DTN Closing Livestock Comments

Most Cattle Futures Close Week Sharply Lower

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

GENERAL COMMENTS

The cash cattle trade Friday was limited to scattered examples of cleanup business. For the most part, trade volume was completed on Wednesday and Thursday. The national hog base closed off $0.20 compared with the Prior Day settlement ($34-$37.50, weighted average $37.06). From Friday to Friday, livestock futures scored the following changes: Aug LC off $03.17; Oct LC off $4.17; Aug FC off $1.75; Sep FC off $4.35; Oct LH off $6.83; Dec LH off $4.05. Corn futures closed several cents higher, modestly supported by light short-covering at the tail end of a very bearish week. Traders seem to be increasingly convinced that a large harvest is just around the corner. The stock market closed higher with the Dow up 133 points and the Nasdaq better by 67.

LIVE CATTLE

Futures closed sharply lower, off 7 to 202. Aggressive selling pressure Friday was related to long liquidation, technical worries and eroding cash market values. Both October and December closed below 100-day moving averages, settling at their lowest points since July 11. The Aug. 1 on-feed report turned out to be neutral to somewhat bearish: on feed 105%; placed in July 108%; marketed in July 105%. Placement activity last month was somewhat larger than expected with a significant number of feeder steers and heifers forced off pasture due to drought conditions. Beef cutouts: lower on choice and steady on select (choice, $213.32 off $1.05, select $203.82 off $0.17) on light-to-moderate demand and light offerings (40 loads of choice cuts, 12 loads of select cuts, 21 loads of trimmings, 17 loads of coarse grinds).

MONDAY'S CASH CATTLE CALL:

Steady to $2 lower. Monday's activity will be limited to the collection of new showlists. We expect ready numbers to be somewhat larger than totals seen this week.

FEEDER CATTLE:

Futures closed mostly sharply lower, off 207 to up 17. Supported by the premium status of the cash index, spot August managed to close modestly higher. Yet most of the action reflected the bearishness seen throughout the live cattle trade. Soon-to-be-spot September closed below its 100-day moving average, marking its poorest finish since June 28. CME cash feeder index: 08/23: $150.85, up $0.21.

LEAN HOGS:

Futures closed moderately to sharply higher, up 17 to 182. 2019 contracts were once again supported by bear-spreading interest. February closed above its 100-day moving average, finishing at its highest level since July 3. On the other hand, spot October, pressured by steadily falling cash sales, closed the week below its 40-day moving average. 2019 contracts seemed to be supported by ideas of accelerating chain speed thanks to several new shifts of slaughter and fabrication expected in late 2018 and/or early 2019. Additionally, some new year optimism may be tied to ideas of trade war resolution and the possibility of better demand from China. Pork cutout: $64.18 (FOB Plant) off $0.67. CME cash lean 08/22: $49.50, off $0.51 (DTN Projected lean index for 08/23: $48.93, off $0.57.

MONDAY'S CASH HOG CALL:

Steady to $1 lower. Look for hog buyers to remain on the defensive when procurement chores begin on Monday.

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

(BE)

John Harrington