GENERAL COMMENTS:
Livestock futures have been mostly lower Wednesday morning, but with barely enough trading volume to really say what mood traders are really feeling. Activity has picked up around 11 a.m. Central, and directions could change through the latter half of the session. Live cattle, feeder cattle and lean hogs all have gains from earlier in the week that may either merit a correction or a confirmation of bullish momentum. Although the cash cattle market may continue to wait until later in the week for major business, asking prices are noted in the South at $163. March corn is down 5 3/4 cents per bushel and March soybean meal is down $7 per ton. The Dow Jones Industrial Average is down 150 points.
LIVE CATTLE:
Live cattle futures charts continue to tap against the ceiling of recent contract highs, and all it would take would be a new boost of buying activity to get them going again. February live cattle are steady at $162.15, April live cattle are down $0.275 at $164.40 and June live cattle are down $0.15 at $160.075. Under USMCA pressure, Mexico has watered down its proposed ban on GMO corn, at least for animal feed, meaning the rail market for U.S. corn to Mexico and the movement of fed cattle and feeder cattle between the U.S. and Mexico should proceed more or less as usual. In this week's cash cattle market, some very small lots have traded at $254 in Iowa (dressed basis) and $159 in Texas (live basis), but generally the bulk of the business isn't expected to kick off until Thursday or later. Early asking prices have been noted in the South at $163. Wednesday's slaughter is estimated at 126,000 head, which is steady with a week ago and 2,000 more than a year ago at this time.
The Fed Cattle Exchange Auction held today reported 7 lots (with 5 lots in Texas, and 2 lots in South Dakota), totaling 1,152 head of cattle. One lot of 84 head sold in South Dakota at $158.75. Opening prices were at $158, high bids were at $158.50 to $159.25, reserve prices were $162 to $164.
Boxed beef prices jumped higher Wednesday morning: choice up $3.66 ($275.72) and select up $2.83 ($261.61), with a movement of 80 loads (49.5 loads of choice, 12.6 loads of select, 10.14 loads of trim and 8.18 loads of ground beef).
FEEDER CATTLE:
Despite some relief from a pullback in feed prices Wednesday morning, with corn down a nickel and soybean meal down more than $5 per ton, feeder cattle futures struggled to find a direction at the start of Wednesday's trade. March feeders are up $0.725 at $187.375, April feeders up $0.475 at $191.375 and May feeders up $0.375 at $195.275. So far during this session, futures trading volume has remained rather light, leaving the possibility for erratic jumps or changes in direction as the day wears on. A dust storm across the Texas panhandle and Oklahoma on Tuesday emphasized the fact that recent precipitation hasn't really fixed the ongoing drought in cattle country, and although the supply of calves may be relatively scarce, so may be the supply of grass this spring.
LEAN HOGS:
Pork values continue to bounce not too far off recent low prices, so it's perhaps not too surprising that the lean hog market is yanking back its gains from earlier in the week. On Wednesday morning, April lean hogs are down $0.975 at $86.275, May lean hogs are down $0.725 at $95.325 and June lean hogs are down $0.80 at $104.025. For the first two trading sessions of the week, it really seemed like the lean hog futures market was finally developing some upward momentum to move off recent lows, and if some supportive factor -- like aggressive packer bidding or even outside market bullishness -- could spark more trading volume during the latter half of Wednesday's trading session, this market may yet regain its footing. Wednesday's slaughter is projected at 486,000 head, which is 4,000 fewer than a week ago and 13,000 more than a year ago at this time.
The projected CME Lean Hog Index for Feb. 13 is up $0.54 at $75.18 and the actual index for Feb. 10 was up $0.63 at $74.64. Wednesday's Daily Direct Morning Hog Report showed a weighted average price of $75.65 (up $0.39) on 4,772 head. Prices ranged from $68 to $79, and the five-day rolling average is now $75.71. Pork cutouts total 167.80 loads with 144.76 loads of pork cuts and 23.04 loads of trim. Pork cutout values: up $0.95 to $82.83.
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