DTN Closing Livestock Comments

Closing Comments

Cash cattle trade took place both on the Fed Cattle Exchange and feedlot markets Wednesday. The Fed Cattle Exchange Auction report Wednesday listed 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 was seen as light to moderate near midday, but expected to likely have set the tone for the week. Cash prices in the South developed at $124 to $125 per cwt, with most sales at $125 per cwt. This is fully steady with last week. Northern Trade was seen at $200 to $202 per cwt, steady to $2 per cwt higher than last week's price levels. Some additional clean-up trade is likely to be seen, but it may be too late to expect price levels shifts at this point. According to the closing report, the national hog base is $0.54 higher compared with the Prior Day settlement ($61.00-$69.25, weighted average $67.76). The corn trade worked lower in light activity. March futures posted a 4-cent loss Wednesday. The Dow Jones Index is 69 points lower with the Nasdaq up 3 points.

LIVE CATTLE:

Moderate gains held through the end of the Wednesday trading session ($0.25 to $0.62 higher) with nearby contracts gaining 57 to 62 cents per cwt. Deferred contracts posted much more sluggish market activity based on the lack of long-term direction in the market and softness in outside markets. Cash cattle market support seemed to solidify the higher-moving markets, although traders have moved away from aggressive triple-digit support seen early in the trading session. The wide premium in cash markets to the futures trade continues to widen, creating even more concern about the ability to maintain support through the upcoming weeks and months. Beef cut-outs: higher, $2,24 higher (select, $207.29) to up 1.61 (choice, $213.61) with good demand and moderate offerings (68 loads of choice cuts, 25 loads of select cuts, 11 loads of trimmings, 26 loads of coarse grinds).

THURSDAY'S CASH CATTLE CALL:

Steady to $2 Higher. Moderate trade that developed Wednesday is likely to have set the tone for the week, even though additional trade may continue to develop. With prices steady to $2 per cwt across cattle country, more focus will be placed on the total amount of cattle traded for the week.

FEEDER CATTLE:

Moderate to firm buyer support slowly developed in feeder cattle trade Wednesday. The strength in live cattle markets quickly drew additional buyer support into all feeder cattle futures. Even though feeder cattle markets closed higher ($0.20 to $0.77 Higher), the inability to hold onto firm triple-digit support and close well below session highs in nearby contracts is likely to limit buyer support later in the week. CME cash feeder index: 3/7: $126.95, down $0.02.

LEAN HOGS:

Lean hog futures remained directionless with prices hovering in a narrowly mixed range ($0.27 lower to $0.37 higher). The inability for traders to actively step back into the market and defend the moderate to firm support seen Tuesday is creating some underlying pressure across most contracts. April futures remained the only nearby contract to close higher, although several spring and summer contracts ventured to the positive side of the range through the day. April contracts closed at $68.42 per cwt following a 37-cent gain. But even contracts that edged lower during the day were unable to show significant pressure. Carcass values are lower. Softness in loins, picnics and hams out weighted light support in other primals. Pork cut-out: $81.06 down $0.65. CME cash lean index for 3/6: $72.69, down $0.23. (DTN Projected lean index for 3/7: $72.60, down $0.09).

THURSDAY'S CASH HOG CALL:

Steady to $1 lower. Very little change in the direction of overall bids are expected to be seen Thursday. This will continue to spark early bids from steady to $1 per cwt lower, although most trade is likely to be confined to steady to 50 cents lower. Active procurement levels are expected Thursday with estimated slaughter at 433,000 head. Saturday runs are expected to be at 120,000 head.

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

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