March 7, 2014
Fed cattle, steady
Feeder cattle, lower
Lean hogs, higher
Overnight stock futures were little changed. Wall Street awaits today's Bureau of Labor Statistics jobs report for February. Traders blame bad weather for sluggish jobs growth in December and January. Winter's icy grip continued in February. Traders are braced for disappointing numbers.
Overnight livestock trade points steady in fed cattle, lower in feeder cattle, higher in hogs.
Cash fed cattle. USDA reported light trading in the Texas Panhandle Thursday with live sales $2 lower than last week at $148.
Trading was limited in Kansas on Thursday morning on light demand. Compared to last week, live sales are $2 lower at $148.
Trading was light in Nebraska on Thursday with a few early live sales mostly $2 lower than the bulk of the sales last week at $150 and early dressed sales $3 lower at mostly $237, few up to $240. Light dressed trade occurred in Nebraska Wednesday with sales at $240.
Trading was light Thursday morning in Colorado with live sales $2 to $2.50 lower than last week at $150.
Trading was light in Iowa with a few sales at $240 dressed.
Thursday's morning choice cutout was up $1.29 at $235.80, with select up $1.14 at $233.07. Afternoon boxed beef cutout values were higher on moderate to fairly good demand and light offerings. Choice was up $1.07 at $235.58, with select up $1.07 at $233.00 on 101 loads.
USDA estimated Thursday's cattle slaughter at 108,000. Slaughter so far this week of 442,000 is down 6,000 from last week and down 35,000 from last year.
The latest HedgersEdge packer margin index per head was minus $31.50 Thursday, compared with negative $48.00 per head Wednesday.
Cattle futures. Cattle futures settled mostly lower Thursday, pressured by declining cash fed cattle prices, as beef processors work to improve battered margins. Surging cattle prices in recent weeks have severely crimped those processing margins.
Cattle prices hit records earlier this year. Cattle made another run-up to new highs last week. As cattle prices rose, so did wholesale beef cutout values, generating more revenue from retailers and export buyers. But if retailers and export buyers balk on paying higher prices, margins could be pinched along the supply chain. Fears of consumer push back pressured cash fed cattle prices lower Thursday.
The Wall Street Journal's weekly survey of grocery-store ads shows this week's:
* 15-cut average for beef at $4.78 a pound, up from $4.55 a week ago and up from $4.26 a year ago.
* Ground beef prices climbed to an average $3.46 a pound, compared with $3.27 a week ago.
* Pork prices were mixed, but the five-cut average came in at $2.76 a pound, compared with $3.10 a pound in the week-ago.
* Chicken prices declined on average, although prices of whole fryer chickens were up from a week ago. At $2.21 a pound, the average price of boneless, skinless chicken breasts was moderately less than last week's $2.65 a pound. The two-cut average price for chicken fell to $1.80 a pound, from $1.93 a pound last week.
Front-month April fed cattle gave up 52 cents to settle at $143.15. June slid 30 cents to $135.47. Remaining contracts through February lost lesser amounts.
March feeder cattle slid 82 cents to $171.40. April through September all lost at least $1.
Bottom line. Cash cattle and futures slip on fears that stronger consumer push back will erode buying interest. Continuing cutout gains improve packer margins. But cattle and wholesale beef prices will not move opposite directions indefinitely.
Cash hogs. Market participants reported Thursday's live cash hog prices steady with Tuesday's prices to $2 higher, with prices mostly ranging from 50 cents to $1 higher.
Buyers paying in the top end of the base price range bought the bulk of the hogs.
USDA's afternoon reports showed Thursday's weighted-average:
* National base price up $2.29 at $104.39.
* Iowa-Minnesota up $2.98 at $106.23.
* Western Corn Belt up $3.04 at $105.76.
* Eastern Corn Belt was up $1.19 at $101.82.
Price changes are compared to USDA's afternoon report for Wednesday.
USDA estimated Thursday's hog slaughter at 418,000. Slaughter so far this week of 1.637 million is down 61,000 from last week and down 75,000 from last year.
Data USDA collected under Mandatory Reporting showed Thursday's morning plant cutout down 71 cents at $108.34. Afternoon cutout values were:
FOB plant up $1.51 at $109.05.
FOB Omaha up $1.75 at $109.58.
Based on 258 total loads.
Based on the new cutout Dow Jones estimated Wednesday's packer margin index at plus $2.71 per head vs. plus $5.47 on Wednesday.
On Wednesday the CME two-day lean hog index advanced for a twenty-ninth day, rising $1.44 to $102.31, just two-bits shy of its September 2013 high of $102.56. 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 notched a fresh all-time closing high Thursday, marking the third record this week on a tighter supply outlook.
Persistent concerns that porcine epidemic diarrhea virus will trim spring and summer slaughter supplies more than earlier expected boosted prices Thursday.
Meat processors are competing more aggressively to secure enough supplies to fill retail pork orders. That's steadily boosted cash hog prices, underpinning futures.
But after a nearly 8% surge in front-month futures -- and a higher climb in deferred contracts -- over the past week, buying has slowed slightly.
Some traders think hog futures may be overpriced compared to actual production losses that may come to pass. But bucking the uptrend is challenging.
April hogs rebounded $1.67 to $112.40, just above the peak set for that contract Tuesday. June hogs rose $1.15 to $119.35, a fresh contract high.
Bottom line. Fears of intensifying PEDV death losses keep feeding the hog market bull. Some traders sense futures are starting to become overpriced.