Friday Closing Livestock Market Summary - Uncertainty Sweeps Through Hog Trade

GENERAL COMMENTS: Livestock futures traded in a wide range Friday. Lean hogs futures moved from early limit gains to aggressive losses through the morning, but stability returned Friday afternoon and prices settled mixed at closing bell. Cattle markets were also affected by the volatility in lean hogs. From Friday to Friday, livestock futures scored the following changes: Apr LC up $0.63; Jun LC up $1.58; Mar FC up $1.68; Apr FC up $1.88; Apr LH up $9.53; May LH up $9.13. Cash cattle trade started to slowly develop Friday with trade extending into late afternoon and potentially Friday evening. The cash trade that has developed so far is seen at $128 to $129 live basis, which is $1 to $2 per cwt higher than last week. Dressed trade developed at $208 through the north, which is $4 per cwt higher than week-ago levels. The National Daily Direct afternoon hog report was $3.29 higher ($56-$71.50, weighted average $66.44) on 6,234 head sold. Corn futures were higher in light activity with May up 2 cents per bushel. The Dow Jones Index is 460 points lower with the Nasdaq down 196 points.

LIVE CATTLE: Narrowly mixed trade left cattle markets directionless Friday ($0.40 lower to $0.40 higher). Live cattle trade struggled to find any sense of market support despite initial market gains through the complex. The lack of underlying support in beef values listed in the morning report as well as general shift in hog market direction seemed to cause most traders to hunker down and focus on market stability through the end of the week. Beef cut-outs: mixed, $0.27 higher (select, $218.64) and down $0.22 (choice, $229.09) with light demand and light to moderate offerings, 72 loads (43 loads of choice cuts, 8 loads of select cuts, 8 load of trimmings, 13 loads of coarse grinds).

MONDAY'S CASH CATTLE CALL: Steady. Packers and feeders will start over Monday morning following late-day trade Friday, which pushed cash markets higher. Monday's session will be focusing on showlist distribution and inventory-taking.

FEEDER CATTLE: Early support in feeder cattle gave way to a mixed close ($0.12 lower to $1.42 higher). Nearby contracts were narrowly mixed with limited interest developing through the entire complex. The USDA Cattle on Feed report, released following the market close, is expected to limit support early next week following cattle placement levels of 102%, which was 6% above early estimates. CME cash feeder index for 3/21 is $141.02, up $1.90

LEAN HOGS: Wide price shifts left hog markets vulnerable and will likely lead to further uncertainty next week. Futures closed $1.35 lower to $1.07 higher. Sharp gains developed early Friday, as traders took advantage of another day of expanded trading limits. But once initial buying slowed, pressure quickly developed, resulting in several summer contracts traded in a $6.50- to $7-per-cwt range during the session. This may be the widest one-day market shift in the lean hog complex since expanded limits were introduced. Light buying trickled into the market late in the session, leaving futures mixed, but avoiding a disastrous meltdown at the end of the week. Continued price support moved into wholesale pork values with triple-digit gains seen in most primal cuts. Pork cutout values added $1.54 per cwt, moving to $77.79 per cwt, on 336 loads. CME cash lean index for 3/20 is $60.75, up $1.53. DTN Projected lean index for 3/21 $62.41, up $1.66.

MONDAY'S CASH HOG CALL: Steady to $2. Firm follow-through support is expected to develop early next week despite the pullback in futures at the end of the week. Monday slaughter is expected at 477,000 head.

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Friday Midday Livestock Market Summary - Selling Develops in Hog Futures

General Comments

Wide-ranging price swings swept through hog markets Friday with initial strong gains quickly replaced by aggressive morning losses. The volatility in the complex may continue through the end of the session given traders trying to adjust positions at the end of the week. This volatility led to strong market shifts in cattle trade midday Friday. Corn futures are higher in sluggish trade, but have given back most of the early gains. May corn futures are 3/4 cent higher. Stock markets are lower in light trade. Dow Jones is 358 points lower with Nasdaq down 152 points.

LIVE CATTLE:

Narrow losses have trickled into live cattle trade as buyers seem to be caught off guard by the sharp turnaround in hog trade. The momentum of this shift has little impact on beef market fundamentals, but the entire livestock market has been so emotionally charged by the recent surge in hog trade, that any break from this pattern will impact all livestock futures. Mixed trade is seen at midday, with nearby contracts 30 to 60 cents lower, while deferred trade has stabilized with a 5 cent gain. Cash cattle interest is slowly improving with live bids of $126 per cwt seen in all areas through the morning. These bids are at the same price levels as seen earlier in the week, and unlikely to get any attention from feeders at this point. Dressed bids have yet to resurface Friday morning, creating the question if packers will wait until late afternoon before even offering bids. Asking prices remain at $130 to $132 per cwt live and $210 dressed. Trade may be delayed until after the cattle on feed report is released at 2 p.m. Boxed Beef cut-outs at midday are mixed, $0.17 higher (select) and down $0.15 per cwt (choice) with light movement of 46 total loads reported (23 loads of choice cuts, 6 loads of select cuts, no loads of trimmings, 11 loads of ground beef).

FEEDER CATTLE:

The aggressive turnaround in hog trade late Friday morning seemed to quickly spark selling pressure through all cattle trade. Feeder cattle, which posted early triple digit gains, have now turned lower, with most contracts 50 cents to $1 per cwt lower. The volatility seen in the hog market caused spill over buying through feeder cattle over the past week, but a similar impact is expected if hog markets move quickly lower over the near future. Traders are still expected to focus on underlying cattle market support, which could help to bring buyers back into the market late in the session.

LEAN HOGS:

Trade in the hog complex has quickly and forcefully changed direction. Initial buyer support flooded the market, moving summer contracts limit higher, up $4.50 per cwt. But the over the last couple of weeks has quickly changed, as buyers kept from moving into the market. This vacuum left the market open, as active selling developed. At midday prices are $1 to $2 per cwt lower, with concerns that the unchecked market rally could allow for further market swings through the complex. The emotional nature that has led to the current market levels can be a dangerous and double-edged sword. Cash prices are higher on the National Direct morning cash hog report. The weighted average price added $1.01 at $65.16 per cwt with the range from $56.00 to $70.00, on 3,611 head reported sold. Cash prices are higher on the Iowa/Minnesota Direct morning cash hog report. The weighted average price added $3.25 at $69.43 per cwt with the range from $56.00 to $70.00, on 866 head reported sold. Pork values continue to shift higher with strong gains seen in all primal cuts midday Friday. Pork cutouts gained $1.02 per cwt at $77.27 per cwt with 196 loads traded. Lean hog index for 3/20 is $60.75, up $1.53, with a projected two-day index is $62.41, up $1.66.

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Friday Morning Livestock Market Summary - All Eyes Are on the Hog Complex

GENERAL COMMENTS:

Cash cattle trade has once again made it to Friday without any significant indication from either side of how aggressive buyer interest will be, and the expectation that it may be late in the day before any deals are struck. Asking prices continue to hold firm with early-week levels as feeders focus on the stability in beef values, and potential demand support in the next several weeks and months. But packers are unwilling to ratchet up prices at this point, potentially limiting negotiated trade volume at the end of the week in order to minimize any added spending. Futures trade is expected mixed in light to moderate activity Friday as the continued support in feeder cattle trade based on supply uncertainty through the end of the year is expected to spark limited support through the complex. The March 1 Cattle on Feed report will be released following the market's close Friday afternoon, potentially creating some additional pre-report adjustments during the morning.

Expanded trading limits are once again an option in lean hog trade Friday morning. This may continue to spark additional strong volatility in the complex that has had unrestricted buyer support the last couple of weeks. With the futures trade limit set at $4.50 per cwt Friday, the potential for wide market shifts at the end of the week continues to add uncertainty to the market. Even though strong buyer support remains in the market with expectations of further pork demand development, the complex is just one trading session away from a market reversal, which could break the momentum. Cash hog values are expected to redevelop steady to $2 per cwt higher with most bids $2 per cwt higher Friday. Expected slaughter Friday is pegged at 467,000 head, Saturday runs are expected at 164,000 head.

	BULL SIDE		BEAR SIDE
1)	Expected lower cattle placements through February is helping to build limited support through the complex late in the week as traders continue to adjust positions ahead of the Cattle on Feed report.	1)	Limited end-of-the-week support in boxed beef values is causing some concern that follow-through beef demand may not show significant support over the near future.
2)	Cash cattle trade is expected to remain steady to firm following the recent support in beef values and futures trade. Feeders have been unwilling to back away from strong early asking prices, creating the expectation that packers will adjust their bids through the day.	2)	Despite strong market shifts seen in feeder cattle futures, nearby live cattle trade have been reluctant to shift higher. Traders still remain capped by recent market highs, unable to break through resistance levels at this point.
3)	Limit higher trade for two consecutive trading sessions has continued to escalate the lean hog complex to contract highs. This underlying support through the complex is likely to bring about increased market support through the end of the week.	3)	The higher and more aggressive the unchecked market rally moves, the greater the potential that a break in momentum will cause widespread market liquidation.
4)	Concerns of the impact on African swine fever on global pork production has sparked increased underlying support through the entire complex. This may continue to solidify active gains in futures and cash-market trade through the near future.	4)	Uncertainty about global pork demand support and the potential to continue to sell actively to China and other major pork-consuming nations will continue to be the main concern about steadily increasing overall demand through 2019.

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Thursday Closing Livestock Market Summary - Hog Trade Takes Advantage of Expanded Limits

GENERAL COMMENTS: Hog futures continue to surge higher with prices shifting $13 per cwt higher in the last week. Markets have moved more than $25 per cwt off contract lows in the last month, sparking renewed interest through the entire complex. Cattle trade got caught up in the buying momentum, although concerns of cattle and calf losses are bolstering fall and winter price levels. Corn futures are higher in light activity. May futures gained 4 3/4 cents per bushel. Dow Jones Index is 219 points higher with Nasdaq up 110 points.

CASH MARKETS: Cash cattle markets remain untraded and will likely stay that way until later Friday. The underlying support in feeder cattle trade seems to be shifting a slightly bullish market tone, but packers are yet to show much interest. A few bids have popped up through the day Thursday with dressed bids in the North at $204, while Texas posted limited live bids of $124 per cwt. This is still a long ways from asking prices of $130 to $132 live and $210 per cwt dressed. Feedlot managers seem intent to hold this price point well into Friday. National Daily Direct afternoon hog report is $3.34 higher with a weighted average of $63.79 per cwt. Full range of $55.00 to $68.00 per cwt on 9,491 head sold.

LIVE CATTLE: Firm support through the rest of livestock trade sparked increased underlying support late day Thursday ($0.32 to $1.15 higher). Based on late month support in feeder cattle trade, fall and winter live cattle markets showed the most excitement with prices hovering $1 per cwt higher in late day trade. There is little interest in nearby contracts despite the continued demand support seen in the complex. April futures posted a 32-cent rally, moving to $129.90 per cwt. Even though spot month prices are testing ceiling price levels, the ability to move above $130 per cwt remains elusive. Beef cut-outs: mixed, $0.26 lower (select, $218.37) and up $0.64 (choice, $229.31) with light demand and offerings, 111 loads (72 loads of choice cuts, 19 loads of select cuts, seven load of trimmings, 13 loads of coarse grinds).

FRIDAY'S CASH CATTLE CALL: Steady. Cash cattle trade will be delayed until late in the week once again. Packer interest is expected to increase through the morning Friday, but it could be late in the afternoon until deals are struck.

FEEDER CATTLE: Continued concerns of cattle losses combined with demand expectations is sparking renewed support through all feeder markets ($0.52 to $1.87 higher). Triple-digit gains quickly formed in late spring and summer contracts as traders seem to be focused more on long-term herd implications, rather than short-term feeder cattle availability. Even though the upcoming cattle on feed report is expected to post a light to moderate reduction in placed cattle in February, the market focus is on what is happening with the cow herd and this year's calf crop. At this point, there is a lot of unknown about cattle affected by winter weather and flooding, but traders are expecting losses will be significant. This has moved August through January feeder cattle futures to new contract highs, focusing on potential supply losses. CME cash feeder index for 3/20 is $139.12 up $1.71

LEAN HOGS: Hog futures took advantage of the expanded trading range with most contracts locked in limit gains of $4.50 per cwt ($3.15 to $4.50 Higher). Traders continue to aggressively swing for the fence. This allowed most nearby contracts to remain locked in expanded limit gains of $4.50 per cwt with April futures surging to $78.32 per cwt. The rocket like momentum across the complex is creating increased optimism, but with markets at contract highs and spot month futures at the highest price since July 2018, the potential for wide market swings is significantly growing by the day. Trading limits will remain at $4.50 per cwt Friday. Strong pork price support has returned to the market following strong loin and belly values. Pork cutout values added $2.20 per cwt, moving to $76.25 per cwt on 233 loads. CME cash lean index for 3/19 is $59.22, up $1.68. DTN Projected lean index for 3/20 $60.74, up $1.53.

FRIDAY'S CASH HOG CALL: Steady to $2. Additional price support continues to flood the hog complex as packers trying to keep up with the surging price levels in order to secure continued hog flows to plants. Most bids are expected to be $1 to $1.50 higher. Friday slaughter is expected at 467,000 head. Saturday runs are expected at 169,000 head.

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