DTN Closing Livestock Comments

Cattle Futures Close Higher

Rick Kment
By  Rick Kment , DTN Analyst
(DTN file photo)

GENERAL COMMENTS:

According to the closing report, the Iowa hog base is $0.15 higher compared with the Prior Day settlement ($52.00-64.00, weighted average $63.15). Corn futures closed lower, down 3/4 in the March and July contracts.

LIVE CATTLE:

Strong support redeveloped Wednesday afternoon with contracts settling mostly triple-digits higher (65 cents to $1.30 per cwt higher). Even though buyers were not able to move back to initial session highs set early in the session, the ability to rebuild support following a lackluster session and morning where prices eroded to mere moderate gains created some additional momentum at the end of the session. Additional direction is expected to come from the cash market as well as support from boxed beef values through the end of the week. The ability to lure commercial buyer support back to the complex would help to draw additional long-term support in both nearby and deferred contract months. Beef cut-outs: higher, up $0.16 (choice, $218.19) and up $0.02 (select, $213.62) with light to moderate demand and offerings (76 loads of choice cuts, 27 loads of select cuts, 8 loads of trimmings, 39 loads of coarse grinds).

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THURSDAY'S CASH CATTLE CALL:

Steady. Packer interest was becoming more evident through Wednesday with live bids seen in both the North and South at $134 and dressed bids developing at $206. At this point, feeders have little interest in pulling the trigger, which may delay trade until sometime Thursday or Friday. Packers are thought to need a relatively large number of cattle given the light movement last week, but it is uncertain just how willing they will be to dig deeper in their pockets to gain access to these cattle.

FEEDER CATTLE:

Strong end-of-day buyer support developed in feeder cattle futures following light trade volume through most of the session. Feeder cattle futures closed 95 cents to $2.25 per cwt higher on potential demand increases through the coming months as well as the stability in feed prices. CME cash feeder index: 02/09: $159.49, down $0.27.

LEAN HOGS:

Lean hog futures broke lower Wednesday as the sideways trend that had held over the last couple of weeks finally gave way and pushed nearby contracts $1 per cwt lower. February was the only contract to hold a gain. Light volume was noted and attention was focused on the underlying cash trade. The remainder of spring and summer contracts posted losses of 90 cents to $1.27 per cwt lower. This created a full market range of $1.27 lower to 30 cents higher. The carcass value closed modestly lower on weakness in picnics (-$1.15), ribs (-$1.66), hams (-$0.57) and bellies (-$1.32). Pork cut-out: $77.05, down $0.12. CME cash lean 02/08: $64.89, up $0.27 (DTN Projected lean index for 02/09: $65.29, up $0.40).

THURSDAY'S CASH HOG CALL:

Steady to firm. Packer spending is expected to remain stable through the end of the week, although overall hog numbers should remain light for the week due to weather and plant maintenance issues. Saturday production levels are holding steady at 200,000 head, which seems to be about where packers remain comfortable for the time being. It appears maintaining comfortable margins without pushing the envelope seems to be the focus of most packers as they continue to work their way through February.

For more from John, see www.feelofthemarket.com

(CZ)

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Rick Kment