DTN Closing Livestock Comments

GENERAL COMMENTS:

Cash cattle markets remain untraded Tuesday afternoon, although a few bids have developed through the South. This has continued to draw additional interest to the market, although a wide gap between asking prices and bids remains, and may push active trade off until late in the week. Asking prices are seen at $122 in the South and $192 to $194 per cwt in the North. According to the closing report, the national hog base is $0.44 lower compared with the Prior Day settlement ($63.00-$70.50, weighted average $67.15). The corn trade turned higher in light activity. March futures posted a 4 3/4 cent gain Tuesday. The Dow Jones Index is 37 points higher with the Nasdaq up 10 points.

LIVE CATTLE

Strong follow-through support developed in live cattle futures trade Tuesday as strong commercial buyer interest flooded the market. This pushed prices strongly higher ($0.75 to 1.25 Higher) with front-month February contracts leading the market higher with $1.25-per-cwt gains. February contracts were the only contracts to post triple-digit gains Tuesday as buyer activity is quickly moving back into the spot month contract based on commercial buying activity. This could bring about additional support through the rest of the week. Beef cut-outs: sharply lower, $2.87 lower (select, $187.78) to down $1.27 (choice, $189.96) with moderate demand and light offerings (70 loads of choice cuts, 29 loads of select cuts, 6 loads of trimmings, 18 loads of coarse grinds).

WEDNESDAY'S CASH CATTLE CALL

Steady. Packer interest is expected to pick up even more on Wednesday, although at this point it may be unlikely if aggressive business will be done unless a significant move in futures markets is seen. It is expected that bids will start out once again Wednesday in the same range seen Tuesday with prices in the South offered at $116 per cwt. Asking prices are likely to hold at $122 in the South and $192 and higher in the North.

FEEDER CATTLE

Despite starting out sluggish with mixed trade, strong buyer support flooded into the feeder cattle market through the end of the trading session ($0.62 to $1.42 higher). The most aggressive buyer interest was not seen in nearby contracts similar to the rest of livestock trade, but summer contracts posted aggressive triple-digit gains as traders continue to adjust expectations following the strong market pressure seen over the last two weeks. This is expected to spark additional commercial buyer support and could bring about additional interest into the market. CME cash feeder index: 2/6: $127.06, up $0.03.

LEAN HOGS

Continued strong buyer support quickly moved into the lean hog futures complex with traders looking for additional fundamental market support through the week. Driven by commercial and noncommercial buyer support, contracts closed strong higher in all contracts ($0.60 to $1.02 higher). This again sets contract highs in front month February futures contracts, drawing potential additional support to the market through the week. Carcass value are slightly higher. Firm gains in Butts, Ribs and Bellies offset strong pressure in Picnics. Pork cut-out: $85.38 up $0.25. CME cash lean index for 2/03: $70.95, up $0.60. DTN Projected lean index for 2/6: $71.45, up $0.50).

WEDNESDAY'S CASH HOG CALL

Steady to $1 higher. Packer buyer interest continues to remain strong with an estimated 440,000 head expected to be bought and run through plants Wednesday. The firm support in futures price is likely to firm cash market prices early in the morning, although pork values may struggle to keep up with futures gains. Saturday runs are expected to be near 151,000 head.

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

(AG)

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