DTN Midday Livestock Comments

GENERAL COMMENTS:

Triple-digit gains continue to hold in cattle futures with April live cattle futures holding a $1.50 per cwt, moving above $119 per cwt. The ability to hold current price levels through the end of the session is expected to create additional end of the week support, and rally additional commercial buying interest. Hog futures have remained mixed much of the morning with narrow gains offsetting earlier softness in the complex. Corn prices are higher in light trade. March corn futures are 2 cents higher. Stock markets are lower in light trade. The Dow Jones is 16 points lower while Nasdaq is down 2 points.

LIVE CATTLE:

Strong gains quickly developed early in the session following the strong cash market support Wednesday. April live cattle futures are leading the complex higher with a $1.50 per cwt rally. The move above $119 per cwt continues to draw buyers actively into the market, but there is growing concern about just how much long term buyer support can still develop. The price discount to the cash market continues to widen, even though triple-digit gains have developed through the week. This may bring additional uncertainty as futures and cash trade remain unhinged given the wide price spreads and lack of market relationship. Cash markets remain silent across the country Thursday morning following the surge in prices seen Wednesday. Most if not all trade is expected to have been done midweek, although there continues to be the chance that some clean-up activity may trickle in through the next couple of days. With prices moving $3 to $4 per cwt higher in the South and $8 to $9 per cwt higher in the North, the focus on aggressive market support continues to drive expectations for later in the month due to continued tight supplies. But without continued support in beef values, it is going to be hard to continue this market trend. Beef cut-outs at midday are higher $0.66 Higher (select) and up $1.12 per cwt (choice) with light movement of 56 total loads reported (27 loads of choice cuts, 14 loads of select cuts, 6 loads of trimmings, 9 loads of ground beef).

FEEDER CATTLE:

Sharp gains have continued to hold with April futures leading the move higher as prices are sustaining a $1.70 per cwt rally. March futures are holding a 77 cent per cwt gain. The strong follow through support in live cattle futures continues to draw buyer activity into the feeder cattle market with the most significant buying interest surrounding the April and May contract months. Even though nearby futures have broken through resistance levels of $130 per cwt, the focus on tight trading ranges continues to bring additional support to the market.

LEAN HOGS:

Lean hog futures are mixed to mostly higher as traders are slowly moving back from the light losses seen during most of the morning. The continued strength in cattle markets are helping to draw additional buyer activity into the lean hog complex. April lean hog futures are currently holding a gain of 30 cents per cwt , with the rest of the complex trading 20 cents lower to 25 cents higher. It is uncertain if there will be enough buyer support in the background Thursday afternoon to maintain the bounce higher seen at midday, or if prices will continue to shift higher and lower through the rest of the trading session. Cash prices are lower on the National Direct morning cash hog report. The weighted average price fell $1.67 at $65.10 per cwt with the range from $61.00 to $67.00 on 3,237 head reported sold. Cash prices are lower on the Iowa Minnesota Direct morning cash hog report. The weighted average price fell $2.43 at $65.01 per cwt with the range from $61.00 to $67.00 on 375 head reported sold. The National Pork Plant Report reported 166 loads selling with prices slipping $0.72 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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