Thursday Morning Livestock Market Update - Pressure Likely During Morning Trade

GENERAL COMMENTS:

Packer interest is expected to develop through the day with bids becoming more available as the day continues. Even with more bids, the wide gap between previous bids and asking prices is unlikely to gain much attention. Packers have gone into the week short-bought once again, but trade may easily be delayed until sometime Friday. Live cattle futures are expected mixed to mostly lower in initial trade as the limited pressure developing midweek is causing some additional weakness through the entire complex. Contracts remain well entrenched in the narrow but well defined trading range seen in the last two weeks. This is likely to keep markets contained for the near future, unless additional market shifts develop.

Cash hog markets are scheduled to remain steady to $1 per cwt lower Thursday with most bids expected steady to weak. Renewed winter weather conditions are moving through some areas once again, leaving hog transportation a challenge for the third week in a row. Overall plant operations are not expected to be as hampered as last week, but could still face delays the rest of the week. Futures trade is expected weaker with little market support in nearby contracts Wednesday, sparking underlying market pressure and causing many traders to refocus on growing supply levels. Even though prices may erode early Thursday, the potential for short-covering is quickly developing, allowing for increased market shifts through the end of the week. Slaughter runs are expected at 477,000 head Thursday. Saturday runs are expected near 214,000 head.

BULL SIDE	BEAR SIDE
1) Feeders have continued to aggressively hold to elevated asking prices of $126 to $127 live and $200 to $203 per cwt. The expectation is that cash market trade will continue to firm up through the end of the week based on growing packer needs.	1) Beef cutout values continue to show limited life during the first full week of February. Even though beef demand is expected to remain firm, beef values are slow to shift higher on lack of consistent buying activity.
2)Live cattle futures continue to hold in a generally stable price pattern despite the midweek pressure. The ability to regain buyer activity through the next two days, may bring bullish market shifts back to the complex.	2)Another round of cold and snowy winter weather is moving through cattle country. This is creating additional challenges with weight gain as well as causing transportation headaches for producers and packers alike.
3)The hopes of a developing trade deal with China continues to create optimism through the entire hog complex. Although there is no sign that anything is close to developing, any deal will support hog prices.	3) Continued aggressive pressure has developed in pork cutout values with firm losses in loin values and most primal cuts posting triple-digit losses. The inability to maintain active product movement is expected to further weaken the entire complex.
4) Strong market premiums continue to hold in late summer contracts with July and August contracts trading $18 to $19 per cwt above April futures. The expectation that hog supplies will slowly erode through the next few weeks going into spring and summer is likely to limit long-term pressure.	4) Despite remaining lightly traded, the February lean hog futures contracts have posted moderate pressure through the week. This moved prices below $56 per cwt, and broke through recent lows, causing additional bearish market trends to develop through the contract month.

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Wednesday Closing Livestock Market Summary - Livestock Futures Pressured in Sluggish Trade

GENERAL COMMENTS: Firm pressure developed late Wednesday in most livestock markets with nearby cattle and hog futures closing down 40 to 70 cents. Little has changed either technically or fundamentally in either of these markets, and futures continue to erode following the early week rally. The fact that commercial buying support has not stepped back into the market through the last two days is concerning. Prices could erode further, taking out early week gains. Cash cattle trade was undeveloped Wednesday with limited bids in the South at $121 per cwt. Dressed bids remain undeveloped at this point. Asking prices have become more available as feedlot managers are pricing cattle at $126 to $127 per cwt live and $200 to $203 dressed. Active trade is not likely until late Thursday or, more likely, sometime Friday. The National Daily Direct afternoon hog report was $0.43 lower ($45-$50.60 per cwt, weighted average $49.77) on 7,094 head sold. Corn futures were lower in light activity with the March futures contract down 3/4 cent. The Dow Jones Index was 21 points lower with Nasdaq down 26 points.

LIVE CATTLE: Early support in live cattle futures slowly trickled away Wednesday with nearby contract posting moderate losses. Futures ended the session $0.47 lower to $0.05 higher. A lack of market direction and the inability to sustain buying activity day after day is weighing on the live cattle market. The combination of firm pressure redeveloping in feeder cattle trade and concerns that wholesale beef values may not be able to push steadily higher through the end of the week has started to pull prices back from early week gains. Beef cut-outs: mixed, $0.73 lower (select, $212.37) to up $0.55 (choice, $217.57) with good demand and light offerings on 112 loads (59 loads of choice cuts, 18 loads of select cuts, 5 load of trimmings, 30 loads of coarse grinds).

THURSDAY'S CASH CATTLE CALL: Steady. Asking prices have started to develop and will continue to be offered early Thursday morning. Cattle are priced at $126 to $127 live and $200 and higher dressed. Bids are expected to be limited early Thursday, but should improve as the day continues.

FEEDER CATTLE: Firm pressure developed late Wednesday, pushing futures to close $0.17 to $0.65 lower. Pressure continued to move back into the market following mixed trade through the first half of the session. The lack of follow-through buying is causing some growing concerns that Monday's market surge may not be able to shift the trend higher. March and April futures led the complex lower, falling 65 and 60 cents per cwt, respectively, as limited outside market direction kept traders subdued. CME cash feeder index for 2/5 is $141.53, down $0.01.

LEAN HOGS: Nearby lean hog contracts saw losses of 50 to 70 cents in mixed trade. Overall, futures closed $0.70 lower to $0.15 higher. The strong surge in futures Monday sparked momentum, but so far, that momentum has been short-lived as traders face the reality that strong supplies and uncertain demand is hard to overcome, no matter how oversold the market remains. Pork cutouts saw light losses as strong gains in bellies were offset by moderate-to-strong pressure in other primals. Pork cutout values fell $0.61 per cwt, moving to $65.61 per cwt on 374 loads. CME cash lean index for 2/4 is $57.36, down $0.05. DTN Projected lean index for 2/5 $57.16, down $0.20.

THURSDAY'S CASH HOG CALL: Steady to $1 lower. Another round of winter weather is seen through much of the country. Although temps and snowfall are not expected to be as drastic as they were the last couple of weeks, transportation issues may limit procurement numbers. Bids are expected to be steady to $1 per cwt lower, although most bids are likely to once again be seen steady to weak. Thursday slaughter is expected to hit to 477,000 head. Saturday runs are pegged at 214,000 head.

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Wednesday Midday Livestock Market Summary - Limited Activity Keeps Prices Mixed

General Comments

Lean hog trade is stuck in a narrow range following the lack of follow-through selling activity Wednesday morning. This is keeping prices stable despite the late morning pullback in cattle trade. Early support in live cattle futures has eroded, although volume remains very light through the entire complex. Corn markets are lower in light trade. March corn futures are 3/4 cent lower. Stock markets are lower in light trade. Dow Jones is 20 points lower with Nasdaq down 19 points.

LIVE CATTLE:

Light volume is seen through the morning Wednesday, which is allowing traders to focus very little on long-term market direction and adjust positions through the morning. Early gains developed across the complex, but this created some additional late-morning pressure as buyer orders were quickly filled, allowing a vacuum to push prices lower. Nearby contracts are holding 40-to-50-cent losses, while the rest of the market is contained to 12-to-17-cent losses. It is likely that additional narrow market shifts will develop through the end of the session with traders still comfortable with price levels hovering in the top end of the current market range. Cash cattle activity remains undeveloped Tuesday with bids and asking prices unavailable. It is expected that most trade will be pushed to the last half of the week. Feedlot managers are slow to float asking prices as the supportive moves in futures trade is likely to firm market prices as the week continues. Boxed Beef cut-outs at midday are mixed, $0.10 lower (select) and up $0.62 per cwt (choice) with light movement of 63 total loads reported (32 loads of choice cuts, 9 loads of select cuts, no loads of trimmings, 22 loads of ground beef).

FEEDER CATTLE:

Light pressure has slowly but steadily moved into feeder cattle trade late Wednesday morning. This has allowed for increased but consistent pressure in all nearby contracts with feeder cattle futures holding 50-to-60-cent losses in all contracts through November. Limited buying support has trickled into the soybean complex through the morning, but underlying pressure in feeder cattle trade continues to focus on moderate supplies of cattle throughout the market.

LEAN HOGS:

Limited buyer support slowly trickled into lean hog futures Wednesday morning as limited direction and light volume continue to be seen through the entire complex. Traders are looking for additional direction in cash and pork markets through the week, although limited activity early in the day may keep most traders searching for information from the afternoon reports. Summer contracts are holding steady to limited gains, which is offsetting narrow losses. The combination of limited activity and direction in most outside markets is keeping trade uneventful in hog futures. Cash prices are unreported due to confidentiality on the National Direct morning cash hog report. Cash prices are unreported due to confidentiality on the Iowa/Minnesota Direct morning cash hog report. Pork carcass values are lower on the morning report with prices sliding $1.63 per cwt at $64 per cwt with 216 loads traded. Lean hog index for 2/4 is $57.36, down $0.05, with a projected two-day index is $57.16, down $0.20.

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Wednesday Morning Livestock Market Summary - Limited Direction Expected Midweek

GENERAL COMMENTS:

Cash cattle trade is expected to remain generally undeveloped through the day with asking prices likely to be more available as the day goes along. Although cash cattle trade is not expected to be active until sometime Thursday or Friday, bids may develop midweek. Futures trade is expected to remain mixed to mostly higher with firm support, which has developed in live cattle trade through the week is helping to bring some additional market stability to the entire complex. Feeder cattle trade will continue to be heavily influenced by the movement in grain trade, based on overall production costs associated with feed costs.

Cash hog bids are expected to once again fit into the typical range in hog markets with early bids steady to $1 per cwt lower. Most bids are expected 50 cents lower early in the morning as packers continue to gather needed hogs without digging deeper into their pockets. Futures trade is expected to bounce higher through the morning as short-covering after Tuesday's market pressure will allow for light to moderate upward market shifts without significant resistance. The firmer tone early in the week is still helping to solidify longer-term direction, as buyers look for opportunities to steadily reenter the complex. Slaughter runs are expected at 477,000 head Wednesday. Saturday runs are expected near 214,000 head.

BULL SIDE	BEAR SIDE
1) Live cattle futures have continued to steadily shift higher through the week. This is allowing many traders and market watchers to expect potential contract highs once again in nearby trade. The underlying support and expectations may bring additional commercial interest back into the market.	1) Market pressure in feeder cattle trade most of Tuesday has quickly moved the focus away from strong market shifts higher and into what could become a more volatile and choppy market structure through the month of February.
2)Limited movement in grain trade the last several days has helped to sustain additional buyer activity in feeder cattle this week. Despite soybean buying activity from China, soybean markets have struggled to develop support. This is expected to continue to drive buyers into feeder cattle trade through the near future.	2)Beef values have struggled to show consistent market support during early February. This is creating some underlying concerns that market depth may be limited and could create some bearish sediment moving into the entire complex.
3)With nearby lean hog futures well off of recent support levels, the expectation is that additional commercial buyer support will continue to develop in the next few trading sessions. The upside of the market remains very unrestricted technically, as traders continue to focus on uncertain fundamental long-term demand.	3) Sharp triple-digit losses in pork cutout values Tuesday have brought the overall hog market back to reality following the early-week surge in futures prices. Overall growing supply levels may continue to limit pork values in the near future.
4) With African swine fever continuing to be a threat to China's hog supply, there remains hope and growing expectations that the U.S. pork market will have to eventually fill a portion of that gap as the demand for pork in China is not expected to decrease.	4) Wide triple-digit price swings through the week have set up the potential for increased market volatility. This could create challenges in rebuilding market support and sustaining continued futures gains.

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