GENERAL
COMMENTS: Limited activity slowly developed in livestock trade Friday as
traders backed away from wide market swings this week and focused more
on position-squaring ahead of the weekend. This left prices mixed in a
narrow trading range in most contracts. From Friday to Friday, livestock
futures scored the following changes: Feb LC up $2.05; Apr LC up $1.70;
Mar FC up $0.30; Apr FC up $0.08; Apr LH off $4.08; May LH off $2.98.
Cash cattle trade remained at a standstill as of midafternoon Friday,
and it appeared that active trade would hold off until late afternoon
and evening Friday once again. This has becoming a pattern over the last
few weeks of both sides holding out until Friday evening. Bids had
improved slightly and were holding at $123 to $125 live and $202
dressed. Even though the gap was slowly narrowing, it was still below
asking prices of $128 live and $205 to $207 dressed. The National Daily
Direct afternoon hog report was $0.42 higher ($43.50-$47.85, weighted
average $46.76) on 9,206 head sold. Corn futures were mixed in light
activity with the March down 1/4 cent per bushel. The Dow Jones Index
was 181 points higher with Nasdaq up 67 points.
LIVE CATTLE: Live cattle futures saw firm
late-week gains of $0.07 to $1.05. The front-month February contract
closed $1.05 higher, though support was mainly due to traders trying to
roll out of the expiring contract. The rest of the contracts were stuck
in narrow trade ranges from 7 to 30 cents per cwt as traders continued
to focus on increased support. With beef demand remaining strong and
expected market firmness through spring, live cattle futures are
expected to hold in the top end of trading ranges over the next couple
of weeks. Beef cut-outs: higher, up $0.94 (select, $212.35) to up $1.32
(choice, $219.39) with light demand and offerings, 82 loads (33 loads of
choice cuts, 12 loads of select cuts, 8 load of trimmings, 28 loads of
coarse grinds).
MONDAY'S CASH CATTLE CALL: Steady. Activity
early next week will return to normal information-gathering. Showlists
will be delivered and inventory will be taken as both sides assess
market direction and needs. Bids and offers are not expected until
midweek or later.
FEEDER CATTLE: Feeder cattle futures trickled
lower in limited activity. Futures closed $0.32 lower to $0.35 higher.
Limited volume seemed to be the consistent theme Friday with narrow
losses developing in all nearby contracts. The Jan. 1 Cattle on Feed
report released Friday afternoon showed a 2% placement loss in December
2018 compared to December 2017, but since the information was delayed,
the impact of the numbers is likely to be minimal when trade resumes
next week. CME cash feeder index for 2/21 is $141.31, up $0.20.
LEAN HOGS: Lean hog futures closed mixed ($0.50
lower to $0.22 higher) in limited trade. April struggled to draw support
back to the complex as traders focused on squaring positions Friday.
Outside of the spot-month April contract, which posted a 50-cent loss,
the rest of the complex remained mixed to mostly higher with futures
contained in a narrow range. The lack of follow-through support due to
light trade volume is expected to be viewed as bearish, as traders tried
to capitalize on the Thursday rally. Pork cutout values continue to
erode with strong price pressure in most primal cuts. Pork cutout values
fell $2.22 per cwt, moving to $59.01 per cwt on 337 loads. CME cash
lean index for 2/20 is $54.06, down $0.07. DTN Projected lean index for
2/21 $53.65, down $0.41.
MONDAY'S CASH HOG CALL: Steady to $1.50 lower.
Continued cash market pressure is expected to develop early next week as
packers focus on the backlog of hogs over the past week or so, as well
as the next round of winter weather that may continue to delay hog
movement over the weekend and into Monday morning. Monday slaughter is
expected at 468,000 head, dependent on weather.
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