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1 Vol. 12, No. 45 / March 5, 2014 Nearby live cattle futures continued to gain ground yesterday on the back of strong gains in wholesale values and, more importantly, a red hot hog market. Sum-mer hog futures contracts were limit up (300 points) yesterday and it was higher still in overnight trading as market partici-pants continue to debate the potential supply impacts of the in-crease in PEDv related losses this winter. Futures are now pric-ing lean hogs for June at an astounding $ (overnight quote), a 20% premium over the IA/MN cash lean hog carcass values in 2013.

2 It is no coincidence that the best performing live cattle contract yesterday was the June 14 contract, with futures settling at $137/cwt, 210 points above the previous close. At this point futures are pricing some very bullish assumptions about the state of US red meat supplies in the spring of 2014 and robust US domestic and export de-mand. One factor that will continue to anchor US live cattle values is the performance of wholesale beef cuts, especially once fed cattle supplies seasonally increase in May and June.

3 The chart to the right shows the price performance of the choice beef cutout in the past three months vs. the seasonal tendency of pric-es during the Dec - May period. We used a five year average in-dex for this time period and on average the tendency is for prices to be higher in January, as retailers transition away from holiday items; dip in February as cold weather takes its toll; and then move higher in March, April and May as the coming of spring stimulates foodservice demand and backyard grilling comes to life.

4 We thought it was interesting to highlight one year, 2010-11, in that the price performance during that year has been closest to what we have observed so far in the beef complex. What stands out this year is the much more dramatic spikes in beef prices in January, which reflected very current feedlot supplies. The choice beef cutout has climbed higher this week, almost in lock-step with how the market performed in 2011. Remember that in 2011 Easter was also quite late. This meant that the end of Lent will be later than normal.

5 The performance in 2011 also presents a cautionary note, however. While normally one would expect the cutout in May to be higher than in April, in 2011 we saw cutout values actually move lower. Retailers are always looking to maintain good margins in the meat case and spiking beef prices certainly impact their decisions as to what to feature going into Memorial Day. The problem this year for end users is that, at least based on what futures are offering, pork prices will not be that great of a bargain.

6 Some items could see price appreciation of 40%+. This is the context for the big jump in June cattle fu-tures even as cattle availability should improve and feed costs are moving higher. So far, the cattle supply situation remains rela-tively tight and feedlots continue to pull marketings forward. Fed cattle slaughter as picked up recently as packers have sought to fill orders and in the process have had to bid up cattle prices. USDA reported only minimal cash cattle trading yesterday but on Monday cash quotes were around $150/cwt for live steer and $240/cwt dressed.

7 In the short term, the market expects packers to remain relatively aggressive in chasing live cattle and the nearby April contract clearly reflects that, closing above $146/cwt overnight. Sponsored by The Daily Livestock Report is published by Steve Meyer & Len Steiner, Inc., Adel, IA and Merrimack, NH. To subscribe, support or unsubscribe visit Copyright 2013 Steve Meyer and Len Steiner, Inc. All rights reserved. The Daily Livestock Report is not owned, controlled, endorsed or sold by CME Group Inc.

8 Or its affiliates and CME Group Inc. and its affiliates disclaim any and all responsibility for the informa on contained herein. CME Group , CME and the Globe logo are trademarks of Chicago Mercan le Exchange, Inc. Disclaimer: The Daily Livestock Report is intended solely for informa on purposes and is not to be construed, under any circumstances, by implica on or otherwise, as an offer to sell or a solicita- on to buy or trade any commodi es or securi es whatsoever. Informa on is obtained from sources believed to be reliable, but is in no way guaranteed.

9 No guarantee of any kind is implied or possible where projec ons of future condi ons are a empted. Futures trading is not suitable for all investors, and involves the risk of loss. Past results are no indica on of future performance. Futures are a leveraged investment, and because only a percentage of a contract s value is require to trade, it is possible to lose more than the amount of money ini ally deposited for a futures posi on. Therefore, traders should only use funds that they can afford to lose without affec ng their lifestyle.

10 And only a por on of those funds should be devoted to any one trade because a trader cannot expect to profit on every trade. The Daily Livestock Report is made possible with support from readers like you. If you enjoy this Report , find if valuable and would like to sustain it going forward, consider becoming a contributor. Just go to to contribute by credit card or send your check to The Daily Livestock Report , Box 2, Adel, IA 50003. Thank you for your support! 18219220221222223224285%90%95%100%105%11 0%115%DecJanFebMarAprMay2013-14 Cutout$/cwt2013-14 Cutout$/cwt(right axis)Dec - May Index(% ch.)