved into nearby lean hog contracts early Wednesday with increased overall support seen through the entire complex. April futures led the complex higher at closing bell, moving $1.52 per cwt higher with a closing price of $67.55 per cwt. The overall lack of market pressure seen midweek seems to indicate follow-through support is likely to develop through the coming days. Pork values shifted lower following sharp triple-digit losses in butt and picnic primals. Pork cutout values fell $0.49 per cwt, moving to $69.67 per cwt. CME cash lean index for 1/07: $54.85, up $0.35. DTN Projected lean index for 1/08: $55.10, up $0.25.
THURSDAY'S CASH HOG CALL: Steady to $1.50 higher. Firm support in futures trade midweek is expected to spark some additional buyer activity. Most bids are expected to be 50 cents higher. Thursday plant runs are expected at 477,000 head. Saturday schedules are expected to be near 195,000 head.
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