GENERAL COMMENTS:
Feeder cattle futures quickly led the cattle market for another day of sharp losses as midweek buyer support was unable to be sustained. Traders continue to focus on any fear of tariff announcements and allowing Mexican cattle to reenter the US market. The volatility in the market continues to be the main driver of both live cattle and feeder cattle prices with markets quickly eroding from last week's highs and trying to reestablish any sense of market support at current prices. Hog futures were steady to fractionally higher in limited trade Thursday. Hog prices closed lower on the Daily Direct Afternoon hog report, down $0.48 with a weighted average of $86.23 on 1,502 hogs. March corn closed up 2 at $4.953 and March soybean meal closed down $1.90 at $306.4. The Dow Jones Industrial Average is down 125.65 at 44,747.63.
LIVE CATTLE:
Live cattle prices followed the feeder cattle market lower as traders quickly erased any midweek support that developed across the complex. February futures hovered above $200 per cwt with a $2.97 per cwt loss, although April and June futures closed with more aggressive losses, falling $4 to $4.50 per cwt lower during the session. April futures have now fallen over $10 per cwt from last week's highs and have now moved to the 40-day moving average. This move is expected to be viewed as technically bearish for the live cattle complex which has been on an active upward price shift over the past two months. The inability to stabilize prices at these levels is expected to spark further market liquidation in the coming days. Fundamentally, the market should resist additional aggressive losses, but technical momentum seems to be the main driver of this market at this point. Cash cattle markets have seen some light trade reported in the South at $206, about $2 lower than last week's weighted averages. Some asking prices remain firm around $208 in the South and $329-plus in the North. Yesterday a light scattered trade was reported in parts of the North with dressed deals at mostly $238, $1 lower than the prior week's weighted average. A few live deals were reported in Kansas at mostly $205. That is about $3 lower than the previous week's weighted average. It is expected that additional trade will still develop before the end of the week, but the direction of early-day beef values and movement on the futures trade could have a significant impact on additional cash trade volume and price movement. February live cattle closed $3.00 higher at $200.05 February live cattle closed $2.98 lower at $200.625, April live cattle closed $4.53 lower at $196.775 and June live cattle closed $4.08 lower at $191.825.
Thursday's slaughter is estimated at 118,000 head, 4,000 head less than a week ago and 5,000 head less than a year ago.
Boxed beef prices closed mixed: choice down $1.36 ($323.98) and select up $0.44 ($314.77) with a movement of 113.71 loads (68.93 loads of choice, 23.31 loads of select, 9.45 loads of trim and 12.02 loads of ground beef).
FRIDAY'S CATTLE CALL: Steady. Additional cash cattle trade is expected to be seen Friday. With the limited trade reported Thursday at generally $2 per cwt lower than last week, additional price moves may start steady with the trade already developed for the week. This would be generally $2 to $3 per cwt lower than last week's levels. However, movement in futures trade and beef values will likely heavily impact cash trade direction and activity levels at the end of the week.
FEEDER CATTLE:
Feeder cattle futures quickly gave back any support seen over the past couple of days with prices hovering from $5 to $6 per cwt lower in nearby contracts through most of the session. Traders remain extremely cautious of not only import and export concerns but given the aggressive and decisive shift lower from all-time highs seen last week, traders are concerned that technical market factors have quickly changed despite the fundamental support that still remains through the market. Traders are now having to wait to see what cash and beef prices will do in the coming days, which will help to get a better sense if this panic selling has been overdone or is the beginning of additional longer-term concerns. Traders will closely monitor both early morning trade Friday as well as closing prices Friday as they will then have the opportunity to digest the volatile shift over the weekend. March feeders closed $5.43 lower at $265.3, April feeders closed $5.48 lower at $265 and May feeders closed $5.10 lower at $263.7. The CME Feeder Cattle Index for February 4: down $1.39, $277.64.
LEAN HOGS:
Lean hog futures quickly stabilized Thursday following additional price volatility in the cattle complex. Spot February futures were trading within a single-digit range most of the session but closed unchanged. Other nearby contracts posted steady to 20-cent gains, but given the wild market moves over the last week, this seems to indicate general market inactivity. Lean hog futures have bounced back from early week losses, but the concern of how overall demand and long-term export markets will react long-term is still keeping traders on edge. February lean hogs closed steady, April lean hogs closed $0.20 higher at $91.75 and May lean hogs closed $0.10 higher at $95.825. Thursday's hog slaughter is estimated at 481,000 head, 2,000 head less than a week ago and 11,000 head less than a year ago. Pork Cutouts totaled 248.34 loads with 200.75 loads of pork cuts and 47.59 loads of trim. Pork cutout values are up $1.81 at $95.64. The CME Lean Hog Index for February 4: up $0.52, $84.60.
FRIDAY'S HOG CALL: Steady. Early cash hog bids are expected to be generally steady Friday morning. The stability in futures trade despite wild moves in cattle markets and moderate shifts in pork values could limit any downward pressure of initial cash bids.
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