March 14, 2014
Fed cattle, steady
Feeder cattle, higher
Lean hogs, lower
Slight gains in overnight stock futures trade suggest Wall Street might start to recover a bit of Thursday's sharp drop.
Overnight trade points steady in fed cattle, higher in feeders, lower in hogs.
Cash fed cattle. On Thursday USDA reported negotiated cash trade was mostly inactive in all feeding regions.
Feedlots in Texas and Kansas passed on multiple bids at $146.
Thursday's afternoon boxed beef cutout values were mostly steady on light to moderate demand and offerings. Choice was down 21 cents at $241.30, slipping from two record highs earlier this week. Select was up 11 cents at $236.87. Load count totaled 114.
Afternoon mostly steady boxed beef cutout values hint that the cattle and beef markets are losing upward momentum.
USDA estimated Thursday's cattle slaughter at 112,000. Slaughter so far this week of 446,000 is up 4,000 from last week but down 34,000 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 as market participants weighed expectations for prices processors may pay for cattle in the cash markets this week.
April cattle futures slid 25 cents to $143.62. June rose 20 cents to $136.87.
March feeder cattle ended unchanged $173.97. Most-active April gained 5 cents to $175.92. May rose up 22 cents at $177.00.
Bottom line. Smaller show lists fuel optimism for higher cash trade this week. Feedlots reject bids at $146, down $1 to $2 from last week. Wholesale cutouts stalling suggest markets could be topping.
Cash hogs. Weather-related transportation snarls and tightening supplies resulted in Thursday's cash bids steady to $2 higher than Wednesday.
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 Thursday's weighted-average:
* National base price up 59 cents at $111.43.
* Iowa-Minnesota up 88 cents at $113.54.
* Western Corn Belt up $1.16 at $113.67.
* Eastern Corn Belt up $2.39 at $108.80.
Price changes are compared to USDA's afternoon report for Wednesday.
USDA estimated Thursday's hog slaughter at 406,000, Slaughter so far this week of 1.643 million is up 6,000 from last week, but down 45,000 from last year.
Thursday's afternoon cutout values were:
FOB plant up 87 cents at $121.47.
FOB Omaha up $1.12 at $120.62.
Based on 269 total loads.
Based on the new cutout Dow Jones estimated Thursday's packer margin index at plus $9.12 per head same as Wednesday.
On Wednesday the CME two-day lean hog index advanced for a thirty-fourth day, rising $1.59 to $109.16. 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. Front-month April hogs locked the $3 daily limit up Thursday, fueled by surging wholesale-pork prices and expectations for supplies of market-ready animals to continue to tighten in the weeks ahead.
Thursday's $118.92 April settlement was the eighth record closing peak in the front month in the past two weeks. June hogs advanced $2.27 to $127.60, also a new high.
Technical buying following another jump in average prices paid in the physical markets lifted futures. The CME two-day index is up $8.29 since March fourth.
Meat processors have been forced to pay higher cash prices for slaughter hogs due to earlier baby pig death losses due to porcine epidemic diarrhea virus.
Hog producers are not required to report the disease to federal regulators. That makes pinning down the extent of PEDV death losses difficult.
The greater the losses, the higher hog prices can go before the market tops out.
Margins for meat processors remain positive, as retailers have also paid up for loins, bellies and other pork products.
Bottom line. Cash hogs seem yet to run out of upward momentum. Hog prices remain inversely linked to PEDV death losses. The more pigs that die, the tighter hog supplies will be and the higher prices could go.