DTN Closing Livestock Comments

GENERAL COMMENTS:

Despite limited trade volume totals, cattle buyers chose not to push for more cattle Friday. Other than a few odds and ends, the cash cattle market was at a near standstill. We suspect that carryover cattle will work to increase the size of next week's offering. The national hog base closed $0.36 higher compared with the Prior Day settlement ($51.00-$58.00, weighted average $55.21). From Friday to Friday, livestock futures scored the following changes: Feb LC, Off $1.23; Apr LC, Off $0.37; Jan FC, Off $2.13; Mar FC, Off $1.30; Feb LH, Off $2.18; Apr LH, Up $0.13. Corn futures closed generally 3 cents lower, pressured by disappointing export sales and spillover selling from the bean market. Closing within throwing distance of the magic 20,000 threshold, the Dow closed 64 points higher. Setting another new all-time record high, the Nasdaq closed 33 points in the green.

LIVE CATTLE

Futures closed mostly higher up 27 to off 25. Late-week action was generally listless with apathy evident in both buyers and sellers. Note that spot February closed more than 300 points below live prices marked on Wednesday. Accordingly, the cattle market is set to start next week with another round of extraordinary basis strength. Such a reality could make it tough again for feedlot managers to move the cash market higher. Beef cut-outs: Sharply lower on choice and steady on select (choice, $198.81 off $2.74, select $193.22 off $0.17) on light-to-moderate demand and offerings (60 loads of choice cuts, 19 loads of select cuts, 08 loads of trimmings, 18 loads of coarse grinds).

MONDAY'S CASH CATTLE CALL

Steady to $2.00 lower. Monday will be typically quiet with packers limiting efforts to the collection of new showlists. While the offering could be somewhat larger thanks to unsold cattle carried over, packers should also have a bigger appetite given this week's limited procurement.

FEEDER CATTLE

Futures closed modestly higher, up 7 to 50. Following the lackluster example set in the live market, feeder issues really didn't do much through the session. The little market support seen may have been tied to lower corn prices and the premium status of the cash index. CME cash feeder index: 01/05: $133.31, up $0.24.

LEAN HOGS

Futures closed mixed, off 90 to up 42. The uneven charter of lean hog contracts seemed to be related to the unwinding of bull spreads as well as late-week profit-taking. With the expiration of spot February still a month away, the spot contract can afford to support a decent premium over the cash index. Yet it's a good bet that we will start to see more convergence moving forward, especially if the appreciation of cash sales starts to dry up. Pork cut-out: $79.01 (FOB Plant) off $0.56. CME cash lean 01/04: $57.61, up $0.03 (DTN Projected lean index for 01/05: $57.69, up $0.08).

MONDAY'S CASH HOG CALL

Steady. Look for hog buyers to resume work on Monday with near-steady bids. Expect the funding of another large kill, motivated by the staying power of attractive processing margins.

For more from John, see http://www.feelofthemarket.com/…

(AG)

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