DTN Closing Livestock Comments

GENERAL COMMENTS:

Cash cattle trade remains undeveloped Monday following a traditional slow start to the week. Showlists remain generally smaller, which may help to spark additional buyer support later in the week. It is likely that bids may not be aggressive until midweek or later, especially given the lackluster moves in futures trade. According to the closing report, the national hog base is $0.70 higher compared with the Prior Day settlement ($62.00-$70.00, weighted average $67.58). The corn trade turned lower in light activity. March futures posted a 1 1/2 cent loss Monday. The Dow Jones Index is 19 points lower with the Nasdaq down 3 points.

LIVE CATTLE

Light buyer support developed early in the trading session, allowing prices to volley higher and lower through the day. Trade closed mostly higher in a narrow range ($0.47 lower to 0.17 higher) although the most significant pressure was seen in front-month futures. February futures fell 47 cents per cwt, closing at $116.42 per cwt as traders seemed to slowly back away from the stability seen over the last couple of trading sessions. There is some resistance to move prices back above $117 per cwt as traders remain concerned about short- and long-term beef demand. Beef cut-outs: mixed, $0.72 higher (select, $190.65) to down $0.17 (choice, $191.23) with light to moderate demand and offerings (51 loads of choice cuts, 20 loads of select cuts, no loads of trimmings, 18 loads of coarse grinds).

TUESDAY'S CASH CATTLE CALL

Steady. Lack of activity was seen through the market Monday, allowing most to expect that Tuesday will be another sluggish day with very little interest shown by either side. Showlists are generally smaller, but at this point, packers are not expected to become aggressive, potentially pushing cash trade toward the end of the week.

FEEDER CATTLE

Light-to-moderate trade developed Monday, which shifted prices higher and lower through the day. This kept prices mostly higher at the end of the session, but uncertainty following long-term direction is seen ($0.17 lower to $0.70 higher). The strong pressure seen through the last couple of weeks associated with the increased cattle placements is still causing nervousness in the market. But there is growing stability developing in the market, bringing buyers back to the table. CME cash feeder index: 2/3: $127.03, down $0.21.

LEAN HOGS

Lean hog futures rallied higher Monday as strong buyer support continues to develop following the increased underlying support in pork demand. Even though most buyer support developed in nearby futures, all contracts moved higher ($0.12 to $1.02 Higher). February lean hog futures led the market higher with a $1.02 per cwt rally, moving above $71 per cwt, settling at $71.35 per cwt. This is the first time front-month futures have moved above $71 per cwt since July 2016. Carcass value are moderately higher. Strong gains in picnics and loins offset light to moderate pressure in other primals. Pork cut-out: $85.13 up $0.67. CME cash lean index for 12/22: $58.18, unchanged. CME cash lean index for 2/2: $70.30, up $0.57. (DTN Projected lean index for 2/3: $70.95, up $0.65).

TUESDAY'S CASH HOG CALL

Steady to 50 cents higher. Light packer activity is expected to be seen early Tuesday with most bids expected to remain steady to firm. Overall slaughter rates are expected to reach 443,000 head on Tuesday, bringing some additional stability to the market and focusing on little disruptions expected through midweek.

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

(AG)

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