DTN Closing Livestock Comments

GENERAL COMMENTS:

According to the closing report, the Iowa hog base is $0.23 higher compared with the Prior Day settlement ($53.00-63.50, weighted average $63.08). Corn futures closed lower, down 1 1/4 in the March and July contracts.

LIVE CATTLE:

Follow-through pressure developed in the February contract, settling $1.65 per cwt lower as traders quickly backed away from early morning support tied to triple-digit gains in feeder cattle. Live cattle futures closed mixed, the full range from $1.65 per cwt lower to 10 cents higher in light late-day trade. Traders question if additional interest will arise after markets shifted significantly lower Monday with limit losses. This has moved nearby contracts $5 to $6 per cwt lower over the last four trading sessions, potentially creating the ability to for buyers to re-establish positions. Beef cut-outs: lower, down $0.78 (choice, $218.03) and off $2.98 (select, $213.60) with light to moderate demand and offerings (63 loads of choice cuts, 32 loads of select cuts, 13 loads of trimmings, 27 loads of coarse grinds).

WEDNESDAY'S CASH CATTLE CALL:

Steady. Although a few bids trickled into the market through the day Tuesday, the overall tone of the complex remained lackluster with activity expected to be pushed off until the last half of the week. Packers remain short-bought given the light activity last week, but this is not a new situation for them, and they will find a way to get through until they can source cattle. But at the same time there is very little interest by packers at this point in aggressively flashing money in order to gain access to these cattle. Active trade may easily be pushed off until Thursday or Friday.

FEEDER CATTLE:

Early triple-digit gains developed in feeder cattle futures early Tuesday morning; prices slowly shifted lower through the session as additional buyers were unwilling to step back into the complex. Feeder cattle futures closed mixed with pressure seen in deferred contracts with a full range of 70 cents lower to 55 cents per cwt higher. Most buyer interest developing Tuesday morning was focused on short-covering following limit losses Monday. CME cash feeder index: 02/08: $159.76, up $0.39.

LEAN HOGS:

Lean hog futures closed mixed in a narrow to moderate range Tuesday with early market support in nearby contracts and pressure developing in deferred contracts at the end of the trading session. Contracts settled mixed, from 52 cents lower to 12 cents higher, with most of the losses seen in late 2016 and early 2017 contracts. The lack of volatility through the market continues to limit price shifts over the last several weeks. Firm fundamental support continues to draw market support through the complex. The carcass value closed modestly higher as strength in loins, picnics, ribs and bellies overcame weakness in butts and hams. Pork cut-out: $77.17, up $0.21. CME cash lean 02/05: $64.62, up $0.32 (DTN Projected lean index for 02/08: $64.89, up $0.27).

WEDNESDAY'S CASH HOG CALL:

Steady. Weather conditions continue to be the main focus on many packers' minds as they try to schedule current and end of the week plant needs. Currently it is expected that Saturday's procurement schedule will remain around 200,000 head, as daily runs have been below week ago levels over the last couple of days. Cash spending is expected to remain steady to firm over the near future, although early activity is likely to remain steady.

For more from John, see www.feelofthemarket.com

(CZ)

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