DTN Closing Livestock Comments

Cattle Complex Crashes With Triple-Digit Losses

(DTN file photo)

GENERAL COMMENTS

Although feedlot managers came into the day with a degree of optimism based upon the board's ability to bounce off early week lows, cattle buyers showed little interest in raising bids expressed on Tuesday. Consequently, trade volume through the day was spotty at best with light volume reported in parts of Nebraska (i.e., 4,367 at $187.27, according to Mandatory). At this point, trade volume totals look little better than moderate, suggesting that a good number of cattle could be carried over into Monday. The National hog base closed up $0.14 compared with the Prior Day settlement ($42-$46, weighted average $45.27). From Friday to Friday, livestock futures scored the following changes: Apr LC off $1.53; Jun LC off $0.25; May FC up $1.60; Aug FC up $1.03; Apr LH off $5.13; May LH off $3.35. Nearby corn futures closed about a penny lower with traders perhaps more confused by trade war rhetoric than alarmed by cold early spring conditions. Spooked by another round of tariff threats from the White House, the stock market closed a defensive week with aggressive selling. The Dow finished 572 points lower with the Nasdaq off 161.

LIVE CATTLE

Futures closed sharply lower, off 72 to 272. Friday's negative action was clearly disappointing to bulls hoping to extend the impressive rallies of Tuesday and Wednesday. Part of the selling may have stemmed from the latest threat of U.S. tariffs against China. On the other hand, traders of soybeans and hogs did not seem to be all that bothered. Long liquidation in this market may have been more tied to lackluster beef demand and a perceived willingness on the part of packers to pay up for ready cattle. Positively, June and August did manage to close the week more than 500 points above Tuesday's lows. Beef cutouts: weak to lower (Choice, $214.31, off $0.78; Select $205.60, off $0.71) on light-to-moderate demand and moderate-to-heavy offerings (100 loads of choice cuts, 23 loads of select cuts, 11 loads of trimmings, 25 loads of coarse grinds).

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MONDAY'S CASH CATTLE CALL:

Steady to $2 lower. Monday's activity will be typically limited to the distribution of new showlists. Our guess is that the fed offering will be somewhat larger thanks in part to unsold cattle carried over from this week. On the other hand, packers seem likely to start out relatively short-bought.

FEEDER CATTLE:

Futures closed sharply lower, off 122 to 242. Feeders followed their live counterparts lower, also hinting by the lack of follow-through buying that the early week rally was nothing but a dead-cat bounce. CME cash feeder index: 04/05: $135.41, up $0.10.

LEAN HOGS:

Futures closed mostly moderately lower, off 17 to 137. Although lean contracts had a tough week (e.g., spot April lost over 500 points from Friday to Friday), late-week selling seemed to moderate despite the fact that trade war talk continued to amplify. Nevertheless, the trade remains very concerned about export prospects going forward, especially knowing that a record-large winter pig crop will be moving across finishing floors over the next four to five months. Pork cutout: $66.69 (FOB Plant), off $2.22. CME cash lean 04/04: $55.27, off $0.33 (DTN Projected lean index for 04/05: $54.75, off $0.52).

MONDAY'S CASH HOG CALL:

Steady to $1 lower. Hog buyers should return to work on Monday with generally defensive bids. Note the sharp drop in carcass value, signaling that a seasonal improvement in pork demand remains very slow in developing.

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

(BE)

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