The cattle complex closed moderately higher, supported by follow-through buying and aggressive packer procurement in feedlot country. Lean hog issues settled modestly higher, boosted by late-week short-covering and pre-holiday positioning.
Midday: After a slow start of momentary profit taking, cattle futures near the noon hour has clearly resumed the week’s impressive march forward. Lean hog contracts are narrowly mixed at midday in a slow and featureless trade.
Light to moderate trade volume is evident in Kansas and Texas with most steers and heifers marked at $128, $2 higher than last week. While buying inquiry is decent in the North at this time (i.e., with most dressed bids up to $205-206), we haven’t seen much area business so far (a few high dressing deals at $206 basis eastern Nebraska).
Look for trade volume totals to increase over the next several hours, probably enough for buyers and sellers to call it a week. According to the midday report, the national hog base is 0.40 lower compared with the Prior Day settlement ($52.00-57.00, weighted average $56.13).
Corn futures are several pennies plus higher in late morning business. Light commercial buying seems somewhat evident in largely featureless activity. The stock market is mixed near midday with the Dow off 36 points and the Nasdaq about unchanged.
Live futures open lower, but turned higher near midmorning thanks to reports of higher feedlot sales. Prices are currently 12 to 112 points higher, supported by short covering, bull spreading interest, and the most recent confirmation that decent packer spending in the country is not going away anytime soon. Note that June through December have once again scored new contract highs.
Beef cut-outs are mixed at midday, up .22 (choice, $210.35) to off 0.07 (select, $198.57) with light box movement (39 loads of choice cuts, 16 loads of select cuts, 6 loads of trimmings, 6 loads of coarse grinds).
While feeders are mostly higher near the noon hour, price action is generally slower than the live market. That’s the opposite of what was seen Monday through Wednesday when feeders played an outstanding role of bullish leadership. Today’s lag could be a function of pre-holiday profit taking and the unwinding of feeder/live spreads.
Lean hog contracts are mixed at midday, ranging from 22 higher to 30 lower. Summer contracts continue to work on a seasonal bottom around 72. The question of the strength of second quarter pork demand may be the most important factor hanging in the balance in that regard. The pork carcass value is bouncing significantly higher according to the noon report, particularly supported by a higher belly primal (i.e., up $5.99).
Pork cut-out: $77.94, off $1.18. CME cash lean index for 04/11: 64.16, off 0.49 (DTN Projected lean index for 04/12: 63.38, off 0.48).