Live and feeder futures surged sharply higher, spurred by aggressive short-covering and cash optimism. Far less dramatically, lean hog closed mixed with deferred generally gaining on nearbys.
Midday: The cattle complex had a firm undertone near midday, supported by positive cash expectations and evidence of strong boxed beef demand. Dor the most part, lean hog futures are modestly higher moving toward the last hour of the session, cautiously supported by short covering and spillover buying from cattle futures.
The cash cattle trade remains generally quiet at midday with just a few suggestions of bids (e.g., $123 live in parts on Kansas) and asking prices (e.g., $200-202 dressed in parts of Nebraska). Interestingly, Mandatory Reporting identified several thousand steers and heifers sold on Monday, mostly at $124. We suspect such early biz related to either basis opportunity or terms of extended delivery. Possibly both.
According to the midday report, the national hog base is 0.90 lower compared with the Prior Day settlement ($63.00-68.50, weighted average $66.59).
Corn futures are 10-11 cents higher near the top of the noon hour, supported in part by friendly talk regarding possible changes in ethanol usage (e.g., broader E15 access). The stock market is lower at midday as the market turns cautious before the President’s scheduled address to Congress tonight. The Dow is 45 points lower with the Nasdaq off 39.
The front four live contracts are essentially covered with triple-digit gains at midday. Spot Feb is set to expire in just a minute or so, and bulls and bears alike are nervous regarding how spring and summer discount might be transformed over the next 30-60 days.
Beef cut-outs are sharply higher at midday, up $2.64 (choice, $204.12) to $3.69 (select, $200.77) with light box movement (25 loads of choice cuts, 14 loads of select cuts, 8 loads of trimmings, 16 loads of coarse grinds).
Though pressured early in the session by profit taking and higher action in the corn market, feeder futures are holding solid progress at midday with most contracts up by 35 to 90.
Lean hog prices near the top of the noon hour range from 30 points higher to 15 lower. Most issues are in the green by a modest margin with spot April dipping some lower. The carcass value is modestly higher at midday with lower loin sales offset by strength in all other primals. Pork cut-out: $80.71, up 0.26. CME cash lean index for 02/24: 76.72, off 0.67 (DTN Projected lean index for 02/27: 75.89, off 0.83).