GENERAL
COMMENTS: Strong early gains across livestock trade were short-lived as
initial support failed to hold in limited volume, allowing
end-of-the-week positioning to develop late Friday. The feeder cattle
market was the most volatile with nearby futures posting triple-digit
losses while the deferred January 2020 contract sustained a triple-digit
gain. From Friday to Friday, livestock futures scored the following
changes: Apr LC up $0.88; Jun LC up $0.95; Mar FC off $1.68; Apr FC off
$0.25; Apr LH up $0.95; May LH up $0.45. Cash cattle trade was
developing Friday with light-to-moderate dressed cattle trade taking
place in Nebraska and Iowa late morning at $205 per cwt. This is
generally $3 per cwt higher than last week. Afternoon trade started to
develop in the live market in all areas with prices at $128 per cwt, $2
per cwt higher. Though additional activity is likely to develop through
the afternoon, the trend of the market likely has been set. The National
Daily Direct afternoon hog report was $0.33 higher ($42-$45.29,
weighted average $45.01) on 3,515 head sold. Corn futures were higher in
light activity with May up 2 cents per bushel. The Dow Jones Index was
105 points higher with the Nasdaq up 59 points.
LIVE CATTLE: Limited activity kept live cattle
prices mixed ($0.30 lower to $0.37 higher) Friday afternoon despite
strong initial gains. The April contract led the complex higher Friday
morning, breaching its 2018 high of $130.10 per cwt. However, limited
trade volume the rest of the session allowed the contract to erode, and
it was unable to close above $130 per cwt. Traders continue to allow
prices to hover near long-term highs, but the inability to secure
additional buyer interest at these levels is eroding market support. The
current support in cash trade and beef values suggests that additional
runs will be seen next week. But unless traders are able to breach these
levels in the near future, additional market liquidation is expected.
Beef cut-outs: higher, up $1.52 (select, $216.79) to up $1.34 (choice,
$221.29) with fairly good demand and light-to-moderate offerings, 75
loads (34 loads of choice cuts, 15 loads of select cuts, 8 load of
trimmings, 19 loads of coarse grinds).
MONDAY'S CASH CATTLE CALL: Steady. Following
cash market direction developing Friday, early week interest is expected
to remain sluggish with inventory-taking and showlist distribution the
main focus Monday.
FEEDER CATTLE: Wide shifts in feeder cattle
trade sparked increased market uncertainty Friday. Futures settled $1.65
lower to $1.30 higher. Movements in feeder cattle trade Friday caused
general confusion, as spring and summer contracts quickly retreated
following a $1.65-per-cwt loss in the spot March contract. The inability
of live cattle to hold early gains caused late-day protection-taking in
the event that this lack of support is signal of an aggressive turn in
live cattle futures. Late-day gains in corn futures also caused concern
in nearby trade, as this swift shift through the session may indicate
further market shifts during March. Deferred feeder cattle futures were
firm to sharply higher due to light volume and expected long-term
support holding across the complex. CME cash feeder index for 2/28 is
$139.23, down $0.71.
LEAN HOGS: Initial buyer support eroded Friday
as traders returned to concerns about pork demand growth. Futures closed
$0.37 lower to $0.52 higher. Strong support swept through lean hog
trade Friday morning, pushing futures triple digits higher as traders
focused on early month momentum and the potential for additional players
moving back into the market through early March. But as the session
continued, limited follow-through buyer interest developed, allowing
deferred traders to search for underlying short-term support. Limited
late-day buying held in April and May contracts, although the tone of
the market remains focused on potential gains through the next couple of
weeks. Despite known concerns of strong hog and pork supplies, there is
still hope that potential China trade will spark renewed buying
interest. Pork cutouts saw additional support, ending higher for the
second consecutive day. Pork cutout values were up $1.43 per cwt to
$61.92 per cwt on 216 loads. CME cash lean index for 2/27 is $52.64,
down $0.18. DTN Projected lean index for 2/28 $52.13, down $0.51.
MONDAY'S CASH HOG CALL: Steady to $1 lower.
Limited direction is expected Monday, although packers will continue to
move into the market, gaining access to market-ready hogs. Limited
weather disruptions are expected over the next few days, potentially
allowing packers and shippers to stay on track. Monday slaughter is
expected at 477,000 head.
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