DTN Closing Livestock Comments

GENERAL COMMENTS

Cash cattle trade remains undeveloped with very little interest seen by either side. At this point, bids and asking prices are poorly defined. That being said, there were a few bids starting to develop in the North at $190 per hundredweight (cwt) dressed basis. It is expected that feeders will aggressively price cattle as they expect the recent shift higher in futures trade to confirm the higher prices. But this could easily push trade into Thursday or Friday sometime as both sides feel they have adequate justification for their own cases. According to the closing report, the national hog base is $1.19 higher compared with the Prior Day settlement ($45.00-$54.50, weighted average $51.96). Corn futures were lower in light activity with the May futures contract down 2 cents. The Dow Jones Index is 255 points higher with the Nasdaq up 135 points.

LIVE CATTLE

Firm underlying support developed in most live cattle futures with nearby gains the main focus of renewed buyer support. Futures closed $0.05 lower to $0.90 higher. April futures led the market higher with a 90-cent gain holding through closing bell. The underlying support in nearby trade is helping to bring about even more market firmness. Spot-month futures have rallied $6 per cwt in the last week, suggesting that follow-through buying will continue over the near future. A portion of the buyer interest is directly related to expectations that strong follow-through gains will develop in cash cattle and beef values in the coming weeks. Beef cut-outs: mixed, $0.40 lower (select, $199.58) to up $0.34 (choice, $212.13) with light demand and light-to-moderate offerings (69 loads of choice cuts, 34 loads of select cuts, 8 load of trimmings, 16 loads of coarse grinds).

WEDNESDAY'S CASH CATTLE CALL:

Steady to $2 higher. Despite very limited activity in cash markets as bids and asking prices remain hard to pin down, the tone of the market is firming with asking prices expected to remain bullish. This is likely to delay market activity until later in the week.

FEEDER CATTLE:

Traders backed away from strong early gains as markets turned generally quiet. Futures closed mixed, $0.50 lower to $0.75 higher. The general tone of the feeder cattle complex remained supported, though traders backed away from triple-digit gains seen in nearby contracts Tuesday morning. Traders are looking for even more underlying fundamental support in cash cattle trade, as well as firming beef values. CME cash feeder index for 4/16 is $137.75 up $0.16.

LEAN HOGS:

Mixed trade developed Tuesday following sluggish early morning weakness. Futures closed $0.27 lower to $0.60 higher. June futures continue to lead the market as spot month contracts even though May contracts are still listed on the board. The inactivity and light open interest in the May futures leaves this market overlooked. May futures have just over 3,000 contracts of open interest. Compare that to April futures, which expired with still over 11,000 contracts on the books, and June futures where over 95,000 contracts are reported. This moves spot-market June prices to $76.75 per cwt, which is over $20 above where April futures expired. The volatility alone in the market is enough to cause market shifts over the last couple of trading sessions. Pork prices remained nearly stable Tuesday following mixed moves in primal markets. Most primal cuts posted light-to-moderate market shifts as ribs and belly markets bookmarked the market shifts. Ribs fell $1.33 per cwt, while bellies gained $1.43 per cwt. Pork cut-out: $68.21 up $0.06. CME cash lean index for 4/13 $53.53 up $30. DTN Projected lean index for 4/16 $54.02 up $0.49.

WEDNESDAY'S CASH HOG CALL:

Steady to $2 higher. Strong early buyer support is expected to redevelop midweek even though most bids are likely to be seen steady to 50 cents higher. The overall support in the complex is focusing not only on price premiums following April contracts expiring, but overall firming fundamentals through the middle of the month. Total slaughter numbers Wednesday are expected to be 465,000 head with an estimated 118,000 head Saturday.

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

(AG)

Copyright 2018 DTN/The Progressive Farmer. All rights reserved.