DTN Closing Livestock Comments

Closing Comments

Activity in feedlot country was typically quiet with buyers and sellers focused exclusively on the distribution of new showlists. The late-month offering looks generally larger than last week with only Colorado showing some fewer ready steers and heifers. According to the closing report, the national hog base is $0.99 lower ($62.00-$70.50, weighted average $67.58). The corn market closed 2-3 cents lower, essentially pressured by the pending South American harvest. The stock market saw another round of record highs. The Dow closed 15 points higher with the Nasdaq better by 16.

LIVE CATTLE:

Live futures closed 65 to 162 higher with soon-to-expire Feb leading the charge. With April set to take the point on Wednesday, it will be very interesting to say the least how the trade deals with nearly a $10 cash premium. Few were surprised that deferred issues bounce higher following Friday's confirmation of aggressive January placement. After all, the board's deep spring and summer discounts had already dialed in a big pile of bearish news. Beef cut-outs: sharply higher, up $1.60 (select, $197.08) to $2.52 (choice, $201.48) with moderate to good demand and light offerings (43 loads of choice cuts, 13 loads of select cuts, 13 loads of trimmings, 33 loads of coarse grinds).

TUESDAY'S CASH CATTLE CALL:

Steady to $2 higher. The cash market should remain quiet Tuesday, though we could see a few preliminary asking prices start to surface (e.g., $128-$130 basis the South).

FEEDER CATTLE:

Feeder contracts exploded higher to start the week, closing 115 to 215 in the green. Buying interest seemed to be spurred by short-covering, the premium status of the cash index, and the ongoing reality of outstanding feedlot profits. On an estimated run of 7,500 head (down from 8,333 last week and 9,572 in 2016), Oklahoma City sold feeder steers and heifers steady to $3 lower. CME cash feeder index: 02/24: $127.06, off $0.14.

LEAN HOGS:

Lean futures went nowhere fast Monday with traders torn over the question of the April discount to the spot cash index (i.e., is it enough or too much?). Contracts settled modestly higher for the most part, up 30 to off 17. The carcass value closed significantly lower, especially pressured by the imploding belly primal (i.e., off $13.31). Pork cut-out: $80.45, off $1.46. CME cash lean index for 02/23: $77.39, off $0.34 (DTN Projected lean index for 02/24: $76.72, off $0.67).

TUESDAY'S CASH HOG CALL:

Steady to $1 lower. Look for hog buyers to stay on the defensive on Tuesday, cautious in part because of softening carcass value.

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

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