Cattle-On-Feed Report Could Pressure Futures Open

Live cattle futures are expected to see some pressure on the opening bell today as the February USDA Cattle-On-Feed report Friday afternoon was considered to be neutral to slightly bearish as some of the data was already priced into the market.\r\n   The USDA report showed the number of cattle populating US feedlots of 1,000 head or more capacity at 10.760 million head, down 3% from a year earlier but slightly more than traders had anticipated in a Reuters survey.  \r\n   The number of cattle placed into feedlots, at 2.029 million, was an 8-year high and the major bearish factor.  This was up 9% from a year ago and well above the 2.5% gain expected by traders.\r\n   The number of cattle marketed, or sent to slaughter, during January was 1.788 million head, the USDA reported, right in line with pre-release estimates.\r\n   The Livestock Marketing Information Center charted the figures, and the results hint at continued market support in the near term, giving way to some possible pressure in coming months.  \r\n   The total number of cattle on feed was below last year and the five-year average and was rising counter-seasonally.\r\n   However, the slaughter supplies remain very tight, and AgResource pointed out later that on-feed supplies were at an 11-year low.\r\n   Total placements during the month were significantly above last year and the average, USDA data showed.  What’s more, January placements were concentrated on the heavier calves, those that will finish, or be ready for slaughter sooner.\r\n   Record-high cash and deferred futures prices were cited by market analysts for the increased placement rate.  AgResource said that even though the feeder cattle prices hit record highs, the nearby feeder cattle crush spread remained well above a year ago and at a 4-year high.\r\n   But while the On-Feed report might be considered somewhat bearish to prices yet supported by tight supplies, the market may get more of a boost from the hog market in coming months.  The Porcine Epidemic Diarrhea virus is spreading, and anecdotal reports hint that the problem may be more widespread than first thought.\r\n   Market analysts say pork production is keeping up because of increased slaughter weights, but that the virus is killing millions of baby pigs.  They say slaughter hog numbers this year could tighten to support the market, and if competing meats are tight with prices higher, beef and cattle prices also could be supported.\r\n   The USDA’s Cold Storage report, however, showed that the industry has pork in storage that could mitigate any nearby supplies from PEDv.  The USDA said Jan. 31 frozen pork supplies were up 13% from a month earlier and up 3% from last year.\r\n   The Cold Storage report, which also was released Friday, showed beef stocks down 2% from last year, the largest decline since 2004.\r\n   Cash cattle traded last week at $144 to $145 per cwt in the southern Plains and up to $148 in the Northern Plains.  Last week, cattle traded at mostly $142.\r\n   Meanwhile, the polar vortex is set to make a return visit to the lower 48.  Forecasters have temperatures dropping for the next two weeks, with some extremely low daily lows possible in the Northern Plains and the Upper Midwest.  \r\n   Grain futures are mixed in overnight trading with soybeans higher and corn and wheat lower.  Traders appeared to be focusing on technical factors and a calming of Ukraine’s political situation in their buying decisions.\r\n   Argentine farmers appear to be selling more as the harvest nears, yet apparently, it’s not enough as government intervention is thought possible to speed up the process.\r\n   Ukraine seems to be settling down as the government capitulates to protesters and a new one more favorable to Europe than to Russia takes over.  Market analysts say the stability means the export markets will remain open, which could keep pressure on world corn and wheat prices.\r\n   Boxed-beef prices were down a bit on Friday, with the USDA reporting its choice cutout at $213.75, down $0.57 on the day, but up $6.07 for the week.  The select cutout was reported Friday at $210.88, down $0.48 for the day but up $3.92 for the week.  There were an estimated 111 fabricated loads sold into the spot market.\r\n