DTN Midday Livestock Comments

GENERAL COMMENTS:

Strong buyer support has swept through cattle contracts Wednesday morning following a strong jump in Fed Cattle Exchange Auction prices compared to week-ago levels. This as well as increased commercial buying activity in nearby contracts has led to triple-digit cattle market gains. Hog futures remain under pressure due to most of the attention quickly shifting to the cattle complex. Trade remains light with all but front-month contracts posting narrow losses. Corn prices are higher in light trade. March corn futures are 1 3/4 cent higher. Stock markets are higher in light trade. The Dow Jones is 45 points higher while Nasdaq is up 5 points.

LIVE CATTLE:

A combination of aggressive packer support, cash market support in the Fed Cattle Exchange and widespread buyer activity redeveloping in feeder cattle markets have sparked additional tripledigit gains across nearby live cattle contracts. April and June futures are holding gains over $1 per cwt with buyers quickly moving from narrowly mixed trade early in the session to a strong buying position. Prices have backed away from session highs with prices venturing above $118 per cwt for a short period of time. Traders seem more comfortable holding front month April futures between the $117.50-and-$118-per-cwt level at this point. More definition may be seen if additional cash trade actually develops during the Wednesday session. Cash cattle activity is limited to developing bids in feedlot country while the Fed Cattle Exchange Auction traded during the morning. The Fed Cattle Exchange Auction report today listed a total of 4,763 head, with 3,350 actually sold, and 1,413 head listed as unsold. The state by state breakdown looks like this: KS 525 head at $125.00-$128.00; NE 2,224 head at $127.00-$131.50; TX 601 head, at $125.00-128.25X; CO no test; IA no test; other states no test. The weighted average was $128.39, up from last week's weighted average of $123.69. Packer bids have quickly developed in feedlot country through the morning following the light trade Tuesday. The indication that packers remain short bought is not surprising, but the aggressive interest is somewhat surprising at this point. Bids are seen at $127 live bases both in the North and South and $204 to $205 dressed basis in the North. Asking prices are at $128 to $132 in the South and $205 to $208 in the North. This could help to spark active trade through the end of the day, although the recent renewed support in live cattle futures may cause feeders to become more aggressive as the week continues. Beef cut-outs at midday are mixed $0.67 Lower (select) and up $1.11 per cwt (choice) with light movement of 72 total loads reported (42 loads of choice cuts, 16 loads of select cuts, 5 loads of trimmings, 9 loads of ground beef).

FEEDER CATTLE:

Despite the sluggish moves during the first hour of trade Wednesday, buyers quickly moved into the complex through the rest of the session. This has pushed nearby contracts over $1 per cwt higher. The aggressiveness of all cattle trade through midday is putting more emphasis on the potential that additional buyer activity may remain well rooted in the shadows. March futures are holding a $1.32 per cwt rally, trading at $129.17 per cwt. Even at the current market support, futures remain will defined within the market range. But the support over the last week has quickly moved prices to the top half of this range, which is sparking some additional market momentum.

LEAN HOGS:

Selling pressure has increased through the morning Wednesday with nearby contracts expanding losses to 40 to 50 cents per cwt. The inability to bring buyers back into the market following early-week gains and trade hovering in a narrow trading range through most of the morning is lending to a weaker market tone. April futures are holding onto $70-per-cwt price levels with a 50-cent-per-cwt loss. The rest of the complex remains much less defined with losses in most contracts limited to 20-to-30-cent per cwt declines. Cash prices are lower on the National Direct morning cash hog report. The weighted average price fell $0.34 at $66.21 per cwt with the range from $65.00 to $69.00 on 4,632 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 152 loads selling with prices adding $0.06 per cwt. Lean hog index for 3/13 is at $71.94 down $0.20 with a projected two-day index of $71.99 up $0.05.

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

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