DTN Closing Livestock Comments

Oversold Cattle Futures React With Triple-Digit Gains

(DTN file photo)

GENERAL COMMENTS:

The cash cattle trade was limited to light business in parts of the North with some dressed deals turned in at $190 (steady with Wednesday but $3.50 below last week's weighted average basis Nebraska). According to the closing report, the national hog base is $0.94 higher ($62.00-$69.75, weighted average $67.33). Corn futures settled fractionally lower, somewhat checked by token profit-taking on the heels of Wednesday's surge. The stock market closed modestly lower, off 6 points on both the Dow and Nasdaq.

LIVE CATTLE

Live futures finally managed to marshal bullish forces for a significant rally. Contracts successfully closed with triple-digit gains, up 102 to 177. Between short-covering profit-taking and oversold oscillators, Feb and April managed to close back above 40-moving averages. Beef cut-outs: lower, off $0.23 (select, $190.62) to $0.74 (choice, $193.01) with light-to-moderate demand and light offerings (62 loads of choice cuts, 12 loads of select cuts, zero loads of trimmings, 25 loads of coarse grinds).

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FRIDAY'S CASH CATTLE CALL

Steady with Wednesday. Light-to-moderate trading is possible before buyers and sellers break for the weekend. It looks like pockets of the North still need to buy/sell more cattle.

FEEDER CATTLE

Following the bullish lead of the live futures, futures closed 162 to 227 points higher. Besides routine short-covering and profit-taking, some seem to reconsider that bearish inventory implication may have been already dialed into the board before the annual inventory actual hit the press. Additionally, note that spot March seems to have rekindled buying interest just above its 100-day moving average near $121.50. CME cash feeder index: 02/01: $128.72, off $1.00.

LEAN HOGS

This market finished 92 points higher to 45 lower. Nearby lean futures closed over 70 Thursday for the first time since last July. Spot August was well supported by cash news and bull-spreading interest. Far-deferred contracts closed moderately lower. Carcass value closed moderately higher, especially supported by another pop in the belly primal (i.e., up $4.17). Pork cut-out: $83.50, up $0.59. CME cash lean index for 01/31: $69.07, up $0.46 (DTN Projected lean index for 02/01: $69.63, up $0.56).

FRIDAY'S CASH HOG CALL

Steady to $1 higher. Cash bids have been on a decent roll all week, and we suspect opening bids Friday morning will continue to sport a firm undertone.

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

(AG)

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