DTN Closing Livestock Comments

GENERAL COMMENTS

Light-to-moderate cattle trading developed in several areas before the holiday break. Live sales in parts of Texas were mostly $121, as much as $5 lower than last week. Dressed sales in the North were mostly $193-$194, $6 to $7 lower than last week. The national hog base closed off $0.36 compared with the prior day settlement ($45-$51, weighted average $48.45). From Friday to Thursday, livestock futures scored the following changes: Apr LC off $2.30; Jun LC off $3.63; Mar FC off $0.10; May FC off $3.28; Apr LH off $1.17; May LH up $2.60. Corn futures closed $0.14 higher, supported by smaller-than-expected planting intentions (88 million acres, 1.3 million below the average guess). The stock market closed higher with the Dow up 254 and the Nasdaq better by 114.

LIVE CATTLE

Futures closed sharply lower, off 170 to 300. Live futures imploded once spot April fell below chart support at $115. Traders obviously remain very worried about surging beef tonnage over the next several months. Positively, beef demand typically sees some of its best strength in the spring and summer tied to outdoor grilling. Nevertheless, the board is clearly focused on supply over demand potential at this time. Beef cutouts: weak to lower (choice $221.00, off $0.62; select $209.68, off $1.95) on light-to-moderate demand and moderate offerings (66 loads of choice cuts, 38 loads of select cuts, 05 loads of trimmings, 20 loads of coarse grinds).

MONDAY'S CASH CATTLE CALL:

Steady to $2 lower. Monday should be typically slow as buyers and sellers focus on showlist distribution. Yet we assume that packers will start out on the defensive given board discounts and lower beef cutouts.

FEEDER CATTLE:

Futures closed mostly sharply lower, off 37 to 450. Feeder futures were clobbered Thursday by two factors: 1) retreating deferred live futures; 2) sharply higher corn futures tied to a surprising drop in planting intentions. Spot March expired at $135.60, off only 37 and very near the cash index. CME cash feeder index: 03/28: $136.21, off $0.02.

LEAN HOGS:

Futures closed mostly modestly lower, off 67 to up 50. Action here Thursday was relatively slow and cautious as traders awaited the supply news of the March 1 Hogs and Pigs report. Official totals turned out to be very close to trade expectations: all hogs up 3%; kept for breeding up 2%; kept for market up 3%. Pork cutout: $69.97 (FOB Plant) off $0.23. CME cash lean index 03/27: $59.85, off $0.73 (DTN Projected lean index for 03/28: $59.06, off $0.79.

MONDAY'S CASH HOG CALL:

Steady to $1 lower. Packers are expected to remain cautious when trade resumes on Monday, assuming that early spring supplies remain plentiful.

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

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