DTN Closing Livestock Comments

Closing Comments

Thanks to active trading on Wednesday, the cash cattle market went untested Friday with both buyers and sellers apparently content with week-to-date trade volume. For what it is worth, trade volume totals look no better than moderate to us, suggesting that packers could easily find themselves short-bought sometime next week. The national hog base closed off $0.91 compared with the prior day settlement ($61.50-$68.50, weighted average $66.33). From Friday to Friday, livestock futures scored the following changes: Apr LC Up $1.63; Jun LC up $0.75; Mar FC Up $3.25; May FC Up $3.37; Apr LH Up $1.42; May LH Up $0.15. Corn futures closed generally 2 cents lower, pressured by expectations of record-large South American crops. The stock market closed mostly higher with the Dow up 44 and the Nasdaq better by 22.

LIVE CATTLE

Futures closed moderately to sharply higher, up 27 to 110. Although the live board seemed to lack direction for most of the week, bulls did manage to engineer a late-week rally, at least pushing April and June above moving average highs for the first time in several weeks. Still, live contracts remain locked in a lateral trading range. It remains unclear if the nearby will eventually be inspired by cash strength. Despite the fact that April closed the week still $7.00-$8.00 below cash, overhead resistance at 119 still seems formidable. Beef cut-outs: higher to sharply higher (choice, $219.83 up $4.27, select $210.99 up $1.99) on moderate to good demand and light offerings (37 loads of choice cuts, 11 loads of select cuts, 07 loads of trimmings, 18 loads of coarse grinds)

MONDAY'S CASH CATTLE CALL:

Steady to $2.00 higher. Monday will be typically slow with packers focusing on the collection of new showlists. We expect the new offering to be about steady with this week. Asking prices will no doubt be higher, probably around $128.00-plus in the South and $204.00-plus in the North.

FEEDER CATTLE

Futures closed sharply higher up 62-205. Feeder cattle gained on live counterparts throughout the week, perhaps thanks in part to lower corn business and better commercial buying interest (after all, feedlot managers are making lots of money). Furthermore, spot March seemed to score decent technical progress this week, closing well above its 40-day moving average and landing its best weekly close since January 25th. CME cash feeder index: 03/09: $127.22, up $0.22.

LEAN HOGS

Futures closed narrowly mixed, off 35 to up 10. The good news is that lean hog futures actually gained a little ground for the week. The bad news is such modest progress wasn't enough to break the market out of chart limbo. We're still not sure whether cash premiums are set to erode further or board discounts will eventually have the potential to rally toward cash. Given Friday's lackluster tone, it would appear that we're not the only one confused in that regard. Pork cut-out: $81.88 (FOB Plant) up $0.13. CME cash lean 03/08: $72.59, off $0.01 (DTN Projected lean index for 03/09: $72.51, off $0.08).

MONDAY'S CASH HOG CALL

Steady to $1.00 lower. Look for cash hog buyers to remain on the defensive when business resumes on Monday.

For more from John, see http://www.feelofthemarket.com/…

(ES)

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