GENERAL COMMENTS: Nearby hog futures saw sharp triple-digit losses Wednesday, while steady buying slowly developed in live cattle trade. By the end of the session, nearby lean hog futures had set new contract lows, while live cattle futures posted contract highs. Cash cattle remained sluggish with only a few cattle sold in Texas at $125 per cwt. A wide gap exists between asking prices and bids, as both sides seem to be in no hurry. Bids through most of the country were seen at $123 live and $198 dressed, well below the $128 live and $205 and higher dressed asking prices. It may be Friday before active trade develops in all areas. The National Daily Direct afternoon hog report was $0.28 lower ($44-$49, weighted average $47.90) on 8,217 head sold. Corn futures were higher in light activity with March up 1 cent per bushel. The Dow Jones Index was 63 points higher with the Nasdaq up 2 points.
LIVE CATTLE: Firm gains developed in live cattle trade late Wednesday on follow-through support. Futures closed steady to $0.75 higher. Gains in nearby trade continued to build through the day as early mixed prices led to firm follow-through interest. April closed at $129.20 per cwt, setting new contract highs. The tone of the market remains firm, but the ability to sustain steady buyer interest has been a significant challenge over the last month. If previous patterns hold, a moderate market correction may develop late in the week. Beef cut-outs: lower, down $2.04 (select, $211.50) to down $0.78 (choice, $216.49) with moderate demand and heavy offerings, 152 loads (86 loads of choice cuts, 24 loads of select cuts, 25 load of trimmings, 16 loads of coarse grinds).
THURSDAY'S CASH CATTLE CALL: Steady. Even though bids and asking prices have developed, cash business is still off in the distance given the wide gap between asking prices and bids. Packer interest is expected to improve Thursday, but trade is not expected early and potentially not until sometime Friday.
FEEDER CATTLE: Narrow gains trickled into feeder cattle markets based on lackluster midweek activity. Futures settled steady to $0.15 higher. Late-day support developed in live cattle markets, helping to offset early market pressure. The shift higher in grain markets had little immediate impact on the feeder cattle complex, as nearby contracts posted 7- to 12-cent gains. Traders are starting to focus on the upcoming Cattle on Feed report Friday, but this will give limited direction due to the tardiness of the report. CME cash feeder index for 2/19 is $141.10 down $0.18.
LEAN HOGS: Nearby lean hog futures saw sharp losses again Wednesday. Overall, futures closed $3.55 lower to $0.12 higher. Despite light short-covering moving into deferred contracts, most nearby contracts closed triple digits lower as traders continued to liquidate positions. April led the complex lower, falling $3.55 per cwt. Trade limits will move back to the normal $3 per cwt Thursday. Continued aggressive packer schedules, combined with growing pork supplies, are adding weakness to the April contract. Pork cutout values trickled higher with mixed prices seen through primal cuts. Pork cutout values added $0.26 per cwt, moving to $60.17 per cwt on 356 loads. CME cash lean index for 2/18 is $54.43, down $0.31. DTN Projected lean index for 2/19: $54.13, down $0.30.
THURSDAY'S CASH HOG CALL: Steady to $1 lower. Additional pressure in lean hog futures and packer delays due to weather is backing up additional market-ready hogs, allowing for prices to further erode. Most bids are expected 50 cents lower early Thursday. Thursday slaughter is expected at 477,000 head. Saturday runs are projected at 154,000 head.
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