DTN Closing Livestock Comments

GENERAL COMMENTS: Livestock trade started the day relatively stable, but then things took a nasty turn the last half of Thursday's trading session. There was no significant news to give a boost to the already weak hog complex. Any initial buyer support quickly evaporated, pushing prices lower through the end of January. Triple-digit losses developed in all live cattle futures, while the biggest losses in lean hogs were contained to nearby futures. Cash activity remained generally undeveloped Thursday with packers showing limited interest through the end of January. A few cattle were sold at $197 dressed basis in Iowa through the last half of the day. But this is not enough to establish a good test at this point. More aggressive packer bids are expected Friday morning, but may not be able to get much business done until later in the day. Asking prices remain at $126 to $127 live, and $200 to $203 per cwt dressed. The National Daily Direct afternoon hog report is $0.49 lower ($48-$51.75, weighted average $50.84) on 12,435 head sold. Corn futures were lower in light activity with the March futures contract 4 cents lower. The Dow Jones Index was 15 points lower with the Nasdaq up 98 points.

LIVE CATTLE: Afternoon market liquidation eroded morning support in the live cattle trade, pushing futures $1.02 to $1.75 lower. Trade turned extremely bearish through the last half of Thursday's session as traders took advantage of light volume, allowing for an aggressive market correction. After April and June contracts set new highs Wednesday, uniform selling stepped into the market on the last trading day of January, pushing both contracts $1.75 per cwt lower. This one-day move essentially flat lines monthly live cattle futures charts, ending a consistent upward shift since May 2018. This could affect trader interest in early February. Beef cut-outs: lower, down $0.12 (select, $212.88) to down $2.66 (choice, $215.39) with light demand and moderate offerings on a total of 139 loads (90 loads of choice cuts, 13 loads of select cuts, 17 load of trimmings, 20 loads of coarse grinds).

FRIDAY'S CASH CATTLE CALL: Steady. Cash cattle trade has been pushed into Friday once again with limited direction developing yet this week. Packer interest is expected to improve through the day. However, activity is unlikely to develop until late in the day, as feedlot managers are not expected to quickly back away from previous asking prices.

FEEDER CATTLE: Feeder cattle saw losses of $0.27 to $1.75 Thursday as traders waved "goodbye" to January. An early sense of market stability and sluggish trade Thursday was very short-lived as traders quickly and aggressively moved into all livestock trade. Any indication that the cold weather was supportive of the market evaporated as triple-digit losses flooded most nearby contracts. At this point, it is uncertain whether the trade will remain sluggish Friday as traders take the weekend to assess further market direction, or if wild price swings will be seen as traders try to reverse Thursday's losses. CME cash feeder index for 1/30 is $142.57, down $0.42.

LEAN HOGS: Lean hog futures were down sharply late Thursday. Futures ended the session mixed, $2.00 lower to $0.05 higher. The April contract led futures lower, falling $2 per cwt. The next meaningful support level is $58.45 per cwt, set in August. A move below this level could spark additional long-term pressure, breaking away from traditional market seasonality. Concerns of upcoming pork demand while supplies are expected to expand has nearby contracts unable to find meaningful support. Pork prices posted moderate gains in most primal cuts, allowing for firming carcass values. Pork cutout values added $1.08 per cwt, moving to $68.05 per cwt on 245 loads. CME cash lean index for 1/29 is $57.67, down 22. DTN Projected lean index for 1/30 $57.40, down $0.27.

FRIDAY'S CASH HOG CALL: Steady to $1 lower. It is uncertain how active packers will be through the end of the week. There are indications most packers will not remain aggressive in the market and could wait until next week to restart the aggressive process. Much of this subdued nature to cash market activity has to do with the limited number of hogs making it to plants over the last couple of days. Friday slaughter is expected to hit to 465,000 head. Saturday runs are expected to hit 310,000 head.

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

(AG)

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