GENERAL COMMENTS: Limited buyer support continues to hold in nearby lean hog futures despite trade eroding initial gains as the day continued. Cattle markets shifted lower as traders are backing away from previous market support due to lack of follow-through buying. Corn futures are higher in light activity. May futures added 1 cent per bushel. Dow Jones Index is 206 points lower with Nasdaq down 17 points.
CASH MARKETS: Cash cattle activity remains at a standstill Monday afternoon following the higher prices seen last week. Bids and asking prices are unlikely to develop until Wednesday or so, but both sides are expected to hold their positions with initial bids and offers. With trade likely to be pushed off to the last part of the week, both sides are closely focusing on futures trade direction. National Daily Direct afternoon hog report is $0.19 higher with a weighted average of $45.06 per cwt. Full range of $41.50 to $48.00 per cwt on 6,989 head sold.
LIVE CATTLE: Market pressure developed as traders quickly pulled away from recent highs (futures closed $1.20 lower to $0.30 higher). Sharp losses developed in all but one live cattle contract as traders quickly adjust markets lower after being unable to break through resistance levels last week. This inability of prices to continue to skyrocket higher took an abrupt turn as markets seemingly ran out of gas near 2018 highs. The continued fundamental support seen in cash and beef values is not counting future gains totally out, but traders have quickly pulled back from the market, allowing for a correction. This could allow prices to move to $127 per cwt in the April contract without any significant technical resistance. Beef cut-outs: higher, $0.42 higher (select, $217.21) and up $2.26 (choice, $223.55) with fairly good demand and light offerings, 79 loads (41 loads of choice cuts, 13 loads of select cuts, 5 load of trimmings, 21 loads of coarse grinds).
FEEDER CATTLE: Strong gains developed in deferred contracts with cold weather affecting calving and the young calf crop (futures closed $0.02 lower to $1.07 higher). Strong buyer activity quickly moved into most feeder cattle contracts despite pressure in live cattle markets and early grain market support. The focus moved from the overall availability of current supply represented by nearby contracts to the latest round of bitter winter weather affecting calving season in many northern areas. With extreme cold weather patterns expected to hold for the next week or two, concerns of calf and cow death loss has started to hit fall and winter feeder cattle prices. CME cash feeder index for 3/1 is $139.59 up $0.36.
LEAN HOGS: Initial hog market rally helped support spot April futures with all contracts closing $0.40 lower to $0.92 higher. April futures held onto early gains Monday as traders quickly and aggressively moved back into the complex. April futures posted a 92-cent-per-cwt rally as traders quickly stepped into the previously oversold complex and focused on increased market interest through the rest of hog market. Initial support helped to push prices higher in all contracts, but continued uncertainty as to what will be involved in a proposed trade deal with China and how it will filter down to the pork market seemed to leave most traders more worried than excited at the end of the session. Pork cutouts continue to advance with increased underlying primal market support developing across the pork complex. Pork cutout values added $1.01 per cwt, moving to $62.93 per cwt on 306 loads. CME cash lean index for 2/28 is $52.13, down $0.51. DTN Projected lean index for 3/1 $51.93, down $0.20.
TUESDAY'S CASH HOG CALL: Steady to $1.00 lower. Limited additional direction is expected although packers will continue to move to gain access to market-ready hogs. Limited weather disruptions are expected over the next few days, potentially allowing packers and shippers to stay on track. Tuesday slaughter is expected at 477,000 head.
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