GENERAL COMMENTS: Sharp gains quickly redeveloped in all livestock trade Monday on technical shifts. Lean hog and feeder cattle futures posted sharp triple-digit gains with April lean hog futures leading the complex higher. The concern is how much follow-through support will redevelop over the next couple of days due to limited fundamental changes in either hog or cattle markets. Cash activity was undeveloped Monday with bids and asking prices nonexistent and likely to not be seen until midweek or later. Showlists appear to be generally larger, with gains seen in Kansas, Nebraska and Texas, while Colorado appears to be smaller. Active trade is expected to be pushed off until the second half of the week with Friday trade possible again. The National Daily Direct afternoon hog report was $0.21 higher ($46-$51.28, weighted average $50.59) on 5,972 head sold. Corn futures were higher in light activity with the March futures contract closing 1 cent higher. The Dow Jones Index was 175 points higher with the Nasdaq up 83 points.
LIVE CATTLE: Live cattle futures saw firm gains following a rally in feeder cattle. Futures closed $0.27 to $0.85 higher. Firm buyer support developed Monday as buyers focused on strong activity in feeder cattle and lean hog futures. Prices have now moved off last week's lows, as the April contract bounced 72 cents higher. However, the market remains range bound at this point. After a strong market correction last week pulled prices down from contract highs, traders were intent on boosting support based on longer-term fundamental strength in the market. The April contract closed at $127 per cwt, still over $1 per cwt under January highs. Increased volatility could be seen throughout livestock markets the next couple of days. Beef cut-outs: higher, up $0.26 (select, $213.41) to up $3.39 (choice, $217.65) with good demand and light-to-moderate offerings on a total of 81 loads (39 loads of choice cuts, 24 loads of select cuts, 9 load of trimmings, 9 loads of coarse grinds).
TUESDAY'S CASH CATTLE CALL: Steady. Little development is expected in cash trade the first half of the week with bids and asking prices seemingly being pushed off as packers and feeders look for some stability after early futures support.
FEEDER CATTLE: Buyers aggressively stepped back into the feeder cattle market Monday, pushing nearby contracts off two-week lows. Futures closed $1.12 to $1.82 higher. The renewed interest in feeder cattle may have been sparked by limited support in the grain trade following the announcement that China would step back into the market and make additional soybean purchases. The underlying support in live cattle trade and recent cash market support has helped to solidify buying and push prices off short-term support levels. Prices backed away from session highs, but the April contract closed at $145.82, identical to its recent high seen last Thursday. Continued buyer support early Tuesday is expected to bring technical support through the entire cattle complex. CME cash feeder index for 2/1 is $141.01, down $0.85.
LEAN HOGS: Lean hog futures closed $0.22 to $2.92 higher. The April futures contract led the market higher with contracts nearly hitting limit gains at closing bell. The April contract settled $2.92 per cwt higher following strong support in the cattle trade as well as commercial buyers moving back into the market on hopes of increased trade and additional product movement. After unchecked market liquidation pushed April lean hog futures over $6 per cwt lower, it took just a tap to bring buyers flooding back into the market. Traders had been searching for a market bottom through most of January. Firm buying moved back into pork cutouts with all primal cuts except butts holding moderate-to-strong support Monday. Pork cutout values gained $1.13 per cwt, moving to $68.12 per cwt on 257 loads. CME cash lean index for 1/31 is $57.18, down 22. DTN Projected lean index for 2/1 $57.41, up $0.23.
TUESDAY'S CASH HOG CALL: Steady to $1 lower. Firm pressure is expected to develop in cash markets even though the tone of the market may be changing. Early week support in futures trade may bring back traders who have been searching for the bottom of the market. Tuesday slaughter is expected to hit to 477,000 head.
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