DTN Closing Livestock Comments

GENERAL COMMENTS: Livestock futures quickly rebounded Tuesday with traders focusing on increased underlying short-term fundamental support. Following early triple-digit gains, markets cooled as limited pressure started to trickle into all markets, eroding early support and leaving prices mixed in both cattle and hog futures. Cash cattle trade remains undeveloped with asking prices and bids still unavailable. This is likely to push most cash trade until the end of the week with limited activity expected from packers until late Wednesday at the earliest. According to the closing report, the national hog base is $0.29 lower ($47-$53, weighted average of $51.46). Corn futures were lower in light activity with the March futures contract ending 7 cents lower. The Dow Jones Index closed 155 points higher with the Nasdaq up 117 points.

LIVE CATTLE: Nearby contracts set new highs Tuesday as traders focused on firming short-term demand. Overall, futures closed mixed, $0.57 lower to $1.52 higher. Strong early morning gains quickly eroded, but nearby contracts were able to hang onto limited buyer support and close at fresh highs. February futures still remain well below 2018 highs set in February, as buyers continue to focus on increased seasonal support. The lack of follow-through buying activity is concerning, which left contracts in the last half of 2019 lower at closing bell. Beef cut-outs: mixed, $0.41 lower (select, $205.87) to up $0.19 (choice, $212.21) with good demand and light offerings, 173 loads (125 loads of choice cuts, 23 loads of select cuts, 5 load of trimmings, 20 loads of coarse grinds).

WEDNESDAY'S CASH CATTLE CALL: Steady. Both sides of the cash cattle equation appear to be focused on late-week developments with bids and asking prices hard to pin down. Early activity Wednesday is expected to be sluggish, as traders focus on outside market direction.

FEEDER CATTLE: Traders focused on firm gains in nearby live cattle and soft grains. Futures closed mixed, $0.10 lower to $0.57 higher. Initial buyer support quickly flooded into the complex, increasing market activity through during the first few hours of trade. This may allow for increased volume the rest of the week, although initial gains were unable to hold as pressure developed in summer live cattle futures. The focus on strong pressure in the corn trade Tuesday helped to instill some needed market stability in most contracts. March through October futures posted firm gains of 35 to 57 cents per cwt. Overall support continues to stem from underlying strength in the nearby live cattle trade. CME cash feeder index for 1/14 is $144.44, down $0.21.

LEAN HOGS: Initial strong gains eroded late Tuesday, and futures closed mixed, $0.27 lower to $0.40 higher. Lean hog futures saw triple-digit gains early Tuesday as support flooded into all nearby contracts. Although the tone of the market firmed Tuesday, concerns that additional buyer activity wouldn't be able or willing to move into the complex caused summer contracts to pull back from morning gains. The softness in the lean hog trade is likely due to concerns that growing supplies will continue to push prices lower over the next several months, especially if export business does not redevelop. Pork carcass values eroded Tuesday despite mixed primal market shifts. Pork cutout values fell $0.86 per cwt, moving to $70.33 per cwt. CME cash lean index for 1/11: is $57.21, up $0.52. DTN Projected lean index for 1/14: $57.65, up $0.44.

WEDNESDAY'S CASH HOG CALL: Steady to $1 higher. Steady to firm price levels are expected to be seen early Wednesday with packers once again trying to source more hogs to fuel aggressive procurement levels. With another round of wintery weather expected late in the week, packers may try to boost production levels over the next couple of days. Wednesday plant runs are expected at 475,000 head. Saturday runs are scheduled for 180,000 head.

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

(AG)

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