DTN Closing Livestock Comments

Cattle, Hog Futures Track in Opposite Price Directions

(DTN file photo)

Closing Comments

Between Wednesday's active trade and heavy snowfall in parts of the North, the cash cattle arena was generally quiet Thursday. We did see limited business in parts of Kansas ($124-$125, near steady) and Nebraska/Iowa (mostly $125/$196, steady). Chances are good that business is now done for the week. According to the closing report, the national hog base is $1.54 lower ($64.00-$72.00, weighted average $70.85). Corn futures closed a nickel-plus lower, pressured by favorable crop weather in South America and a private estimate that the Brazil corn harvest will exceed last year by as much as 39%. The stock market closed on a mixed basis with the Dow up 34 points and the Nasdaq off 25.

LIVE CATTLE:

With spot February leading the charge, live issues closed 5 to 177 higher. Actually, buying interest was rather modest once you looked past the lead contract (i.e., set to expire next Tuesday and still several dollars below the most recent feedlot sales). The size of the April discount to both February and cash seems unusually large. Beef cut-outs: significantly higher, up $1.66 (choice, $196.19) to $2.02 (select, $192.83) with moderate demand and light to moderate offerings (72 loads of choice cuts, 16 loads of select cuts, 10 loads of trimmings, 27 loads of coarse grinds).

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FRIDAY'S CASH CATTLE CALL:

Steady/firm with Wednesday's surge. While scattered clean-up business is possible, the cash market seems to be essentially done for the week.

FEEDER CATTLE:

Feeder futures settled narrowly mixed, from 27 higher to 37 lower. The simple fact that deferred live contracts seem oblivious to the bullish performance of feedlot cash is keeping this market in a very defensive frame of mind. CME cash feeder index: 02/22: $127.41, up $0.29.

LEAN HOGS:

Lean contracts displayed more evidence of running out of gas Thursday with prices closing generally 22 to 117 lower. Despite the substantial premium status of the cash index, spot April somehow managed to attract the most selling interest. Finger-pointing seemed to blame the price defensiveness on long liquidation, pork demand worries and the unwinding of hog/cattle spreads. The carcass value held essentially steady as fresh cut losses were offset by strength in processing items. Pork cut-out: $80.26, up $0.02. CME cash lean index for 02/21: $77.64, up $0.40 (DTN Projected lean index for 02/22: $77.73, up $0.09).

FRIDAY'S CASH HOG CALL:

Steady to $1 lower. Look for hog buyers to resume trading on Friday with cautious bids, mindful of narrowing processing margins.

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

(ES)

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