Thursday Morning Livestock Market Update - Cattle Futures Expected Firm

GENERAL COMMENTS:

Cattle futures are expected to remain higher during early trade following strong midweek gains. The ability to push prices higher in feeder cattle Wednesday is expected to create a combination of follow-through buyer support, mixed with morning position-taking as traders still remain uncertain about strong additional gains moving into feeder cattle trade especially at the end of the month. Live cattle futures are expected to continue to quickly follow the direction of feeder cattle markets through the day Thursday, but will also focus on outside market direction shifts through the session. Cash cattle markets are likely to spark additional market interest, although bids through most of the morning are expected to redevelop near $122 live and $196 dressed. Asking prices remain well above current bids at $126 and higher live and $200 dressed. Active trade is probably going to be pushed off until sometime Friday.

Cash hog bids are expected to erode early Thursday morning with bids expected steady to $1 per cwt lower. Some additional market pressure is likely to develop through the end of the week due to lower packer processing schedules impacted by the weather. Most bids are expected to be steady to 50 cents per cwt lower through the morning. Futures are expected to draw additional market improvement as traders are attempting to build on the midweek market rally. This may spark some additional underlying activity in nearby contracts as traders try to bounce off of short-term lows over the next week.

BULL SIDE	BEAR SIDE
1) Sharp triple-digit gains, which flooded the market Wednesday, are likely to create additional follow-through support through all cattle trade. This may bring additional stability to the weak feeder cattle complex.	1) The latest round of winter storms that have moved through the Midwest and well into the Northeast, which has continued to reduce feed intake, and reduced if not eliminated, weight conversions. This is likely to delay market-ready cattle in many areas.
2)Beef values have gained momentum midweek with firm gains developing in choice and select cuts. This may add even more underlying support through the cattle complex through the end of the week.	2) Despite the strong midweek rally, feeder cattle futures continue to trade at the lowest level since May 2018 on the continuous month chart. The inability to hold December gains continues to add bearishness to the complex.
3)Packer interest remains extremely strong with an estimated 477,000 head sought once again Thursday with estimated Saturday runs expected to near 215,000 head.	3) Additional pressure keeps being added to pork cutout values as all primal cuts eroded Wednesday. The lack of follow-through support during the first half of the week may continue to erode overall buyer support in futures and cash markets.
4) April contracts continue to hold a strong $4 per cwt premium to spot-month February futures, helping to support cash market moves as cash market activity starts to move to the April contract month in the next couple of weeks.	4)Reduced packer activity due to the latest rounds of winter weather is expected to add even more weakness to the entire complex. This will back up market-ready hogs available to packers, likely reducing cash bids through the end of the week.

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Wednesday Closing Livestock Market Summary - Live Cattle Futures Follow Feeder Cattle Rally

GENERAL COMMENTS: The livestock trade saw wide swings early Wednesday. Renewed buyer support moved into the cattle trade, while market uncertainty continued to pressure hog trade. Triple-digit gains in feeder cattle futures were offset by similar losses in nearby lean hog futures. Cash cattle activity remains sluggish with just a few starter bids developing Wednesday at $122 per cwt in Kansas on a live basis, while limited dressed bids of $196 are seen in Nebraska. Asking prices are becoming more available at $126 and higher live and $200 dressed. Active trade is expected to be seen later in the week, potentially as late as Friday afternoon. According to the closing report, the national hog base is $0.40 higher ($48-$53.50, weighted average $52.49). Corn futures are mixed in light activity. March futures were 1/4 cent lower. Dow Jones Index is 171 points higher with Nasdaq up 5 points.

LIVE CATTLE: Live cattle futures followed feeder cattle higher, closing up $0.42 to $0.75. Market direction was limited with prices hovering at the top end of a moderate trading range. Futures have pulled back from contract highs. However, the April futures contract is still $2.50 per cwt above January lows and over $6 above support levels set in November. The tone of the market remains firm even though traders seem unwilling to step back into the market. Beef cut-outs: higher, up $0.32 (select, $212.04) to up $0.87 (choice, $217.21) with light demand and moderate to heavy offerings, 134 loads (64 loads of choice cuts, 20 loads of select cuts, 16 load of trimmings, 34 loads of coarse grinds).

THURSDAY'S CASH CATTLE CALL: Steady. Cash cattle markets are expected to limp into Thursday with little direction. Bids are likely to be re-established in the $122 live and $196 range Thursday morning, but are unlikely to gain much attention unless futures prices or beef values completely fall out of bed. Friday trade is a strong possibility given the lack of interest at this point.

FEEDER CATTLE: Feeder cattle futures closed $1.37 to $2.15 higher on strong buyer support. The moves were strictly reactionary, as buyers moved into the already oversold market, pushing prices off January lows posted Tuesday. The feeder cattle trade is trying to adjust to the strong support in live cattle and also to uncertainty over cattle placements. The lack of information due to the government shutdown has left traders trying to assess market conditions through early January. CME cash feeder index for 1/22 is $141.58, down $0.04.

LEAN HOGS: Lean hog futures fell $0.05 to $1.25 on growing long-term market uncertainty. Futures traded triple digits lower for most of the session, but the aggressive selling eased slightly at closing bell. This allowed nearby contracts to move above short-term support levels established last week. The April futures contract closed $1.25 per cwt lower at $64.85 per cwt. Traders remain concerned about ample pork supplies, especially later in the summer. Prices could hover near the lower end of their trading range through the near future. Pork cutout values continue to erode following moderate-to-firm pressure in all primal cuts. Pork cutout values fell $0.93 per cwt, moving to $68.70 per cwt on 334 loads. CME cash lean index for 1/21 is $58.33, up $0.26. DTN Projected lean index for 1/22: $58.58, up $0.25.

THURSDAY'S CASH HOG CALL: Steady to $1 lower. Firm pressure is expected to be seen in early bids Thursday morning, although most bids are expected to remain steady to weak. This may limit market movement as packers continue to secure needed hogs for scheduled plant runs. Thursday packer runs are expected to hit 480,000 head, with a Saturday scheduled run of 212,000 head.

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Wednesday Midday Livestock Market Summary - Hog Futures Erode

General Comments

Wide price shifts have quickly developed Wednesday morning following a quick turn lower in lean hog trade. This sparked additional liquidation, moving April futures nearly $2 per cwt lower. Feeder cattle futures are leading the cattle complex higher with March futures $2 per cwt higher in limited volume. Corn markets are mixed in light trade. March corn futures are 1/4 cent lower. Stock markets are lower in light trade. Dow Jones is 11 points lower with Nasdaq down 47 points.

LIVE CATTLE:

Sharp triple-digit gains in feeder cattle futures have quickly brought about renewed futures market trade as traders try to adjust to the renewed support developing in the last half of January. Although gains are moderate at best through the morning, there is increased focus on the ability to bring additional trade volume back to the table with traders covering short positions from Tuesday's trade. The focus on stable beef demand and higher feeder cattle prices is kindling additional buyer support through the market. Cash cattle interest is slowly improving through the morning following stability in futures trade. A few token bids have entered the market at $122 live basis in the South and $196 dressed basis. Asking prices have developed at $126 and higher live and $200 dressed. It is expected that cash business will not develop until later in the week, potentially Friday. Boxed Beef cut-outs at midday are mixed, $0.16 lower (select) and up $0.40 per cwt (choice) with moderate movement of 87 total loads reported (45 loads of choice cuts, 12 loads of select cuts, 9 loads of trimmings, 22 loads of ground beef).

FEEDER CATTLE:

Feeder cattle futures have quickly turned around with March contracts leading the renewed support as prices have surged $2.22 per cwt through morning trade. Although there still remains uncertainty concerning the overall direction cattle markets through early 2019, the potential to build on recent market lows and spark additional buyer activity through the entire market could bring about stability in the soft feeder cattle complex.

LEAN HOGS:

Sharp losses have quickly flooded through lean hog trade with triple digit losses seen from April through August contracts. April futures are sparking increased underlying weakness with contracts breaking through support levels seen last week, and sparking additional bearish market moves as traders focus on liquidation. With prices moving below $65 per cwt in April contract, additional late day pressure is likely. Cash prices are lower on the National Direct morning cash hog report. The weighted average price is down $0.03 at $52.06 per cwt with the range from $48.00 to $53.00 on 4,736 head reported sold. Cash prices lower on the Iowa/Minnesota Direct morning cash hog report. The weighted average price is down $0.41 at $51.88 per cwt with the range from $49.25 to $53.00 on 1,636 head reported sold. Pork carcass values are lower on the morning report with prices slipping $0.08 per cwt at $69.55 per cwt with 191 loads traded. Lean hog index for 1/21 is $58.33, up 0.26, with a projected two-day index is $58.58, up 0.25.

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Wednesday Morning Livestock Market Update - Early Morning Trade Adjustments Likely

GENERAL COMMENTS:

Cash cattle markets are expected to remain silent or nearly silent through most of the day Wednesday with packers not expected to quickly move into the market until later in the week. This could keep markets uncertain with cash trade potentially put off until sometime Friday once again. It is likely that asking prices may start by midday, although this is not expected to bring about any action. Initial trade in live cattle futures is expected to remain mixed with a combination of follow-through selling pressure and short-covering through the morning. Outside market shifts will once again play a significant role in overall direction of the market and participation by commercial and investment traders.

Cash markets are expected to remain mixed through most of the morning with prices 50 cents lower to $1 per cwt higher. Although most bids are expected steady by midweek. With another round of winter storms in the last day, there is expected to be some challenge getting hogs to plants through much of the Midwest. This is likely to limit packer runs the next couple of days. Futures trade is called mixed in a moderate range, although the ability to hold onto recent support levels is helping to spark additional commercial buyer activity through most of the complex.

BULL SIDE	BEAR SIDE
1) Firm beef demand continues to spark additional short-term support based on the expectation that meat demand may continue to remain firm through most of the winter and early spring months.	1) Sharp early-week losses has sparked additional bearishness through the entire cattle complex. This is likely to draw additional selling activity into the market midweek.
2) Even with the most recent market pressure in live cattle trade, futures prices remain in the top end of the trading range, at well above the 100 day moving average. This may help to spark some underlying support through the upcoming days.	2) Early cattle on feed estimates are looking for a reversal of last month's bullish market shift. With increased expected placements likely to be muddled with potentially delayed reports, limiting market support.
3)Summer market spreads continue to hold strong premiums with July contracts trading $20 per cwt above spot February contracts. This may spark some additional focus on long-term pork demand.	3) Strong pork belly losses quickly offset the potential of stable-to-firm pork values. Pork bellies fell nearly $10 per cwt Tuesday, derailing narrow-to-firm support in all other primal cuts.
4) Stability in nearby futures has helped to push prices off of recent support levels with February futures holding support at $60.67 per cwt. Traders may be able to spark additional underlying support through the next two weeks, establishing longer-term market gains.	4) With January weather showing much of the country what winter season is like, overall pork demand and product movement is expected to be hindered due to not only snow and ice in many locations, but cold weather not releasing its grip on a good portion of the country.

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