Wednesday Midday Livestock Market Summary - Hog Futures Rally on Trade Hopes

General Comments

Hog futures have continued to surge higher with triple digit gains seen in most contracts. May futures are leading the market higher with $3.75 per cwt gains. Cattle markets are under moderate pressure focusing on pressure in feeder cattle trade. Corn futures are lower in light trade. May corn futures are 1 1/2 cents lower. Stock markets are mixed in light trade. Dow Jones is 102 points lower with Nasdaq up 2 points.

LIVE CATTLE:

Strong market losses have developed Wednesday morning while most of the attention has moved back to the escalating hog complex. This has not only moved the emphasis off of recent market support seen in March, but also tested short term support levels, as April contracts have continued to move below $126 per cwt while June futures have shifted below $119 per cwt with an 80 cent loss. The concern that beef values may continue to slowly erode or stay steady at best is creating pressure through the entire complex. Cash cattle are still untraded, but the fact that a few scattered bids have developed, and asking prices are seen is helping to move the process along Wednesday morning. Bids are seen at $124 in the South, while dressed bids in the North are seen at $203 to $204 per cwt. Asking prices remain at $127 to $128 live and $207 to $208 dressed. Boxed Beef cut-outs at midday are mixed, $0.54 higher (select) and down $0.23 per cwt (choice) with light movement of 72 total loads reported (44 loads of choice cuts, 12 loads of select cuts, no loads of trimmings, 17 loads of ground beef).

FEEDER CATTLE:

Strong underlying pressure is developing in feeder cattle trade with deferred futures holding triple-digit losses. There is expected to be some growing concerns about renewed support in grain trade which is adding to overall pressure in feeder and live cattle trade. Feeder cattle futures are not anywhere near short term support levels seen in March, allowing additional pressure due to the technical pressure in live cattle trade.

LEAN HOGS:

Follow through buying is seen Wednesday as traders focus on the potential that a trade deal is getting close ahead of the next round of talks taking place this week. May futures, despite being so lightly traded have posted expanded trading limits, moving to $3.60 per cwt late morning. Most other contracts remain $1.50 to $2.50 per cwt higher as traders expect increased sales to develop over the next few weeks to China. Cash prices are higher on the National Direct morning cash hog report. The weighted average price added $0.41 at $75.69 per cwt with the range from $67.00 to $78.00, on 5,736 head reported sold. Cash prices are unreported due to confidentiality on the Iowa/Minnesota Direct morning cash hog report. Pork values eroded during morning trade following the recent pressure in cash activity. Pork cutouts fell $0.40 per cwt at $81.31 per cwt with 156 loads traded. Lean hog index for 3/30 is $76.78 up 0.98, with a projected two-day index is $77.70 up $0.92.

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Wednesday Morning Livestock Market Summary - Hog Futures Building on Momentum

GENERAL COMMENTS:

Limited activity is expected early Wednesday with traders focusing on the lack of late-day support in feeder cattle on Tuesday. The focus in the livestock market will return to the actively-traded hog market, which is expected to have additional uncertainty. Sluggish support in beef values has caused traders to back away from long-term support, limiting upward market direction for April, which is curbing trade interest. Cash trade is undeveloped at this point, and likely to remain sluggish until late in the week. Packers may start to show a few bids during the day, but unless widespread futures selling develops, most feeders will not be willing to sell early this week, despite the early trade last week.

The market rally Tuesday increased interest in the entire complex. The limit gains at closing bell Tuesday in May and June futures opened the door for expanded trading limits through the entire session. This will allow additional market volatility as follow-through support is likely based on expected short- and long-term pork demand growth through the end of the year. Trade interest continues to be linked to expectations of potential trade deals with China and their need to replace production lost because of African swine fever. But as strong as expectations are that this demand will develop, it is hard to pinpoint just how much and how soon there will be active sales. This could add increased market swings to the entire complex. Cash hog trade is expected to be steady following the recent market pressure in early April. Expected slaughter Wednesday is at 477,000 head. Saturday runs are expected at 146,000 head.

	BULL SIDE		BEAR SIDE
1)	Comments from the USDA attache stated that African swine fever has bolstered demand for other meats, including beef. This could continue to stimulate export demand.	1)	Sharp losses in feeder cattle futures have limited trade support through the entire cattle complex. This is expected to create additional underlying pressure early Wednesday.
2)	April contracts continue to hold strong premiums to summer contracts, allowing increased interest in current beef values and potential cash market strength.	2)	Boxed beef values have continued to erode as traders focus on the lack of follow-through buying interest and the potential for additional strong support in the near future.
3)	Aggressive buying rekindled during early April, setting limit gains in nearby contracts. The active buying interest continues to focus on aggressive demand support potentially building through the end of the year.	3)	Despite strong futures trade, cash hog prices are slow to react following pressure early this week. This could limit packer buying in the next couple of days based on the short-term availability of market ready hogs.
4)	Expanded trading limits are available in all lean hog trade. This may help to spark additional underlying buying, with the potential to move nearby contracts to new contract highs.	4)	With so much market momentum built on rumors, hopes and expectations of further demand with China, there are still more questions than answers. This could add increased volatility to the market. As seen last week, prices have the potential to move lower, just as quickly as recent gains have developed.

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Tuesday Closing Livestock Market Summary - Lean Hog Futures Post Sharp Gains

GENERAL COMMENTS: Lean hog futures rose sharply Tuesday with limit gains seen in May and June contracts. Because of this, expanded trade limits will be in place Wednesday, allowing for potential additional support. Meanwhile, the feeder cattle market was under pressure late Tuesday. Cash cattle activity remained at a standstill Tuesday afternoon. Although this is not a shock to most market watchers, the lack of early week bids and asking prices following the midweek trade last week seems to indicate that both sides may be willing to wait out the other side. Both offers and asking prices are expected to develop over the next couple of days in all areas. The National Daily Direct afternoon hog report was $0.14 lower ($67-$77, weighted average $75.14) on 5,820 head sold. Corn futures were mixed in light-to-moderate trade with May down 1/4 cent. The Dow Jones Index was 79 points lower with the Nasdaq up 19 points.

LIVE CATTLE: Live cattle trade was mixed following weakness in feeder cattle. Futures closed $0.87 lower to $0.17 higher. Firm support early Tuesday quickly eroded as deferred contracts quickly followed feeder cattle contracts lower. Narrow gains remained in spring and summer contracts as traders continued to focus on firming demand expectations and the potential to rekindle buyer activity through the next several weeks. But a strong pullback in feeder cattle trade late Tuesday pulled most early buyers away from the complex. Limited volume was seen in deferred late-2019 contract months, but the weaker market tone could limit late-week support. Beef cut-outs: lower, down $0.84 (select, $218.49) to down $1.11 (choice, $225.73) with moderate demand and light offerings, 141 loads (107 loads of choice cuts, 15 loads of select cuts, 5 load of trimmings, 13 loads of coarse grinds).

WEDNESDAY'S CASH CATTLE CALL: Steady. Bids and asking prices remain quiet and will likely stay that way early Wednesday. Some interest is expected to develop midweek, but most trade may not develop until Thursday or Friday.

FEEDER CATTLE: Losses quickly developed Tuesday in the feeder cattle market. Futures settled $0.60 to $1.45 lower. Despite early mixed trade on spillover support from the hog trade early in the session, the feeder cattle market took on a weaker tone at midday. This sparked additional selling pressure in all contracts as most futures traded $1 to $1.45 per cwt lower, based on limited interest and firming feed prices. Nearby contracts still remain within the wide trading range that developed in March. This could allow wide market shifts without any significant technical signals developing over the next couple of weeks. CME cash feeder index for 3/30 is $142.50, up $0.08.

LEAN HOGS: Lean hog futures rose sharply Tuesday, closing $1.55 to $3.00 higher. Strong buyer interest moved back into the complex, as traders feel that, at some point, a trade deal will get signed between the U.S. and China and that losses due to African swine fever will stimulate more buying in the long term. May and June contracts posted triple-digit gains, which was enough to expand trading limits Wednesday. Pork cutout prices slipped as overall softness early in the week had an impact on most primal cuts. Pork cutout values fell $0.44 per cwt, moving to $81.71 per cwt on 355 loads. CME cash lean index for 3/29 is $75.80, up $1.92. DTN Projected lean index for 3/30 $76.78, up $0.98.

WEDNESDAY'S CASH HOG CALL: Steady. Despite the strong futures market rally, cash markets are still expected to remain generally steady midweek. The focus on recent market pressure is still causing some limited interest as packers are able to gain access to needed market ready hogs without increasing spending. Wednesday slaughter is expected at 477,000 head. Saturday runs are expected at 146,000 head.

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Tuesday Midday Livestock Market Summary - Active Hog Trade Sparks Interest

General Comments

Traders attention has quickly shifted to lean hog futures trade with most contracts are trading $2 to $3 per cwt based on continued expectations of strong pork demand through the rest of the year. Cattle futures are firming, due in part to spill over activity from hog markets. Corn futures are lower in light trade. May corn futures are 1 1/2 cent lower. Stock markets are mixed in light trade. Dow Jones is 102 points lower with Nasdaq up 2 points.

LIVE CATTLE:

Spillover support from the hog complex is helping to rekindle buyer activity in nearby contracts. April and June futures are leading the complex higher with 40-to-55-cent gains despite mixed moves in beef values. The focus on renewed short-term support has limited previous market pressure, as traders start focusing on underlying demand growth, and less emphasis on available cattle to the market. This could help to reestablish a wide trading range, which may contain the cattle market through most of April. Cash cattle interest is still quiet with bids and asking prices yet to be seen. Active trade is likely to be pushed to the last half of the week, although with packers remaining short bought and last week's early trade, it is possible that trade could be seen in the next couple of days. But if moderate gains hold in futures trade, both sides will likely wait as long as possible. Boxed Beef cut-outs at midday are mixed, $0.35 higher (select) and down $0.89 per cwt (choice) with light movement of 76 total loads reported (58 loads of choice cuts, 8 loads of select cuts, no loads of trimmings, 9 loads of ground beef).

FEEDER CATTLE:

Feeder cattle futures appear to be treading water Tuesday morning with most contracts mixed in a single-digit price range. April futures are holding a firm gain of 45 cents per cwt sparked by active support in nearby live cattle trade and aggressive hog market support. April feeder cattle seem to have been caught up in spillover buying activity, while the rest of the complex remains much more cautious Tuesday morning. The focus on potential long-term stability in live cattle trade is being tempered by overall lack of volume through the entire cattle market. This could keep prices moving higher and lower in a narrow range through the rest of the session.

LEAN HOGS:

Active gains seen early in the session Tuesday continue to hold with most contracts holding gains of $2 to $3 per cwt. At this point, deferred-month May 2020 contracts are the only contract trading limit higher, while most other futures are $2 to $2.50 per cwt higher. The stability seen Monday in the complex has helped to rekindle bullish fundamental support as traders quickly step into the market based on expected pork movement. There continue to be so many unknowns surrounding expected pork demand and export markets, but traders remain hopeful that U.S. pork will partially fill the void in Chinas demand needs due to African swine fever. Cash prices are lower on the National Direct morning cash hog report. The weighted average price fell $0.38 at $74.90 per cwt with the range from $68.00 to $77.00, on 2,960 head reported sold. Cash prices are unreported due to confidentiality on the Iowa/Minnesota Direct morning cash hog report. Pork values have started to quickly adjust higher once again with gains seen in all primals except rib and belly cuts. Pork cutouts gained $0.88 per cwt at $83.03 per cwt with 208 loads traded. Lean hog index for 3/29 is $75.80 up $1.92, with a projected two-day index is $76.70 up $0.98.

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