March 6, 2014
Fed cattle, lower
Feeder cattle, lower
Lean hogs, lower
The crisis between Russia and Ukraine remains unresolved. Still, after early week gyrations, stock futures inched higher overnight. Markets, sensing that a full-fledged war is unlikely, seem to be finding some stability.
Overnight livestock trade points lower in fed and feeder cattle, higher in hogs through summer.
Cash fed cattle. USDA reported very limited trading in Kansas late Wednesday morning on light demand. A few cattle sold at $148, but not enough to establish a market. Iowa also saw limited trading with a few dressed sales at $240. Trade was inactive on light demand in all other feeding regions.
Rebounding beef cutouts, recent fed cattle futures gains and smaller show lists have feedlots asking more for fed cattle this week. Some owners are asking $153 to $154 in the south, up about $3 from prices paid in Kansas and Texas last week. The limited early trade suggests achieving those prices could be a stretch.
Last week cattle traded mostly $150 to $152 live and $240 dressed. Last week's $150 trade in the south was about $8 higher than trade in the region the prior week.
Wednesday's morning choice cutout was up $2.99 at $234.75, with select up $2.31 at $232.05. Afternoon boxed beef cutout values were higher on moderate demand and light offerings. Choice was up $2.75 at $234.51, with select up $2.19 at $231.93 on 139 loads.
USDA estimated Wednesday's cattle slaughter at 106,000. Slaughter so far this week of 334,000, up 3,000 from last week, but down 22,000 from last year.
The latest HedgersEdge packer margin index per head was minus $48.00 Wednesday, compared with negative $61.30 per head Tuesday.
Canadian cattle inventory down 1%. Statistics Canada, in a report released by USDA, tallied the Jan. 1, 2014 all cattle and calves inventory in Canada at 12.2 million head, down 1% from the 12.3 million on Jan. 1, 2013. All cows and heifers that have calved, at 4.86 million, were down 1% from a year ago.
All cattle and calves in the United States and Canada combined totaled 99.9 million head on Jan. 1, 2014, down 2% from the 101.6 million on Jan. 1, 2013. All cows and heifers that have calved, at 43.1 million head, were down 1% from a year ago.
All cattle and calves in the United States as of Jan. 1, 2014, totaled 87.7 million head, 2% below the 89.3 million on Jan. 1, 2013. All cows and heifers that have calved, at 38.3 million head, were down 1% from a year ago.
Cattle futures. Cattle futures all declined Wednesday, pressured by the more negative tone across the livestock complex.
Front-month April fed cattle gave up all of Tuesday $1.50 gain and 45 cents more to settle at $143.67. June slid $1.22 to $135.77. Remaining contracts lost lesser amounts.
March feeder cattle slid 67 cents to $172.22. May dipped 35 cents to $174.00.
Bottom line. Futures markets have an instinct to be able to anticipate cash market action in days ahead. Despite continuing wholesale beef cutout value gains, Wednesday's across the board cattle slump, which continued overnight, is a sign the cattle bull may be running out of momentum.
Cash hogs. Market participants reported Wednesday's live cash hog prices steady with Tuesday's prices to $2 higher, with prices mostly ranging from 50 cents to $1 higher.
USDA's afternoon reports showed Wednesday's weighted-average:
* National base price up 77 cents at $101.98.
* Iowa-Minnesota up 24 cents at $103.28.
* Western Corn Belt down 13 cents at $102.66.
* Eastern Corn Belt was up $1.04 at $100.63.
Price changes are compared to USDA's afternoon report for Tuesday.
USDA estimated Wednesday's hog slaughter at 423,000. Slaughter so far this week of 1.224 million is down 47,000 from last week and down 61,000 from last year.
USDA reported last week's Iowa-southern Minnesota barrows and gilts averaged 281.8 pounds, down from 282.2 pounds the previous week, but up 1 pound from a week earlier and up from 276.1 pounds a year ago.
Data USDA collected under Mandatory Reporting showed Wednesday's morning plant cutout up $1.41 at $108.95. Afternoon cutout values were:
FOB plant up $1.51 at $109.05.
FOB Omaha up $1.12 at $107.83.
Based on 483 total loads.
Based on the new cutout Dow Jones estimated Wednesday's packer margin index at plus $5.47 per head vs. plus $2.83 on Tuesday.
On Tuesday the CME two-day lean hog index advanced for a twenty-eighth day, rising $1.92 to $100.87. Its recent lows are $79.91 on Jan. 20, $79.23 on Dec. 23 and $80.83 on Nov. 25. Recent peaks are $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.
Hog futures. U.S. hog futures surged to the highest intraday prices ever early in Wednesday's session, before retreating slightly into the close.
Hogs traded in a wide range Wednesday--both higher and lower than Tuesday's close--as traders weigh sentiment that the upward swing this week could have been too sharp in some contracts. This follows four consecutive days of major buying in hog futures, which has taken prices for many contracts to their highest levels in history.
Projections from market watchers who see slaughter numbers dropping dramatically in the summer months due to thoughts porcine epidemic diarrhea virus death losses are larger than previously believed fueled buying. PEDV began to rapidly spread throughout the U.S. in the fall. It has continued to affect new barns, killing more pigs this month.
April hogs slid 95 cents to $110.72, after climbing to a fresh front-month contract high of $114.67 at the open. June hogs rose $2 to $117.75, a fresh contract high. May through August all gained between $1.15 and $2 on concerns PEDV baby pig death losses will further trim spring and summer hog slaughter at a time when hog slaughter runs are seasonally the smallest.
Steadily rising negotiated cash prices have been underpinning futures. Some traders see rising cash prices as a sign of tighter supplies of market-weight hogs in the weeks ahead.
Summer hog slaughter could dip 13% below last year. Heavier carcass weights could offset lower numbers. But pork production could still skid 9% to 10% from 2013.
So far this year, pork production remains at, or above, 2013 levels.
Some traders think hog futures may be overpriced compared to actual production losses that may come to pass. But selling into a raging bull market is challenging and fraught with risk.
Bottom line. Fears of intensifying PEDV death losses keep feeding the hog market bull. Wednesday's trading in a wide range on both sides of Tuesday's close suggest the market is nervous about how much more upside might be left.