Friday Midday Livestock Market Summary - Light Trade Keeps Futures Weak Friday

GENERAL COMMENTS: 

Light to moderate pressure is seen in most livestock trade as cattle futures continue to erode due to concerns of additional pressure developing in the near future. Hog trade is focusing on end-of-week position squaring, as limited losses are seen Friday morning. Corn prices are steady to lower in light trade. March corn futures are 1/2 cent lower Friday. Stock markets are higher in light trade. The Dow Jones is 137 points higher while Nasdaq is up 59 points.

LIVE CATTLE:

Moderate to firm losses have quickly developed through the live cattle futures market. Traders are also focusing on the inability to bring additional volume to the market at the end of the week. Some late-day market shifts may continue to develop as traders focus on the upcoming cattle on feed report. This may add even more uncertainty to the complex and spark some early-week market shifts Monday morning. Cash cattle bids have developed at $128 live through the South and $202 dressed in the North through the morning. Although there may still be a few cattle needing to be sold, it appears that for the most part both sides seem comfortable with previous market activity. This could allow for markets to remain at current levels with activity next week focusing on end-of-month needs also. Boxed beef cut-outs at midday are mixed, $0.83 higher (select) and down $0.32 per cwt (choice) with light movement of 39 total loads reported (15 loads of choice cuts, 7 loads of select cuts, no loads of trimmings, 17 loads of ground beef).

FEEDER CATTLE:

Feeder cattle futures have traded moderately lower through most of the morning, although prices have tried to break out of the lower market moves. This could add even more softness to the complex over the near future, as traders continue to focus on increased activity through the next couple of days. March futures are unchanged in light midday trade as the potential for late-day support may move back into the market.

LEAN HOGS:

Light pressure is slowly trickling into the lean hog complex Friday morning following a strong market rally over the last two sessions. This overall support seen in the market has quickly pulled prices well off of recent lows, but traders are now starting to focus on end-of-week positioning, which could lead to increased volatility. The strength in the market continues to hold, but could draw additional buyer activity back to the market over the next week. Cash prices are lower on the National Direct morning cash hog report. The weighted average price is down $0.73 at $62.83 per cwt with the range from $57.00 to $63.75 on 3,252 head reported sold. Cash prices are lower on the Iowa/Minnesota Direct morning cash hog report. The weighted average price is down $0.52 at $63.19 per cwt with the range from $62.00 to $63.75 on 492 head reported sold. The National Pork Plant Report posted 135 loads selling with carcass values adding $0.77 per cwt. Lean hog index for 2/21 is at $70.17, down 0.61 with a projected two-day index of $69.78, down 0.39.

Friday Morning Livestock Market Update - Mixed Livestock Trade Expected

GENERAL COMMENTS:

Light trade activity is expected to be seen early Friday morning, although the tone of the market continues to be focused on the previous market pullback that may add even more softness to trade through the morning. There is also expected to be some pre-report positioning ahead of the cattle on feed report in both live cattle and feeder cattle trade. Cash markets appear to be well established with prices steady to $2 per cwt lower. It appears that more cattle will likely still need to be sold given the trickle of trade over the last few days. But unless something major is seen across the complex or in the cattle on feed report, prices appear to be set.

Additional buyer support is expected to be seen early in the session Friday, although the recent rally is expected to create some additional market adjustments with traders looking for increased market activity and the $3 per cwt market rally over the last couple of days. Cash hog prices are still expected to remain steady to weak with bids likely to be seen anywhere from steady to $1 per cwt lower through the morning. The rally in the futures trade has still not created a significant shift in packer spending as packers are still trying to control spending following previous margin pressure. Daily procurement levels are targeted at 451,000 head Friday with an estimated 134,000 head on Saturday.

	BULL SIDE		BEAR SIDE
1)	Light buying support moving into deferred live cattle futures trade Thursday helped to bring about a sense of stability in the market. This is likely to help create some additional price support and buying momentum at the end of the week.	1)	The pullback off of 2018 highs through the week in live cattle futures has created additional market pressure that is continuing to cause longer-term questions about just how much buyer support remains in the complex. With triple-digit losses seen once again in February contracts, the entire complex remains generally weak.
2)	Expected increases in cattle marketed in January on the upcoming cattle on feed report is expected to help support overall demand expectations not only short term, but through the upcoming spring and summer months.	2)	Increased cattle on feed numbers in the upcoming report which will be released Friday afternoon is expected. The current projection is that overall cattle on feed levels will increase 7% over 2017 levels, accounting for not only increased cattle available to the market, but also a steady string of 11 straight months of feedlot growth.
3)	Aggressive triple-digit rallies have changed the direction of the lean hog complex after testing long-term market lows over the last couple of weeks. This $3 rally in nearby contracts is helping to create expectations of additional long-term support.	3)	Cash hog prices are still unable to inch higher due to the consistent pressure by packers to limit spending activity and try to improve margins. This could continue to erode overall cash markets through the week and widen the spread between futures trade.
4)	Active packer movement through the week combined with moderate to strong weekend hog movements through plants continues to keep the supply chain well balanced and is limiting a backlog of hogs to build up due to the ability to aggressively move hogs and pork through the system.	4)	Pork values have been extremely slow to respond to the latest round of aggressive futures support. This is likely to help to draw additional activity into the market, but strong pork product increases may still not be able to develop.

Thursday Closing Livestock Market Summary - Strong Gains Developing in Hog Futures

GENERAL COMMENTS

Cash cattle trade has slowly trickled into the market over the past couple of days. Prices are seen once again at $128 live basis, steady with Wednesday's trade, but still $2 per cwt lower than last week. Dressed activity is slightly more defined with trade at $204 to $205 per cwt. This is steady to $1 per cwt lower than last week. It is expected that even though more trade may develop Friday, the tone of the market has been set at these price levels. There could be some additional market shifts in futures, but not a lot of direction is expected to cash trade. According to the closing report, the national hog base is $0.43 lower compared with the Prior Day settlement ($57-$64.25) weighted average $63.50. March corn futures were 1 cent higher in light trade activity Thursday. The Dow Jones Index is 164 points higher with the Nasdaq down 8 points.

LIVE CATTLE

Mixed trade developed in the last half of the trading day with early pressure giving way to narrow gains in deferred contracts ($0.22 higher to $1.30 lower). The underlying tone of the market remains extremely weak with front-month February futures holding triple-digit losses. But the inability to follow the aggressive pressure seen midweek is actually helping to stimulate some expectations that prices may bounce higher at the end of the week. Beef cut-outs: higher, $0.14 higher (select, $212.06) and up $1.03 (choice, $218.40) with light demand and offerings (70 loads of choice cuts, 12 loads of select cuts, 5 load of trimmings, 11 loads of coarse grinds).

FRIDAY'S CASH CATTLE CALL:

Steady with early week Trade. It is expected that some additional trade will develop Friday unless another round of activity is seen late Thursday afternoon or evening. But the tone of the market is likely to be set, with prices through the rest of the week likely to be seen at $128 live basis and $204 to $205 dressed.

FEEDER CATTLE:

Light-to-moderate pressure redeveloped in feeder cattle trade. This left prices looking for longer-term support, but unable to find a sense of stability Thursday ($0.27 to $1.02 lower). Moderate nearby contract weakness led the complex lower with April futures holding a $1.02-per-cwt loss. Even the expected stability in overall feeder cattle placements in January that likely will be seen in the Cattle on Feed report was unable to draw buyers back to the market. Deferred futures posted narrow losses, with the more intensive pressure reserved for nearby trade. CME cash feeder index for 2/21 is $148.05 up $0.06.

LEAN HOGS:

Strong gains redeveloped in lean hog futures as traders focused on follow-through pressure in the cattle trade, but pushed higher as follow-through buyer interest developed (0.47 to 1.37 higher). Triple-digit gains were seen at closing bell in all 2018 contracts as the overall support in the complex is helping to not only bring firm commercial buyer support back to the market, but is also helping to add even more strength to the lean hog complex. The moves helped to push prices above last week's highs, although the strong pressure in the market seems to be still limiting the buyer activity as prices remain well below short-term resistance levels. Narrow pressure was posted in pork prices with mixed primal moves seen Thursday. This could lead to additional end-of-the-market shifts through the complex. Pork cut-out: $78.70 down $0.03. CME cash lean index for 2/20 $70.78 down $0.63. DTN Projected lean index for 2/21 $70.17 down $0.61.

FRIDAY'S CASH HOG CALL:

Steady to $1 lower. Early morning cash market calls seem to be a broken record as of late. Even though futures trade has found renewed support, packers are able to continue to offer starting bids at steady to $1 per cwt lower. Most trade is expected to remain steady to weak early Friday, but the need to access weekend procurement levels is likely to help draw additional support. Processing schedules are expected to be 452,000 head Friday. Saturday runs are expected at 135,000 head.

Thursday Midday Livestock Market Summary - Additional Losses Sweep Through Cattle Trade

GENERAL COMMENTS: 

Follow-through pressure has continued to develop in cattle trade with the focus split between pressure developing in the cash cattle markets and additional weakness seen as prices reach technical tipping points. Hog trade is holding firm support Thursday. Corn prices are steady to higher in light trade. March corn futures are 3/4 cent higher Thursday. Stock markets are higher in light trade. The Dow Jones is 303 points higher while Nasdaq is up 45 points.

LIVE CATTLE:

Lower trade continues to be seen in most live cattle futures, although prices have been seen in a very wide range of movement through the morning. At midday prices range from $1.27 per cwt lower to 12 cents per cwt higher. The overall lack of buyer support seen in nearby contracts has caused widespread nearby market losses to redevelop. But deferred futures remain steady to slightly higher as the focus on lack of additional trade moving into the market may help to allow market firmness. There continues to be some additional longer term trade activity developing in the complex as traders are focusing on the ability to not only adjust prices, but stabilize open interest at the end of the week. Cash cattle trade is starting to slowly pick up in the North with dressed trade reported at $204 to $205 per cwt. These prices are steady to $1 per cwt lower than last week, and may be the trend for the week even though more activity is expected to develop before the end of the week. Live bids are being restated at $127 to $128 live basis. Prices of $128 per cwt were able to establish light sales activity Wednesday, but the overall uncertainty of the market may continue to limit trade at these levels. But packers continue to need cattle to keep chain speed active through the end of the month. Asking prices remain firm at $130 live basis and $205 dressed. Boxed beef cut-outs at midday are higher, $0.22 higher (select) and up $0.04 per cwt (choice) with light movement of 57 total loads reported (42 loads of choice cuts, 9 loads of select cuts, no loads of trimmings, 6 loads of ground beef).

FEEDER CATTLE:

Firm pressure is seen through feeder cattle futures once again Thursday. Even though markets have been contained to moderate losses through the morning, there is still an uneasiness surrounding the entire complex as prices seem to have a hard time finding any sense of short-term support. Prices are holding within a range of 30 to 60 cents per cwt lower as the overall lack of direction in the market continues to focus on increased market pressure and the late-month pullback from previous highs.

LEAN HOGS:

Firm follow-through support has quickly moved into the lean hog complex Thursday with prices 80 cents to $1 per cwt higher during most of the morning trade. Price levels have changed very little during the morning after initial position taking developed and increased volume was seen through the complex. The inability to move prices higher is focusing on the overall lack of new interest seen in the market, although prices have broken through last week's highs in search of additional underlying support. Cash prices are lower on the National Direct morning cash hog report. The weighted average price is down $0.57 at $63.36 per cwt with the range from $57.00 to $63.50 on 2,370 head reported sold. Cash prices are unreported due to confidentiality on the Iowa/Minnesota Direct morning cash hog report. The National Pork Plant Report posted 177 loads selling with carcass values adding $0.88 per cwt. Lean hog index for 2/20 is at $70.78, down 0.63 with a projected two-day index of $70.17, down 0.61.