DTN Closing Livestock Comments

GENERAL COMMENTS:

Light-to-moderate cash cattle trading surfaced Friday with the best market test evident in the South. Most live deals were marked at $118, nearly $3 higher than last week's weighted average basis Texas and Kansas. According to the closing report, the national hog base is $0.15 higher ($45.00-$53.00, weighted average $51.95). From Friday to Friday, livestock futures scored the following changes: Dec LC, Up $4.43; Feb LC, Off $0.25; Jan FC, Off $0.27; Mar FC, Off $1.60; Feb LH, Up $2.95; Apr LH, Up $2.20. Corn futures drifted 1-2 cents higher thanks to short-covering in very thin volume. The stock market bid adieu to 2016 by closing 57 points lower in the Dow and 48 down in the Nasdaq.

LIVE CATTLE

Live cattle futures seemed to fly all over the place through the last session of 2016. Yet the wild price swings had more to do with paper-thin volume than significant shifts in market perception. When the dust settled, contracts closed mostly lower, off 5 to 190. Only expiring December finished in the green at $119.00, up 30. Beef cut-outs: lower, off $0.14 (choice, $203.33) to $1.05 (select, $192.84) with light-to-moderate demand and offerings (31 loads of choice cuts, 17 loads of select cuts, 7 loads of trimmings, 13 loads of coarse grinds).

TUESDAY'S CASH CATTLE CALL

Steady to $2 higher. Bullish-minded feedlot managers will launch the new year next Tuesday by once again pricing showlists substantially higher (e.g., $122-plus in the South). Early week activity will be naturally limited to the gathering of new showlists.

FEEDER CATTLE

Feeder contracts closed sharply lower, for the most part down by 145 to 172 points. Most of the defensive was no doubt tied to extremely light trade volume. Seasonally, we would expect to see large auction receipts in the first half of January, and it will be interesting to see how aggressively feedlot managers accept the larger offering of replacements. CME cash feeder index: 12/29: $133.17, up $0.13.

LEAN HOGS

Lean futures closed with decent late-year strength with positive settlements ranging from 7 to 150 higher. Spot Feb through May were well supported thanks to bull-spreading and pre-holiday short-covering. The carcass value closed moderately higher, supported by firm demand for loins, picnic, ribs, and bellies. Pork cut-out: $81.08, off $1.16. CME cash lean index for 12/28: $57.98, up $0.03 (DTN Projected lean index for 12/29: $57.76, off $0.22).

TUESDAY'S CASH HOG CALL

Steady. Expect hog buyers to resume procurement chores next week with basically steady prices.

John A. Harrington can be reached at john.harrington@dtn.com

(AG)

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