GENERAL COMMENTS: Lean hog futures saw sharp losses Thursday on bearish market concerns. The prospect of plentiful supplies of hogs available to the market has continued to limit trader interest. Meanwhile, cattle trade stabilized Thursday following uncertainty in early activity. Light support developed in feeder cattle based on pressure in the grain complex. Cash cattle markets remain undeveloped with limited packer interest Thursday. A few bids have surfaced through the day in most areas with prices offered at $121 live and $196 dressed. Given the stability of cattle markets and futures prices, feeders are unwilling to give these bids much attention. Asking prices are holding at $126 to $127 per cwt live and $200 to $203 dressed. The National Daily Direct afternoon hog report was $0.23 lower ($45-$50.25, weighted average of $49.52) on 5,102 head sold. Corn futures were lower in light activity with the March contract down 3 1/2 cents. The Dow Jones Index was 220 points lower with the Nasdaq down 86 points.
LIVE CATTLE: Live cattle futures were mixed ($0.32 lower to $0.22 higher) due to limited support moving back into the market. Live cattle traders distanced themselves from the bearish shift lower in lean hog trade, allowing for limited market activity Thursday. There is growing uncertainty ahead of the USDA crop reports Friday, which will reveal a lot of data due to the government shutdown. This may create more volatility in the markets as traders try to sort out what they feel is relevant and what they toss into the heap of old information. Beef cut-outs: lower, down $0.84 (select, $211.53) to down $0.86 (choice, $216.71) with light demand and heavy offerings on 131 loads (67 loads of choice cuts, 15 loads of select cuts, 19 load of trimmings, 31 loads of coarse grinds).
FRIDAY'S CASH CATTLE CALL: Steady. Limited interest has developed before the end of the week. This is expected to allow for more packer interest Friday, although trade is likely to be delayed until the afternoon. Bids may firm through the day, but are expected to be sluggish early in the day. Cattle are priced at $126 to $127 live and $200 and higher dressed.
FEEDER CATTLE: Light support trickled into cattle futures on minimal volume. Futures closed steady to $0.50 higher. Early pressure shifted to a more stable pattern as pressure developed in grains. The firmness in live cattle trade is helping to bring some renewed support to nearby feeder cattle trade. CME cash feeder index for 2/6 is $141.81 up $0.28.
LEAN HOGS: Strong pressure swept through the lean hog trade, pushing futures $0.30 to $1.30 lower. The April lean hog futures contract turned sharply lower through the morning, breaking below $60 per cwt for the first time since August and moving through support levels seen last week. Traders remain focused on growing supply levels. Despite information on 2019 pork sales to China in the Export Sales report Thursday morning, the fact that report is from Dec. 27 seemed to minimize its market impact. With USDA releasing a mix of past and current data as the government returns from its shutdown, the focus on timely information becomes much more challenging. Pressure redeveloped in pork cutouts following increased market pressure in several primal cuts. Pork cutout values fell $0.50 per cwt, moving to $65.11 per cwt on 341 loads. CME cash lean index for 2/5 is $57.16, down $0.20. DTN Projected lean index for 2/6 $56.89, down $0.27.
FRIDAY'S CASH HOG CALL: Steady to $1 lower. Hampered by the latest round of adverse winter weather and aggressive pressure in futures trade, packers continue to adjust cash markets lower. Most bids are expected 50 cents lower Friday, although limited market direction is expected. Friday slaughter is expected to hit to 465,000 head. Saturday runs are at 214,000 head.
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