DTN Closing Livestock Comments

Mixed Cattle Trade Limit Trade Volume

Rick Kment
By  Rick Kment , DTN Analyst
(DTN file photo)

GENERAL COMMENTS

From Friday to Friday, livestock futures scored the following changes: Feb LC up $3.58; Apr LC up $4.03; Mar FC up $3.52; May FC up $4.50; Apr LH off $0.70; May LH up $0.15. Cash cattle trade quickly developed mid to late afternoon Friday with trade seen at $129 to $130 live basis, which is $4 per cwt higher than last week. Dressed trade was seen at $205 per cwt, which is a $5 per cwt rally over last week's average. Although it appears that trade is done for the week, it is likely that overall numbers of sales and amount of cattle sold will likely continue to trickle in after the fact through the rest of the afternoon and evening. According to the closing report, the national hog base is $0.95 lower compared with the Prior Day settlement ($59-$66) weighted average $64.82. The corn futures are lower in light activity. March futures were 1/4 cent lower Friday. The Dow Jones Index is 16 points higher with the Nasdaq down 14 points.

LIVE CATTLE

Light-to-moderate gains developed late in the trading session following lackluster interest through most of the morning. Nearby gains were offset by light pressure in deferred contracts ($0.10 lower to $0.82 higher). The inability to establish additional selling pressure early Friday morning allowed the bullish market shift seen over the last couple of days to continue through the entire market. The February futures contract rallied 82 cents to close at $130 per cwt. Although trade volume remained light late in the week, the firmness coming from cash cattle trade seemed to be a welcome sight to most traders. Beef cut-outs: mixed, $0.02 lower (select, $205.12) and up $0.84 (choice, $209.88) with moderate demand and light offerings (94 loads of choice cuts, 13 loads of select cuts, 7 load of trimmings, 18 loads of coarse grinds).

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TUESDAY'S CASH CATTLE CALL:

Steady. Following the strong move higher in cash trade in live and dressed basis deals Friday, early week activity is likely to remain sluggish. Show list distribution is expected to be the main order as both sides focus on overall numbers of cattle sold.

FEEDER CATTLE:

Mixed trade in a narrow range left the market looking for additional direction next week ($0.10 lower to $0.55 higher). The strong gains seen over the last couple of days have helped to spark additional longer-term market activity through the complex. This is leading to increased market trade and has the potential to draw commercial and investment trade back to the market. The lack of trade on Monday is keeping some traders out of the market already late Friday, as many are willing to wait until the middle of next week before stepping back into the complex. CME cash feeder index for 2/15 is $148.15, up $0.45.

LEAN HOGS:

Strong follow-through pressure developed in nearby contracts, pushing all contracts lower ($0.20 to $1.57 lower). The front-month April contract led the market lower with a $1.57 loss. This added long-term pressure to the market, as April futures have now taken out support levels established last week. The concern that additional pressure and liquidation may continue early next week could push prices even lower. Carcass values shifted higher in a narrow range as traders continue to focus on increased buyer support through the entire complex. Pork cut-out: $77.34 up $0.35. CME cash lean index for 2/14 $73.49, down $0.52. DTN Projected lean index for 2/15 $72.89, down $0.60.

TUESDAY'S CASH HOG CALL:

Steady to $1 lower. Continued pressure continues to be seen through the lean hog complex, and this is adding to the weakness in cash hog prices. Early week activity is expected to be steady to weak as the overall lack of futures trade Monday is not likely to change packer spending levels. Most bids are expected to be 50 cents lower. Processing schedules are expected to be 465,000 head Monday and Tuesday.

Rick Kment can be reached at rick.kment@dtn.com

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Rick Kment