DTN Closing Livestock Comments

Closing Comments

Cash cattle market activity remains quiet Tuesday with bids and asking prices hard to find if available at all. The lackluster direction in futures trade continues to leave both sides waiting for increased market definition through the end of the week. Although activity may increase Wednesday, active trade may be delayed until Thursday or Friday. According to the closing report, the national hog base is $0.06 higher compared with the Prior Day settlement ($61.00-$70.00, weighted average $67.38). Corn futures worked lower in light trade Tuesday. March futures posted a 3-cent loss Tuesday. The Dow Jones Index is 33 points lower with the Nasdaq down 15 points.

LIVE CATTLE:

Firm losses developed in live cattle trade despite an attempt to keep prices closely confined through much of the session ($0.20 to $0.65 lower in most contracts). The outlier in the market was seen in June 2018 contracts due to minimal trade activity, and allowed contracts to settle $2.22 per cwt lower. The live cattle futures complex spent most of the session in an extremely narrow trading range on either side of unchanged. The overall lack of buyer interest through the last hour of trade allowed for moderate price erosion in nearby and deferred contracts based on general lack of interest. The firmness in beef values on the morning report did very little to energize buyers through the end of the day. Beef cut-outs: higher, $1.09 higher (select, $205.05) to up 2.40 (choice, $212.00) with moderate to fairly good demand and light to moderate offerings (76 loads of choice cuts, 28 loads of select cuts, 10 loads of trimmings, 27 loads of coarse grinds).

WEDNESDAY'S CASH CATTLE CALL:

Steady to $2 Higher. Early moves Wednesday are expected to remain similar to the lackluster direction seen through the early part of the week. Both sides will continue to look to the other to make the first move. Short=bought packers are likely to step into the market at some point Wednesday with initial bids, but this may not create much momentum until sometime Thursday or Friday.

FEEDER CATTLE:

Lackluster market movement left most contracts stuck in a narrow trading pattern ($1.00 lower to $0.02 Higher) Tuesday. All nearby contracts posted narrow losses of 12 to 32 cents per cwt as traders focused on the late-day pressure in live cattle futures. The overall concern that strong follow-through buyer support may not be willing to return to the market even though seasonal support is expected to be seen in beef values has limited the overall interest by most commercial and investment feeder cattle traders. March futures posted a 12-cent loss, as prices trickled below $124 per cwt closing at $123.95 per cwt. This overall lack of market direction in the complex could allow for additional shifts later in the week. CME cash feeder index: 3/6: $126.97, up $0.11.

LEAN HOGS:

Buyer support firmed through the end of the session ($0.10 to $0.87 higher) following what started out as sluggish, light volume trade. April lean hog futures led the complex higher, posting an 87-cent-per-cwt rally, closing back above $68 per cwt at $68.05 per cwt. After establishing short-term support at $66.75 per cwt last week in April contracts, solid, but cautious buying activity has developed through not only front-month futures, but in all nearby contracts. The ability to sustain and build longer-term fundamental support may help to build seasonal support into the complex. Carcass values are moderately lower. Strong price pressure in bellies overshadowed light to moderate gains in all other primals. Pork cut-out: $81.71 down $0.82. CME cash lean index for 3/3: $72.92, down $0.46. DTN Projected lean index for 3/6: $72.69, down $0.23).

WEDNESDAY'S CASH HOG CALL:

Steady to $1 lower. Packers continue to focus on the steady movement of hogs available to the market. This is likely to keep early bids steady to $1 per cwt lower, even though most bids are likely to be steady during morning buying activity. The focus on returning to a more normal procurement week following plant issues over the last couple of weeks in certain areas may increase packer's appetite to buy hogs, and could spark firming price levels through the end of the week. Saturday runs are expected to be at 120,000 head.

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

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