DTN Closing Livestock Comments

Closing Comments

Cash cattle trade developed in both the Fed Cattle Exchange and feedlot trade through late morning and afternoon Wednesday. The Fed Cattle Exchange Auction report on Wednesday listed a total of 3,350 head, with 3,065 actually sold, and 285 head listed as unsold. The state-by-state breakdown looks like this: KS 378 head at $122.50-$123.00; NE 1,890 head at $120.00-$123.25; TX 797 head, at $121.25-$124.50; CO no test; IA no test; other states no test. The weighted average was $122.10, up from last week's weighted average of $119.04. Light to moderate trade developed in most areas with feedlot trade moving aggressively higher from last week's price levels. Trade in the South was seen at $124 to $125 per cwt, as most sales were reported at $125 per cwt. This is generally $5 per cwt higher than last week. Northern trade was generally light at this point, but prices of $195 to $196 per cwt are being reported, $5 to $6 per cwt higher than last week. According to the closing report, the national hog base is $0.32 lower compared with the Prior Day settlement ($66.00-$74.00, weighted average $72.42). The corn trade trickled higher in light activity. March futures posted a 1-cent gain Wednesday. The Dow Jones Index is 15 points higher with the Nasdaq down 11 points.

LIVE CATTLE:

Moderate to strong gains developed across live cattle futures at midday, drawing active buyer support back into the market ($0.47 to $2.20 higher). The most aggressive buyer support redeveloped in the soon-to-expire and lightly traded February contracts. This pushed front-month futures to triple-digit gains, closing $2.20 per cwt higher at $121.30 per cwt. Front-month futures were the only contract to develop triple-digit price support at closing bell, although most contracts backed away from session highs through the end of the trading session. Strong cash market support, which developed through the last half of the day, helped to spark increased commercial buyer support to quickly and aggressively move back into the market. Beef cut-outs: higher, $1.00 higher (select, $190.81) to up 2.72 (choice, $194.53) with moderate demand and light to moderate offerings (97 loads of choice cuts, 27 loads of select cuts, 6 loads of trimmings, 37 loads of coarse grinds).

THURSDAY'S CASH CATTLE CALL:

Steady with Wednesday's trade. Additional trade is expected to develop through the rest of the week, especially in the North. With prices listed on cattle sold Wednesday mostly $5 per cwt higher than last week, most of the price discovery may be already established.

FEEDER CATTLE:

Light-to-moderate gains developed across feeder cattle futures Wednesday ($0.27 to $0.77 Higher) following the sharp rally seen in live cattle futures and support developing in cash cattle trade during the midweek trading session. Early moves in feeder cattle markets posted light-to-moderate losses, but as soon as prices surged higher in front-month live cattle futures, more stability and buyer activity quickly developed across the entire feeder cattle market. March futures posted a 55-cent-per-cwt gain as traders continue to look for increased market support through the rest of the week. There continues to be growing uncertainty surrounding the market's reaction to the upcoming Cattle on Feed report and cattle placement levels. But, for now, traders are keeping market shifts limited as they look for additional direction. CME cash feeder index: 2/21: $127.12, down $0.06.

LEAN HOGS:

Triple-digit losses ($1.30 to $2.60 lower) quickly developed Wednesday as pressure moved into the market just after opening bell. The overall lack of commercial buyer support as well as concerns of further cash and pork market pressure is leaving traders unsettled and looking for protection through midweek. April futures led the complex lower, falling $2.60 per cwt and closing at $67.75 per cwt. This is the lowest price level in April futures since the last week in January. And a pull back below $70 per cwt is likely to spark additional follow-through liquidation at the end of the week. Carcass values are sharply lower. Stable-to-higher prices in other primal markets failed to offset sharp double-digit losses in bellies and price pressure in hams. Pork cut-out: $80.24 down $4.30. CME cash lean index for 2/20: $77.24, up $0.17. DTN Projected lean index for 2/21: $77.64, up $0.40).

THURSDAY'S CASH HOG CALL:

Steady to $1 lower. Strong pressure throughout much of the day Wednesday is likely to create additional uncertainty through the rest of the market the rest of the week. Bids early Thursday are expected to be steady to $1 per cwt lower, although most bids are likely to remain steady. Saturday runs are expected to be near 105,000 head with steady daily procurements seen through the rest of the week.

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

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