DTN Closing Livestock Comments

GENERAL COMMENTS: Buying in lean hog trade led the complex higher, allowing for trade near limit gains through part of the morning. Even though prices backed away from session highs, the strong bounce at the end of the week limited market losses. Cattle futures trickled higher Friday with the focus on position adjustments before the weekend. From Friday to Friday livestock futures scored the following changes: Feb LC, up $1.55; Apr LC, up $1.00; Jan FC, off $4.67; Mar FC, off $2.08; Feb LH, off $1.43; Apr LH, off $1.08. Cash cattle trade remains undeveloped at this point, with activity likely to hold out until late afternoon. Asking prices remain firm at $127 to $130 per cwt live and $200 and higher dressed. The need for cattle by packers should help to spark some additional packer interest late in the week, but current bids are showing little aggressiveness at this point. Live bids are seen at $122 to $123 per cwt, while dressed bids are at $195 to $197 per cwt. According to the closing report, the national hog base is $0.41 higher ($46-$53, weighted average of $51.81). Corn futures are higher in light activity. March futures were 1 3/4 cent higher. Dow Jones Index is 300 points higher with Nasdaq up 62 points.

LIVE CATTLE: Pressure developed in live cattle trade following sharp triple-digit losses in feeder cattle markets. Futures closed mixed, $0.57 lower to $0.62 higher. Buyers moved into live cattle trade Friday with all but front-month February futures posting firm gains. The turn lower in cattle markets last week has sparked some additional underlying support and end-of-the week position-taking. Even though trade remains extremely light in the last half of the week, the focus on still-strong beef demand through spring is helping to keep prices near the top end of the trading range. Beef cut-outs: higher, up $1.81 (select, $209.45) to up $0.65 (choice, $213.15) with light demand and light-to-good offerings on 96 loads (38 loads of choice cuts, 13 loads of select cuts, 17 load of trimmings, 29 loads of coarse grinds).

MONDAY'S CASH CATTLE CALL: Steady. Activity Monday is expected to remain extremely sluggish given that futures trade will remain closed and packers and feedlot managers will go through the weekly chore of showlist distribution and inventory-taking. Limited cash market activity won't develop until midweek or later.

FEEDER CATTLE: Mixed trade developed late in the week as traders tried to add stability back into the complex. Futures closed $0.10 lower to $0.30 higher. Trade volume was limited Friday, although firm buyer support developed in most contracts through the first half of the session. Sharp triple-digit losses Thursday sparked increased short-covering as traders tried to prepare for the longer holiday weekend. Futures trade will remain closed Monday, and will open at normal trading times Tuesday morning. That will allow traders and analysts time to focus on potential longer-term moves in the cattle industry in general and overall feeder cattle specifically. CME cash feeder index for 1/17 is $142.05, down $1.04.

LEAN HOGS: Strong gains quickly developed Friday, pushing futures $0.30 to $1.65 higher. Aggressive buyer support moved into the lightly traded lean hog futures Friday morning with triple-digit gains seen in all nearby contracts. The unrestricted buyer support pushed April through June contracts over $2 per cwt higher through most of the session, with the April contract nearing limit gains. The inability to hold prices at session highs is not expected to add additional pressure to futures, as traders tried to adjust positions following sharp previous losses. Even though there is no significant news to explain the rally in futures, the announcement that China will include poultry as one of the products it will buy and reports coming out of China that pork supplies are tightening are generally positive for the overall pork industry in the long term. Pork carcass values trickled lower with widely mixed prices in primal cuts. Loin markets surged $2.39 per cwt higher, while picnic cuts were down $2.34 per cwt. Pork cutout values fell $0.13 per cwt, moving to $69.97 per cwt on 232 loads. CME cash lean index for 1/16 is $58.18, up $0.16. DTN Projected lean index for 1/17: $58.16, down $0.02.

MONDAY'S CASH HOG CALL: Steady to $1 higher. Activity Monday is expected to remain sluggish with bids expected to be mostly steady. With futures trade closed Monday due to the holiday, cash market direction is likely to be limited. Hog slaughter levels are also expected to be reduced early in the week with 400,000 head expected Monday, while all packers are expected to move back to a normal schedule on Tuesday.

Rick Kment can be reached at rick.kment@dtn.com

(AG)

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