DTN Midday Livestock Comments

Firm Gains Hold in Cattle Futures

Rick Kment
By  Rick Kment , DTN Analyst
(DTN photo by Russ Quinn)
GENERAL COMMENTS:

Firm support in cattle futures during the morning has helped to bring additional underlying support to the complex. Although cattle prices have backed away from early triple-digit gains, the ability to hold moderate to strong gains in live cattle futures is keeping some commercial traders active in the complex. Corn prices are lower in light trade. March corn futures are 4 cents lower. Stock markets are mixed in light trade. The Dow Jones is 15 points lower while Nasdaq is up 15 points.

LIVE CATTLE:

Strong gains continue to hold in nearby live cattle futures with prices seen 80 to 92 cents per cwt in all spring and summer contracts. The focus on potential additional market support at the end of the week as well as strong gains in beef values has helped to draw additional trader activity back into the complex. Deferred futures remain higher, but have much less interest with lightly traded contracts holding gains of 30 to 60 cents per cwt. Cash cattle trade took place on The Fed Cattle Exchange Auction Wednesday morning with the report today listing a total of 3,413 head, with 523 actually sold, 249 head PO (Passed Offer, KS 57 head, TX 192 head) and 2,641 head listed as unsold. The state by state breakdown looks like this: KS 341 head sold at $123.75-$124.00; NE 2,641 head, all unsold; TX 182 head sold, at $122.50-$123.75; CO no test; IA no test; other states no test. The weighted average was $123.69, down from last week's weighted average of $124.99. Feedlot trade remains undeveloped although bids are developing in most areas with $121 to $122 seen in the South and $200 per cwt seen in the North. Active trade may not develop yet this afternoon although could be seen sometime Thursday. Beef cut-outs at midday are higher, $1.86 higher (select) and up $1.67 per cwt (choice) with light movement of 80 total loads reported (43 loads of choice cuts, 15 loads of select cuts, 9 loads of trimmings, 13 loads of ground beef).

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FEEDER CATTLE:

Firm gains continue to hold across the feeder cattle complex, although the tone of the market remains sluggish after traders quickly gave back triple-digit gains within the first two hours of trade Wednesday. Nearby contracts are comfortably holding gains of 50 to 70 cents per cwt, although volume has slowed as the session has progressed. The support developing in live cattle futures trade is driving feeder cattle markets through midweek.

LEAN HOGS:

Mixed trade continues to hold through the entire hog complex with nearby gains seemingly well rooted given the overall lack of direction in the complex. Front month April futures are leading the market higher with a 42 cent per cwt rally at midday. This support has been consistent through most of the morning, although additional buyer support late in the day could push prices higher. Deferred futures are steady to 12 cents per cwt lower, although the softness has slowed given the support in both nearby contracts and spill over buying from cattle markets. Mixed trade is expected to hold through the end of the session with no sense of additional market direction expected. Cash prices are lower on the National Direct morning cash hog report. The weighted average price fell $0.96 at $66.26 per cwt with the range from $63.50 to $69.00 on 3,628 head reported sold. Cash prices are unreported due to confidentiality on the Iowa Minnesota Direct morning cash hog report. The National Pork Plant Report reported 223 loads selling with prices falling $0.20 per cwt. Lean hog index for 3/6 is at $72.69 down $0.23 with a projected two-day index of $72.60 down $0.09.

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

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Rick Kment