DTN Closing Livestock Comments

Lean Hog Futures Slump Lower Thanks to Late Week Long-liquidation and Profit-Taking

John Harrington
By  John Harrington , DTN Livestock Analyst
(DTN file photo)


Light to moderate trade developed in parts of the South this afternoon with most live sales marked at $109, $1 higher than last week, yet we are still waiting for significant business to develop in the North. Although packer bids have slowly improved through the day, they remain just short of higher asking prices around $110 live and $174 dressed. The National hog base closed off $0.11 compared with the Prior Day settlement ($47.00-$54.50, weighted average $52.03). From Friday to Friday livestock futures scored the following changes: Oct LC up $1.92; Dec LC up $1.67; Oct FC up $1.73; Nov FC up $1.75; Oct LH up $3.77; Dec LH up $0.97. Corn futures closed fractionally higher in lackluster trading. Would-be bulls will be watching the weekend radar, looking for the possibility of more harvest-slowing rain. The stock market closed on a mixed basis with the Dow off 1 point and the NASDAQ up 4.


Futures closed moderately higher, up 17-95. Spot October and December closed at their highest levels seen since September 22. For December, that meant essentially closing the bearish gap created on the 25th. While the board seemed to anticipate a higher feedlot trade, such a reality seems little more than spotty at this time. Note that December will start out on Monday nearly $8 above cash sales now reported in the South. Beef cut-outs: steady on Choice, and lower on Select (Choice, $197.22 off $0.33, Select $187.23 off $1.55) on light to moderate demand and moderate offerings (58 loads of choice cuts, 29 loads of select cuts, 14 loads of trimmings, 28 loads of coarse grinds).


Steady. With this week's cash market still in the bubble as of this writing, it is tough to make a call for next week. Having said that, mid-month cash should be no worse than steady/firm. Activity on Monday will be typically limited to the distribution of new showlists.


Futures closed moderately to sharply higher, up 32-112. Feeders finished with a firm undertone, once again supported by the substantial premium of the cash index and inviting premiums in deferred live futures. CME cash feeder index: 10/05: $155.57, off $0.64.


Futures closed mostly sharply lower, up 12 to off 187. Most of the selling pressure here was focused on the first three contracts. Given the substantial progress of the nearby contracts this week, late-week profit-taking was not all that surprising to see. But besides the desire to take money off the table, sellers were also motivated by the substantial discount of the cash index. Spot December expires one week from today, and traders will take a hard look at convergence possibilities (i.e., will cash rally further or will futures drop significantly). Pork cut-out: $72.61 (FOB Plant) off $0.27. CME cash lean 10/04: $55.33, up $0.36 (DTN Projected lean index for 10/05: $55.77, up $0.44).


Steady to $1.00 higher. Look for hog buyers to start out bidding on a steady/firm basis when business resumes on Monday. Packer margins remain extremely attractive.

For more from John see www.feelofthemarket.com


John Harrington