DTN Closing Livestock Comments

Closing Comments

The cash cattle trade turned active Friday as short-bought packers moved aggressively to cover immediate kill needs. For the most part, cash activity was fully steady with last week with buyers paying $119.00-$120.00 on a live basis in the South and $190.00 dressed in the North. The national hog base closed off $0.34 compared with the Prior Day settlement ($68.00-$74.75, weighted average $72.95). From Friday to Friday, livestock futures scored the following changes: Feb LC Up $1.52; Apr LC up $1.77; Mar FC Up $2.00; May FC Up $1.47; Apr LH Off $0.30; May LH up $0.30. Corn futures closed generally a nickel lower with traders taking profits off the table after a generally positive trading week. The stock market closed generally higher with the Dow up 4 points and the Nasdaq positive by 23.

LIVE CATTLE:

Futures closed moderately to sharply higher, up 45-167. February through June scored triple-digit gains, boosted by bull-spreading and the reality of large cash premiums. Although live issues managed to find decent support near long-term trend lines (e.g. 112 basis April), the market remains largely trapped in a lateral trading range under the bearish gap created in late January. Note that spot February remains at least $2.00 under the cash market. Beef cut-outs: are higher (Choice, $190.49 up $1.27, Select $189.24 up $1.05) with moderate demand and moderate to heavy offerings (77 loads of choice cuts, 14 loads of select cuts, 05 loads of trimmings, 22 loads of coarse grinds).

MONDAY'S CASH CATTLE CALL:

Steady to $2.00 higher. Monday's activity will be typically slow with packers primarily focused on the distribution of new showlists. We expect ready numbers to be steady to somewhat smaller than this week with asking prices around $122.00-$124.00 in the South and $193.00-$195.00 in the North.

FEEDER CATTLE:

Futures closed moderately higher up 25-77. Feeders followed a positive lead of their live counterparts, further supported by short-covering and the premium status of the cash index. Interestingly, the market structure remains remarkably flat with March through September all closing within a dollar range. CME cash feeder index: 02/16: $127.69, off $0.33.

LEAN HOGS:

Futures closed moderately to sharply higher, up 25-100. Lean hog contracts definitely closed the week better than they began. Fairly aggressive buying resurfaced Friday, boosting spot April back over 70 and toward the lofty level of the cash index. Part of the board's reluctance seems to be tied to previous estimates of a large fall pig crop. But with year-to-date slaughter running below expectations (off 1.1%), it remains to be seen whether such bearish nervousness is justified. Pork cut-out: $84.65 (FOB Plant) up $0.23. CME cash lean 02/15: $75.98, up $0.67 (DTN Projected lean index for 02/16: $76.66, up $0.68).

MONDAY'S CASH HOG CALL:

Steady to $1.00 higher. Hog buyers are expecting to start out with steady to firm bids on Monday, encouraged by decent processing margins and a desire to keep country numbers moving.

John Harrington can be reached at harringtonsfotm@gmail.com

Follow John Harrington on Twitter @feelofthemarket

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