DTN Closing Livestock Comment 03/22 17:29
Uncertainty Sweeps Through Hog Trade
Hog futures showed their first signs of uncertainty Friday morning as
traders pulled back from limit gains in summer trade. Trading stabilized late
in the session, resulting in a mixed close.
By Rick Kment
GENERAL COMMENTS: Livestock futures traded in a wide range Friday. Lean hogs
futures moved from early limit gains to aggressive losses through the morning,
but stability returned Friday afternoon and prices settled mixed at closing
bell. Cattle markets were also affected by the volatility in lean hogs. From
Friday to Friday, livestock futures scored the following changes: Apr LC up
$0.63; Jun LC up $1.58; Mar FC up $1.68; Apr FC up $1.88; Apr LH up $9.53; May
LH up $9.13. Cash cattle trade started to slowly develop Friday with trade
extending into late afternoon and potentially Friday evening. The cash trade
that has developed so far is seen at $128 to $129 live basis, which is $1 to $2
per cwt higher than last week. Dressed trade developed at $208 through the
north, which is $4 per cwt higher than week-ago levels. The National Daily
Direct afternoon hog report was $3.29 higher ($56-$71.50, weighted average
$66.44) on 6,234 head sold. Corn futures were higher in light activity with May
up 2 cents per bushel. The Dow Jones Index is 460 points lower with the Nasdaq
down 196 points.
LIVE CATTLE: Narrowly mixed trade left cattle markets directionless Friday
($0.40 lower to $0.40 higher). Live cattle trade struggled to find any sense of
market support despite initial market gains through the complex. The lack of
underlying support in beef values listed in the morning report as well as
general shift in hog market direction seemed to cause most traders to hunker
down and focus on market stability through the end of the week. Beef cut-outs:
mixed, $0.27 higher (select, $218.64) and down $0.22 (choice, $229.09) with
light demand and light to moderate offerings, 72 loads (43 loads of choice
cuts, 8 loads of select cuts, 8 load of trimmings, 13 loads of coarse grinds).
MONDAY'S CASH CATTLE CALL: Steady. Packers and feeders will start over
Monday morning following late-day trade Friday, which pushed cash markets
higher. Monday's session will be focusing on showlist distribution and
FEEDER CATTLE: Early support in feeder cattle gave way to a mixed close
($0.12 lower to $1.42 higher). Nearby contracts were narrowly mixed with
limited interest developing through the entire complex. The USDA Cattle on Feed
report, released following the market close, is expected to limit support early
next week following cattle placement levels of 102%, which was 6% above early
estimates. CME cash feeder index for 3/21 is $141.02, up $1.90
LEAN HOGS: Wide price shifts left hog markets vulnerable and will likely
lead to further uncertainty next week. Futures closed $1.35 lower to $1.07
higher. Sharp gains developed early Friday, as traders took advantage of
another day of expanded trading limits. But once initial buying slowed,
pressure quickly developed, resulting in several summer contracts traded in a
$6.50- to $7-per-cwt range during the session. This may be the widest one-day
market shift in the lean hog complex since expanded limits were introduced.
Light buying trickled into the market late in the session, leaving futures
mixed, but avoiding a disastrous meltdown at the end of the week. Continued
price support moved into wholesale pork values with triple-digit gains seen in
most primal cuts. Pork cutout values added $1.54 per cwt, moving to $77.79 per
cwt, on 336 loads. CME cash lean index for 3/20 is $60.75, up $1.53. DTN
Projected lean index for 3/21 $62.41, up $1.66.
MONDAY'S CASH HOG CALL: Steady to $2. Firm follow-through support is
expected to develop early next week despite the pullback in futures at the end
of the week. Monday slaughter is expected at 477,000 head.
Rick Kment can be reached at firstname.lastname@example.org
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