In this file:


         Livestock Call By John Otte

Cattle futures plunge on Cargill beef plant closure notice, tight supplies and strong demand help hog futures dodge downdraft from cattle


         DJ Cash Hog Bids Seen Flat To Higher on Snug Supplies 

         DJ Estimated U.S. Pork Packer Margin Index - Jan 18


         DJ MARKET TALK: CBOT Wheat-Corn Spreads to Hold Steady - Analysts



Livestock Call By John Otte

Cattle futures plunge on Cargill beef plant closure notice, tight supplies and strong demand help hog futures dodge downdraft from cattle


John Otte - Farm Futures - January 18, 2013



Fed cattle, lower

Feeder cattle, lower

Lean hogs, steady


Stocks rallied Thursday. The Dow closed near a 5-year high as upbeat reports on the economy offset mixed corporate results. Stock futures traded near steady overnight. Signs of a rebound in China's economy could provide lift. But more corporate earnings will set the tone for today's trade.


The beef complex worked lower overnight. Hog futures showed signs of stability.


Thursday morning Cargill said it would close its Plainview, Texas, beef processing plant Feb. 1, noting that the prolonged drought in the Plains has led to tighter cattle supplies.


Traders fear that the plant's closure will leave fewer competitors bidding for a tight supply of cattle, easing cash prices somewhat. Some analysts predict that the closure could result in roughly a $2 drop per cwt. in cash prices for the near term. It may also soften the outlook for futures prices this spring and summer, which many industry experts have seen on-pace to hit contract records, since packer demand for the animals may not be as brisk.


Cash fed cattle. USDA reported limited trading in all feeding regions Thursday.


Sales so far this week were at mainly $125 on a live basis in Texas, Oklahoma and Kansas. In Nebraska, prices were mainly at $198 dressed and from $123 to $125 live.


USDA estimated Thursday's cattle slaughter at 124,000. The 504,000 cattle slaughtered so far this week are up 3,000 from a week ago, and up 6,000 from year ago.


Thursday afternoon boxed beef cutout values were lower on light to moderate demand and moderate offerings. At midday Choice was off $1.05. Select was off 64 cents. For the day, Choice slipped $1.63 to $192.20. Select fell $1.84 to $184.36.


The latest HedgersEdge packer margin index was minus $36.95 per head compared with minus $46.90 reported the previous day. This is an estimate of packer returns on cattle slaughtered and processed expressed in the form of an index...


Bottom line. Excess beef packing capacity in the U.S. had industry watchers expecting that some beef packing plant would eventually close. Cargill's plant closure may diminish competition among packers a bit as they strive to buy cattle cheaper to boost their dismal margins. Basis patterns in the Texas Panhandle area may shift. Cattle owners there may have to ship cattle to more distant packing plants, which will up their costs.


Trade chatter hints cash prices may average $2 lower, particularly in the area of the plant. However, beef supplies remain tight. The march to record high prices may have slowed, but it's still on.


Cash hogs. Thursday's cash hog bids were mostly steady. A few firmer bids surfaced in some locations on buying interest for weekend delivery and to add to inventories for next week. Packers bidding in the top end of the base price range bought most of the hogs Thursday.


Slaughter-ready supplies are predicted to tighten gradually in the weeks ahead, which could force packers to compete more aggressively for the available animals.


USDA's afternoon reports showed Thursday's weighted-average base prices in:


* Iowa-Minnesota gained $1.82 to average $86.66.


* Western Corn Belt gained $1.43 to average $86.42.


* Eastern Corn Belt hogs surged $3.77 to average $82.72.


Price changes are compared to USDA's afternoon report for Wednesday.


Dow Jones estimated Thursday's packer margin at minus $10.08 per head, vs. minus $6.64 on Wednesday.


USDA estimated Thursday's hog slaughter at 430,000. The 1.720 million hogs slaughtered so far this week are the same as last week and up 77,000 from a year ago. Projections for Saturday's slaughter are mostly around 90,000 to 95,000 head, down about 40,000 from a week ago. The week's total is predicted to be near 2.24 million, compared with 2.284 million a week ago and up 1% from nearly 2.217 million a year ago.


Loins plunging $2.24 took Thursday's pork cutout 37 cents lower to $83.88. Load count totaled 97.


The CME two-day lean hog index, calculated using USDA market data, for Wednesday gained 38 cents to $85.14. It's still well up from $82.67 on Jan. 2...


Bottom line. Cash hogs find firm domestic and export demand. Expectations of tightening nearby supplies push packers to keep competing for hogs. Relatively low retail pork prices compared to beef spark consumer buying interest.


Lean hogs resist spillover selloff from cattle complex on thoughts good demand will persist. If beef prices weaken due to Cargill's Texas plant closure, pork could face stiffer price competition from beef at retail...





DJ Cash Hog Bids Seen Flat To Higher on Snug Supplies

Curt Thacker - DJ/ - Jan 18, 2013


--Cold snap early next week could temper selling interest


--Three plants down Monday for Martin Luther King Jr. holiday


Cash hog prices Friday are expected to be steady, or flat, to higher as packers seek additional animals for next week amid modest seasonal tightening of supplies.


The arrival of cold temperatures across the Midwest forecast for the first half of next week could limit selling interest since producers may want to leave the hogs in the barns to maintain temperatures within the facilities. If packers need to buy more hogs, they'll have to pay steady to higher prices to get any producers interested in selling, livestock dealers said.


Friday's slaughter is expected to be reduced by around 10,000 head from normal due to some maintenance or mechanical work being done at a plant in the western corn belt, but the company will make up the shortfall on Saturday. The weekend slaughter is predicted to be around 90,000 to 95,000 head, and the week's total is seen near 2.23 million head, up about 0.6% from a year ago.


Three eastern plants will be closed Monday in observance of the Martin Luther King Jr. holiday. Those plants have a combined daily capacity of about 52,000 head.


Wholesale pork prices Thursday fell 37 cents per hundredweight to $83.88 from a five-week high hit Wednesday...





DJ Estimated U.S. Pork Packer Margin Index - Jan 18

DJ/ - Jan 18, 2013


This report reflects U.S. pork packer processing margins. The margin indices

are calculated using current cash hog or carcass values and wholesale pork

cutout values provided by USDA and may not reflect actual margins at the plants.

These estimates reflect the general health of the industry and are not meant to

be indicative of any particular company or plant.

Source: USDA, based on Dow Jones Newswires calculations


  All figures are on a per-head basis.



Date        Standard            Estimated margin

            Operating           at vertically

           Margin Index        integrated operations

                *                    *

Jan 17     $ - 10.08             $ - 11.57





DJ MARKET TALK: CBOT Wheat-Corn Spreads to Hold Steady - Analysts

DJ/ - Jan 18, 2013


1021 GMT [Dow Jones] Wheat's premium to corn futures on CBOT is likely to hold steady as a result of tight supply and smaller world-wide crops but further gains will be limited. "If wheat moves up it also pulls along corn so there isn't much change in the corn-wheat spreads," Kaname Gokon, deputy general manager at Tokyo-based brokerage Okato Shoji told Dow Jones Newswires. Near-month spreads between corn and wheat are currently around 55 cents/bushel. Technical charts indicate that the spread will be rangebound between 37 cents and 72 cents a bushel in the next few days, says Hiroyuki Kikukawa, general manager for research at Nihon Unicom in Japan. Corn is getting price support from tight inventories in the U.S., the world's largest exporter. Wheat prices have moved up this month...