Livestock Call by John Otte

Fed cattle futures ease lower as cash trade slips $1 on adequate supply, hog futures rally on PEDV death loss concerns

Published on: Apr 18, 2014

April 18, 2014

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Fed cattle
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Feeder cattle, closed
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Wall Street and the Chicago Mercantile Exchange are closed today for Good Friday.

Cash fed cattle. USDA reported limited trading in Kansas Thursday morning on light to moderate demand. Compared to last week, early live sales ran $1 lower at $146. Trading accelerated to light to moderate, still at $146.

Later, slow trading began in Nebraska with a few early sales trading at $148 live, and few dressed sales trending $2 lower than last week at $238.

Trading was slow in Iowa with some dressed sales Thursday morning reported at $239 to $240.

Thursday's morning choice boxed beef cutout was up $1.65 at $225.40, with select up $1.06 at $215.53. Afternoon cutouts were higher on moderate demand and light to moderate offerings. Choice was up $2.13 at $225.88, with select up 96 cents at $215.43 on 185 loads.

USDA estimated Thursday's cattle slaughter at 110,000. Slaughter so far this week of 458,000 is down 2,000 from last week and down 24,000 from a year ago.

Cattle futures. Slippage in cash fed cattle prices and variable weather creating a shaky start to grilling season let fed cattle futures drift lower. Sharply lower 2013-crop feed costs and pricy fed cattle spurred winter feedlot placements. The market sees larger summer fed cattle supplies coming, which keeps pressure on prices.

Ten days ago packers were short bought. Now they're not. That means they do not need to chase supplies. That's letting cash fed cattle prices drift lower, which pressures fed Cattle futures.

April fed cattle fell $1.55 to $144.20, down 0.4% from last Friday's close. Most-active June skidded $1.25 to $134.37. Remaining contracts lost lesser amounts.

May feeder cattle fell $1.85 to $178.05. Most-active August slipped $1.57 to $181.40.

Thus far the CME has listed no tender notices to deliver on the soon-to-expire April fed cattle contract.

Bottom line. Cattle prices slump as packers need fewer cattle.

Livestock Call by John Otte

Cash hogs. Compared to Wednesday, on a plant by plant basis, Thursday's weighted average base prices were $2.37 lower to $1 higher. Trading occurred throughout the full $104 to $117 range on slow market activity with light demand.

USDA's afternoon reports showed Thursday's weighted-average:

* National base price down 24 cents at $114.70.

* Iowa-Minnesota up 50 cents at $115.69.

* Western Corn Belt up 55 cents at $115.65.

* Eastern Corn Belt was not available.

Price changes are compared to USDA's afternoon report for Wednesday.

USDA estimated Thursday's hog slaughter at 417,000. Slaughter so far this week of 1.621 million is down 6,000 from last week and down 51,000 from a year ago.

USDA reported Thursday's morning plant cutout down 62 cents at $120.54. Afternoon cutout values were:

FOB plant down $1.08 at $120.08.

FOB Omaha down 71 cents at $119.20.

Based on 283 total loads.

Based on the new cutout Dow Jones estimated Thursday's packer margin index at plus $2.15 per head vs. plus $5.62 Wednesday.

Wednesday's CME two-day lean hog index slipped for a tenth straight day, sliding 92 cents to $122.16. Its recent peaks are $130.35 on April 2, $81.05 on Jan.10, $82.91 on Dec. 4, $91.48 on Oct. 24, $98.25 on Sept. 20 and $102.56 on Aug. 15. Recent lows are $79.91 on Jan. 20, $79.23 on Dec. 23 and $80.83 on Nov. 25.

Hog futures. Hogs ended mostly higher Thursday. Summer hogs rose on persistent uncertainty on how much earlier baby pig losses will trim summer hog slaughter.

Through April 12, the National Animal Health Laboratory Network reported the total number of positive tested cases for Porcine Epidemic Diarrhea Virus and another coronavirus called swine delta corona virus at 5,790. Vermont reported the state's first positive PEDV accession in the most recent update.

Most-active June hogs surged $1.05 to $124.82. July rose $1.42 to $123.07. August was the big gainer, up $1.65 at $121.90. Deep deferreds slipped. February 2015 hogs sagged 15 cents to $86.70, a sizable $38.12 discount to June. Deferreds slipped on thoughts hog expansion is underway.

Bottom line. Most hog futures contracts advanced on persistent concerns about how much death losses due to viral diseases will trim slaughter runs in the days ahead. Some semblance of cash price stability is constructive. Still, cutouts continue to weaken, which is a negative.

The opinions of John Otte are not necessarily those of FarmProgress.com, Farm Futures.com, or the Penton Farm Progress Group.