Thursday Morning Livestock Market Update - Traders Uncertain of Price Potential

GENERAL COMMENTS:

Pressure on feeder cattle was due to corn prices gaining strength as the day progressed. Live cattle closed lower as the market seems tired and will only trade once the strength of cash is seen. Traders do not seem interested in adding premium to the market. The market could be hanging in a balance Thursday with weekly export sales a potential factor in trading activity. Boxed beef prices were lower Wednesday with choice down $1.12 and select down $2.82. Export sales will need to be better than last week, or pressure may be put on the market. Whether these two things will have an impact on cash this week remains to be seen. Cash price cannot increase indefinitely, but strong demand and tighter supply may continue to support the market.

Hog futures have declined since the big jump over a week ago. Traders have not found confidence in underlying fundamentals. Maybe cash and cutouts are an indication the market is changing. However, one day or even a few days does not necessarily indicate a change. The National Direct Afternoon hog report showed cash up $1.59. Cutouts gained $1.16. Slaughter is lighter and there is speculation hog numbers may be tightening. However, the cash market will need to support that idea. Weekly exports sales will influence trade Thursday, along with potentially stronger trade based on Wednesday's afternoon pork reports.

	BULL SIDE		BEAR SIDE
1)	Packers are staring at having to pay more for cattle again this week as feedlots are looking for at least $1.00 to $2.00 higher.	1)	Live cattle futures in April and June have not been able to make new contract highs since the report last Friday.
2)	Feedlots feel confident holding cattle another week will net higher cash, which leaves them in the driver's seat for pricing. Cattle are current and, in some cases, lighter as they are being pulled forward.	2)	Higher corn futures overnight might keep pressure on feeder cattle with further liquidation after a volatile day yesterday.
3)	Strong cash and higher cutouts Wednesday may influence trading activity Thursday. There generally is a delayed reaction to the afternoon prices.	3)	Pork cutouts need to see higher prices again to provide some confidence demand is improving or futures could see further pressure.
4)	Strong export demand would keep packers more aggressive in the cash market from week to week.	4)	If packers are reducing slaughter to improve their margins, hogs may back up, resulting in more supply available to the market.

Wednesday Closing Livestock Market Update - Corn Finds Support and Sends Cattle Lower

GENERAL COMMENTS

The livestock contracts struggled to find support through Wednesday's end as the cattle contracts didn't like the strength that the nearby corn contracts gained ahead of closing, and the lean hog complex remains hesitant as demand has been touch and go. Hog prices closed higher on the Daily Direct Afternoon Hog Report, up $1.59 with a weighted average of $79.50 on 21,226 head. May corn is up 5 1/2 cents per bushel and May soybean meal is up $3.20. The Dow Jones Industrial Average is down 42.47 points.

LIVE CATTLE:

The live cattle complex closed mixed with just a few of the deferred months able to hang onto their gains ahead of the day's close. The market's lower descend stemmed from the corn complex gaining some modest support in its nearby contracts, but also from the fact that no cash cattle have traded yet and boxed beef prices closed lower. April live cattle closed $0.35 lower at $165.12, June live cattle closed $0.75 lower at $160.60 and August live cattle closed $0.57 lower at $159.67. The slight dip in boxed beef prices doesn't come as a surprise as box prices have held up far better than expected. Once the cash cattle market begins to trade, traders will likely see the support they need in order to justify higher trade again. A sole bid of $165 live and $265 dressed was offered throughout the day in Nebraska, but no feedlots jumped on it. Asking prices are noted in the South at $166-plus, but remain unestablished in the North. Trade could begin to develop as early as Thursday. 

Wednesday's slaughter is estimated at 126,000 head. steady with a week ago and 2,000 head more than a year ago.

Boxed beef prices closed lower: choice down $1.12 ($287.83) and select down $2.82 ($276.43) with a movement of 100 loads (71.61 loads of choice, 12.48 loads of select, 4.31 loads of trim and 11.17 loads of ground beef).

THURSDAY'S CATTLE CALL: $1.00 to $2.00 higher. Given that fed cattle supplies are as thin as they are, prices will likely be higher again this week.

FEEDER CATTLE:

Early in the day, the feeder cattle contracts jolted higher, believing it was going to be another day when corn prices ventured lower and feeders were going to be given an open market to run with. However, as the day got closer to the noon hour, the corn complex began to find strength and support in its nearby contracts and ultimately closed $0.03 to $0.11 higher in its nearby contracts. Nevertheless, the change in tone from the corn market abruptly sent feeders retreating and eventually to a lower close for the day. March feeders closed $1.50 lower at $188.30, April feeders closed $1.22 lower at $193.85 and May feeders closed $0.62 lower at $199.00. Demand wasn't weakened throughout the countryside as buyers continue to aggressively hit sale barns and procure both calves and feeders. At Winter Livestock Auction in La Junta, Colorado, compared to last week, steer calves under 650 pounds traded steady expect for those weighing 500 to 550 pounds as they traded mostly $3.00 to $5.00 higher, but there were instances of $10.00 higher. Steers weighing 650 to 700 pounds traded $2.00 to $3.00 higher, and those over 700 pounds sold steady to $1.00 higher. Heifer calves under 500 pounds sold steady, heifers weighing 500 to 600 pounds sold $3.00 to $5.00 higher, and heifers over 600 pounds sold steady to $1.00 higher. Feeder cattle supply over 600 pounds was 64%. The CME Feeder Cattle Index for Feb. 28: up $0.42, $183.04.

LEAN HOGS:

The lean hog complex closed lower as the market couldn't find the technical support it needed throughout Wednesday's market. On the bright side, pork cutout values did close higher, and cash prices closed higher too. The cash market saw a strong movement of 21,226 head traded with a $1.59 advancement on top of Tuesday's cash price to move the weighted average to $79.50. Pork cutout values also saw steady gains across nearly all the cuts as the ham was the only cut that dropped lower and it was only by a mere $0.09. Nevertheless, come Thursday, the market may be able to trade slightly higher technically as the market saw strong fundamental through Wednesday's close, especially if the market gets a strong export report. April lean hog closed $0.22 lower at $84.95, June lean hogs closed $0.92 lower at $100.80 and July lean hogs closed $1.02 lower at $103.07. Pork cutouts totaled 261.13 loads with 237.26 loads of pork cuts and 23.87 loads of trim. Pork cutout values: up $1.16, $85.52. Wednesday's slaughter is estimated at 468,000 head, 59,000 head more than a week ago and 13,000 head less than a year ago. The CME Lean Hog Index for Feb. 27: up $0.29, $78.51.

THURSDAY'S HOG CALL: Lower. Given that Wednesday's market saw such a big volume traded, it's not likely that packers will show much more interest on Thursday in the cash market.

Wednesday Midday Livestock Market Summary - Stabilizing Corn Prices Sends Cattle Lower

GENERAL COMMENTS:

The livestock complex is trading mostly lower Wednesday afternoon as the market notes the stability that corn prices are finding and longs to see some developments in the cash cattle market. Depending on how Thursday's export report goes, the markets could find support there. May corn is down 3/4 cent per bushel and May soybean meal is up $1.60. The Dow Jones Industrial Average is up 44.40 points.

LIVE CATTLE:

Upon seeing the corn complex level out and trade steadily mixed, and with lower boxed beef prices, the live cattle contracts have gone from trading higher at the day's start to now trading lower into Wednesday's afternoon. Neither of these changes (weaker beef prices or the contracts' reaction) is surprising as we knew that, at some point, boxed beef prices had to level out or correct, and without any new developments in the cash market, traders were likely to take the news negatively. April live cattle are down $0.57 at $164.90, June live cattle are down $0.90 at $160.45 and August live cattle are down $0.75 at $159.50. It's still unlikely that any cash cattle trade develops Wednesday as feedlot managers will likely push the week's trade out until Thursday or Friday in hopes of getting higher prices. Asking prices are noted around $166-plus in the South but are still unestablished in the North.

Boxed beef prices are lower: choice down $0.37 ($288.58) and select down $2.93 ($276.32) with a movement of 61 loads (44.34 loads of choice, 5.39 loads of select, 2.91 loads of trim and 8.70 loads of ground beef).

FEEDER CATTLE:

The feeder cattle contracts really tested the waters Wednesday morning and attempted to trade sharply higher, but as the corn complex gained footing in Wednesday's market, the feeder cattle contracts had to react. March feeders are down $1.27 at $188.52, April feeders are down $0.97 at $194.10 and May feeders are down $0.72 at $198.90. It's unlikely that the slight change in corn prices will negatively affect feeder cattle sales Wednesday afternoon as demand is still high and supplies are thin for both feeders and calves.

LEAN HOGS:

The lean hog complex would love to catch a break, but unfortunately the market's lower tones have continued into Wednesday's hours. April lean hogs are down $0.50 at $84.67, June lean hogs are down $1.05 at $100.67 and July lean hogs are down $1.10 at $103.02. It will be interesting to see how both cash prices and cutout values close Wednesday afternoon. Pork enthusiasts are hoping that, with poultry and beef prices the way they are, more consumers will step over to the pork side of the coolers and begin to purchase more of their family meals with pork cuts in mind.

The projected lean hog index for Feb. 28 is up $0.07 at $78.58, and the actual index for Feb. 27 is up $0.29 at $78.15. Hog prices are unavailable on the Daily Direct Morning Hog Report due to packer submission issues. Pork cutouts total 145.12 loads with 133.42 loads of pork cuts and 11.70 loads of trim. Pork cutout values: up $1.28, $85.64.

Wednesday Morning Livestock Market Update - Cattle Traders Wait for Cash

GENERAL COMMENTS:

The cattle complex was again supported by lower corn prices. Live cattle did not push to new contract highs with March feeder cattle posting the highest close since Aug. 22, 2022, and nearing the contract high. Later contracts continue to post new contract highs. Feeder cattle have been in demand with strong prices being paid at auctions. Live cattle did not see any cash trade Tuesday with early asking prices indicating feedlots want at least $1.00 to $2.00 more. February live cattle saw an impressive gain of $2.50 into the close of the contract. April is now front-month with a $2.00 discount to where February left the board. Boxed beef showed choice up $0.61 and select unchanged from the previous day.

Hogs struggled throughout the day with April and May finally closing higher. Traders were waiting for cash and cutouts for direction but did not find anything solid enough to buy into the market. Packers bought a good number of hogs Tuesday but did not have to pay up to get them. The National Direct Afternoon Hog report showed cash down $0.11. Even though it was a minimal drop in price, it was enough to limit trader interest. Cutouts declined $1.58 keeping any bullish attitude at bay. Demand needs to improve, or the market could flounder Wednesday.

	BULL SIDE		BEAR SIDE
1)	April live cattle took over as front-month with a $2.00 discount to where February went of the board. Higher cash this week may push the market to new highs.	1)	Feeder cattle are at lofty levels with futures overbought technically. This could trigger some liquidation.
2)	March feeder cattle are poised to close the chart gap from Aug. 22, 2022, and then challenge the contract high.	2)	Live cattle futures have not been able to make new highs after the Cattle on Feed report, which could indicate the market might be running out of steam.
3)	Cash hogs were down slightly, but considering the amount of hogs purchased, the market held well.	3)	Hogs showed lower cutouts Tuesday, leaving traders searching for fundamental support from better demand.
4)	If hog futures find some support here, it could point to a positive technical picture and generate some buying interest.	4)	Fund traders are short the hog market and see no reason to cover those short positions leaving price rallies short-lived.