GENERAL COMMENTS:
Cattle and hog futures trade has seen a role reversal Wednesday morning from the direction earlier in the week. Initial buyer support moved into both live cattle and feeder cattle trade during Wednesday morning, while firm triple-digit losses developed in nearby lean hog futures. Although long-term direction is hard to pin down based on the wild and volatile shifts seen this week, traders are looking for fundamental direction and support over the near future. Trade is expected to remain in a wide trade range through the rest of the day with traders looking for additional long-term direction, but seemingly content with current positions. December corn is up 6 1/4 at $4.748 and December soybean meal is up $9.50 at $456.9. The Dow Jones Industrial Average is down 110.57 at 34,042.03.
LIVE CATTLE :
Live cattle futures have posted firm gains in nearby contract months with all contracts through June posting triple-digit rallies during the first few hours of trade Wednesday. The focus on active technical pressure seen early in the week is keeping some traders unwilling to actively look for long-term positions and focus more on immediate position squaring opportunities. Live cattle futures broke below recent support price levels set in October in Tuesday's late day moves, but remain concerned that there may not be enough depth of buy orders to quickly change price direction and move prices back to levels seen last week. This could keep prices choppy at or near recent lows in the near future.
Cash cattle markets continue to remain quiet with asking prices and bids still undeveloped in all areas of cattle country. The volatility in futures trade is likely to limit early week movement in cash markets, potentially leaving the majority of needed cash sales until Thursday or Friday.
December live cattle are $1.30 higher at $180.075, February live cattle are $1.53 higher at $179.95, April live cattle are $1.38 higher at $181.975.
Boxed beef prices are mixed: choice down $1.60 ($298.78) and select up $0.89 ($270.37) with a movement of 78.99 loads (52.45 loads of choice, 13.66 loads of select, 5.51 loads of trim and 7.37 loads of ground beef).
FEEDER CATTLE:
Feeder cattle futures are trading firmly higher Wednesday morning. The $2 to $2.50 per cwt gains in feeder cattle trade are nothing to downplay but following the aggressive losses the last two days, which pushed prices as much as $10 per cwt lower, these gains seem less significant. The biggest moral victory seen in cattle futures, and especially feeder cattle contracts Wednesday, is early buyer support moving into the market and holding through morning trade. Granted, most of the buyer interest is short covering activity as traders square positions, but the fact that buy orders have not dried up at this point is creating additional hope and expectations that further gains may be seen in the near future.
November feeders are $2.58 higher at $234.8, January feeders are $2.00 higher at $232.825 and March feeders are $2.08 higher at $235.325.
LEAN HOGS:
Lean hog futures are on the losing end of the market early Wednesday with triple-digit losses moving back into the complex. Trade liquidation seen in cattle markets earlier in the week seem to have moved their attention to the lean hog complex midweek. It is expected that most of the downward market shift is technical based, focusing on squaring positions following the firm run higher over the last three weeks. But the inability to bring some additional support into cash hog values or pork values through the end of the week could add some short-term fundamental pressure to the complex. February futures are leading the complex lower with a $2 per cwt loss, with price ranges stabilizing at midday with the potential to hold similar losses into the end of the trading session.
December lean hogs are $1.35 lower at $71.55, February lean hogs are $1.98 lower at $74.05 and April lean hogs are $1.53 lower at $79.725.
Hog Prices are lower on the Daily Direct Morning Hog report, down $0.16 with a weighted average of $68.62, ranging from $63.00 to $71.00 on 2,969 head with a five-day rolling average of $68.75. Pork Cutouts totaled 177.13 loads with 150.08 loads of pork cuts and 27.05 loads of trim. Pork cutout values are down $1.54 at $85.46.
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