DTN Closing Livestock Comments

GENERAL COMMENTS

It appears cash cattle trade won't develop until Friday unless something breaks loose late Thursday night. Bids were seen once again during the day Thursday, but packers are not willing to venture out of the current range seen over the last few days. Live bids are seen at $124 per cwt with dressed bids holding at $198 per cwt. This still is a world away from asking prices, which are at $128 to $130 per cwt live basis and $205 and higher dressed. It is likely to be late Friday at this point before business gets done. According to the closing report, the national hog base is $1 lower compared with the Prior Day settlement ($60-$67) weighted average $65.79. The corn futures are higher in light activity. March futures were 1/4 cent higher Thursday. The Dow Jones Index is 306 points higher with the Nasdaq up 112 points.

LIVE CATTLE

Triple-digit gains moved quickly and aggressively into nearby live cattle contracts. This helped to push prices higher in all markets ($0.60 to $2.02 higher). Market support was evident through the entire session as nearby contracts posted gains of $1 to $2 per cwt, which helped markets to move well above short-term resistance levels. With April futures now trading at $127.25 per cwt, prices are now at the highest levels since mid-November with the potential to gain additional seasonal support over the coming weeks. Beef cut-outs: higher, $1.63 higher (select, $205.14) and up $1.23 (choice, $209.04) with light-to-moderate demand and offerings (90 loads of choice cuts, 27 loads of select cuts, 5 load of trimmings, 16 loads of coarse grinds).

FRIDAY'S CASH CATTLE CALL:

Steady. It appears that any substantial cash cattle business will likely be delayed until Friday at this point. This will likely keep markets sluggish early in the morning with moderate-to-active trade seen during the second half of the day. Steady price levels seem to be the target at this point with packers and feedlot managers not budging from early week price points.

FEEDER CATTLE:

Strong triple-digit gains have developed, allowing for firm market support ($1.02 to $1.87 higher). The combination of supportive moves in feeder cattle futures as well as the ability to bring moderate-to-strong support to all live cattle trade has sparked some increased underlying support through the entire complex. With April contracts moving through short-term resistance levels set in early February, contracts are trading at the highest level since November. This is likely to bring about additional underlying support over the near future, with potential buying moving back into the complex. CME cash feeder index for 2/14 is $147.70 up $0.08.

LEAN HOGS:

Firm pressure has redeveloped across the lean hog futures complex with traders looking for additional longer-term market direction through the rest of the week (0.10 to 0.92 lower). The back-and-forth price shifts have actually taken more confidence out of the market than anything else with prices unable to hold midweek highs, but still trading within a moderate trading range through the end of the week. At this point, the best market watchers can hope for is market stability through the end of the week. Carcass values turned lower once again with losses seen in all primals except for hams. Most cuts posted triple-digit losses Thursday as traders adjust to the lower futures market prices and weaker overall market tone. Pork cut-out: $76.99 down $0.53. CME cash lean index for 2/13 $74.01 down $0.29. DTN Projected lean index for 2/14 $73.49 down $0.52.

FRIDAY'S CASH HOG CALL:

Steady to $1 lower. Very little additional market direction is expected to be seen through the end of the week. Packers will have access to manageable hog numbers, but the continued pressure in futures trade is weakening the ability to demand steady cash prices. Packer activity is expected to be 455,000 head Friday with an estimated 82,000 head on Saturday.

Rick Kment can be reached at rick.kment@dtn.com

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