Wednesday, March 27, 2019

Wednesday Closing Livestock Market Summary - Cattle Futures Slide Lower

GENERAL COMMENTS: The April lean hog futures contract surged higher Wednesday on continued support in cash hogs. The rest of the livestock complex remained generally weak on outside market weakness. Cash cattle trade quickly developed Wednesday morning with Southern deals struck at $126 per cwt live. With prices falling $2 per cwt lower from week-ago levels, additional dressed trade started to develop early afternoon Wednesday at $206 to $207. Most trade was seen at $206, which is $2 per cwt lower than last week. Although additional trade may continue to develop through the rest of the week, the tone of the market is already set, likely inking prices for the week at current levels. The National Daily Direct afternoon hog report was $1.87 higher ($64-$80, weighted average $74.92) on 10,605 head sold. Corn futures were lower in light activity with the May down 3 1/2 cents per bushel. The Dow Jones Index was 32 points lower with the Nasdaq down 48 points.

LIVE CATTLE: Live cattle futures settled $0.20 to $1.12 lower. Sharp losses quickly developed across all live cattle trade Wednesday with the June contract leading the complex lower. The summer contracts posted the most significant losses, nearing $1 per cwt. The combination of widespread outside market losses and the spot April futures contract breaking through short-term support levels sparked technical pressure through all nearby contracts. This could lead to increased end-of-the-week liquidation through nearby futures trade. Beef cut-outs: mixed, up $1.54 (select, $220.53) to down $0.52 (choice, $228.99) with light demand and moderate to heavy offerings of 157 loads (99 loads of choice cuts, 12 loads of select cuts, 17 load of trimmings, 30 loads of coarse grinds).

THURSDAY'S CASH CATTLE CALL: $2 lower. The courtship of bids and asking prices was extremely short this week with light-to-moderate trade developing quickly Wednesday. Follow-through interest is expected to be seen early Thursday, although the tone of the market is likely to be set following midweek trade.

FEEDER CATTLE: Feeder cattle futures ended mixed ($0.62 lower to $0.10 higher) as traders focused on outside market pressure. Feeder cattle is the one livestock market that continues to have mixed reactions to outside market pressure, including losses in nearly all commodity markets, energy trade and the stock market. Nearby futures followed the rest of the complex lower as traders continue to remain concerned about the ability to spark follow-through buying as losses developed in live cattle trade. But limited buying trickled into deferred summer and fall feeder cattle futures as traders took into account lower grain prices. This lowers overall production costs for feeding cattle, allowing for increased margin available for feeder cattle prices. CME cash feeder index for 3/26 is $142.15 up $0.11.

LEAN HOGS: Early pressure eased as buyers returned to the lean hogs complex, leading to a mixed close ($0.52 lower to $1.60 higher). Strong gains quickly moved into nearby lean hog trade with the April contract leading the complex higher following support in cash trade. The rest of the complex was less convinced, as triple-digit losses held for most of the session as profit-taking developed. Even though the long-term focus is on expanded domestic pork demand and growing exports, the short-term support in cash trade is leading spot-month contracts higher. Mixed primal values limited pork price gains. The firmness continues, but is much less aggressive. Pork cutout values were up $0.56 per cwt, moving to $81.63 per cwt on 320 loads. CME cash lean index for 3/25 is $67.13, up $2.16. DTN Projected lean index for 3/26: $69.50, up $2.37.


THURSDAY'S CASH HOG CALL: Steady to $2 higher. Strong buyer support is expected to develop through the rest of the week. Most bids are expected to develop $1 per cwt higher, but the range of the market is likely to remain wide. Thursday slaughter is expected at 477,000 head. Saturday runs are expected at 146,000 head.

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