GENERAL COMMENTS: Firm pressure developed in nearby lean hog contracts Wednesday. The April contract pulled back from early week gains, settling down 55 cents. Light-to-moderate pressure developed throughout the cattle trade, although the tone of the market remains firm at this point. Cash cattle trade remained elusive, though bids have become slightly more available Wednesday. Live bids are seen at $122 in Texas, while dressed bids in the North are seen at $200 per cwt. This is still a long way from firm asking prices of $126 to $127 live and $203 to $205 dressed. Trade is not expected until closer to the end of the week. The National Daily Direct afternoon hog report was $0.18 higher ($44.50 to $48.78, weighted average) on 11,630 head sold. Corn futures were higher in light activity with March futures up 1/4 cent. The Dow Jones Index was 117 points higher with the Nasdaq up 5 points.
LIVE CATTLE: Live cattle futures closed $0.20 to $0.87 lower. The April contract led the complex lower. The inability of buyers to step back to the complex is creating some renewed volatility in the market. Similar market moves have been seen over the last month where nearby prices reach new contract highs, then moderate-to-strong liquidation develops, pushing prices $1 to $3 lower, only to spark renewed buying. This cycle of traders pushing prices to the top edge of the trading range, then being unable to support gains, may be seen through much of the spring. Beef cut-outs: lower, $0.99 lower (select, $212.01) and down $0.72 (choice, $216.44) with good demand and heavy offerings, 128 loads (71 loads of choice cuts, 18 loads of select cuts, 23 load of trimmings, 15 loads of coarse grinds).
THURSDAY'S CASH CATTLE CALL: Steady to $2 higher. Bids have slowly developed in several areas, but still remain generally subdued. This is likely to keep cash markets quiet Thursday morning. It is expected that active trade will be seen late Thursday or sometime Friday.
FEEDER CATTLE: Feeder cattle closed $0.42 to $0.87 lower in light trade. The expectation that trade talks with China will improve the trade outlook for grains is creating some additional softness in feeder cattle trade, as higher grain prices will increase feeding costs. Traditionally, feeder cattle prices have an inverted relationship with movements in grain futures. CME cash feeder index for 2/12 is $141.79, up $0.13.
LEAN HOGS: Firm support developed in deferred contracts on follow-through strength. Futures closed mixed, $0.55 lower to $0.77 higher. The April futures contract backed away from previous gains due to active positioning. This pullback was limited to spring contracts, as active buying continued in summer and fall contract months. The July contract led the complex higher, settling up 77 cents per cwt. Moderate pressure developed in wholesale pork cuts with firm losses in several primal cuts. Pork cutout values fell $1.34 per cwt, moving to $63.88 per cwt on 349 loads. CME cash lean index for 2/11 is $55.91, down $0.23. DTN Projected lean index for 2/12 $55.55, down $0.36.
THURSDAY'S CASH HOG CALL: Steady. Limited cash market direction is expected through the end of the week with packers unwilling to move prices higher, but finding it hard to justify significantly lower price levels. Most bids are expected to be steady to weak. Wednesday slaughter is expected at 468,000 head. Saturday runs are expected at 210,000 head.
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