March 12, 2014
Fed cattle, steady to higher
Feeder cattle, steady to higher
Lean hogs, lower
Overnight stock futures trade suggests Wall Street will continue Monday's slump.
Overnight trade points firm in cattle, sharply lower in hogs.
Cash fed cattle. On Tuesday USDA reported negotiated cash trade was at a standstill in all feeding regions.
Early week wholesale cutout gains plus futures advances combined with 6,000 fewer cattle on show lists lead some market watchers to expect cash sales could occur at steady to slightly higher prices this week.
Tuesday's morning choice cutout was up $2.18 at $241.08, with select up $1.47 at $237.46. Afternoon boxed beef cutout values were higher on moderate to fairly good demand and light offerings. Choice was up $2.57 at $241.47, with select up $1.72 at $237.71 on 106 loads.
USDA estimated Tuesday' cattle slaughter at 114,000. Slaughter so far this week of 219,000 is down 9,000 from last week and down 18,000 from last year.
Last week's live basis cattle traded $2 to $3 lower at mostly $147 to $148, a few at $150.
Dressed sales ran steady to $4.50 lower from $235.50 to $240.
Cattle futures. Fed cattle ended mixed, lifted in the front-month contract by rising wholesale beef prices, which improve packer margins. Strengthening margins for beef processors have some industry watchers thinking this week's cash trade will take place near the $148 to $150 fetched by most owners last week.
April cattle futures gained 7 cents to $143.22. June slipped 30 cents to $136.10. August through February lost at least 37 cents.
March feeder cattle gained 22 cents to $173.92. April through November slipped at least 12 cents as corn futures advanced.
Bottom line. Rising wholesale cutout values and spillover support from hogs buoy fed Cattle futures. Smaller show lists fuel optimism for higher cash trade this week. Feeder cattle trip on rising corn futures.
Cash hogs. Market participants pushed Tuesday's live cash hog prices as much as $2 higher.
Still, trade chatter persists that live hog buying interest may ease in weeks ahead as packers adjust slaughter schedules to expectations hog supplies will keep tightening.
USDA's afternoon reports showed Tuesday's weighted-average:
* National base price up $1.72 at $107.91.
* Iowa-Minnesota up $2.22 at $110.45.
* Western Corn Belt up $2.48 at $110.08.
* Eastern Corn Belt averaged $105.23, with no comparison.
Price changes are compared to USDA's afternoon report for Monday.
USDA estimated Tuesday's hog slaughter at 413,000, Slaughter so far this week of 821,000 is up 20,000 from last week but down 14,000 from last year.
Data USDA collected under Mandatory Reporting showed Tuesday's morning plant cutout up 74 cents at $115.68. Afternoon cutout values were:
FOB plant up $2.59 at $117.53.
FOB Omaha up $2.91 at $116.46.
Based on 338 total loads.
Based on the new cutout Dow Jones estimated Tuesday's packer margin index at plus $7.95 per head vs. plus $6.19 on Monday.
On Monday the CME two-day lean hog index advanced for a thirty-second day, rising $1.29 to $106.02. 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. Hogs ended Tuesday's session at new all-time highs despite choppy trading throughout the day. Market participants are reassessing supply concerns due to widespread porcine epidemic diarrhea virus cases.
April hogs recovered earlier losses to settle $1.10 higher $117.10, the highest ever price for any front-month contract and the seventh new record over the past eight sessions. June hogs rose $1.45 to $124.95, also a fresh high. Deep deferreds slipped. Futures slipped overnight.
PEDV, which first appeared in the U.S. last spring, has spread to new sow units through March, raising concerns the disease could affect supplies longer than previously expected. Pigs take about six months to grow to slaughter weight. That lag has market watchers seeking signs that the rapid spread of the disease last fall is about to curtail slaughter runs. Estimates of weekly pork production remain on par with, or slightly higher than, year-ago levels.
Monday's USDA World Ag Supply and Demand Estimates trimmed this year's forecast U.S. pork production by 60 million pounds, or 0.3%, to 23.4 billion pounds. Projected production is still 1% higher than 2013 levels. The reduced production estimate also supported gains in futures. However, the production reduction was offset by a 65 million pound cut in projected pork exports. That cut makes sense due to rising prices. Those adjustments leave domestic pork consumption virtually unchanged.
Bottom line. After front-month futures rose nearly 17% over the past two weeks, and deferreds saw bigger gains, some analysts are concerned the buying could have taken prices too high, too soon. Futures trading both higher and lower than the prior peaks throughout the day Tuesday signal to some that the market looks toppy. Hog futures plunging more than $1 overnight unnerves market bulls.