DTN Closing Livestock Comments

GENERAL COMMENTS: Limited buying redeveloped throughout the livestock market Friday with live cattle and lean hog futures mostly higher at closing bell. Pressure in feeder cattle futures was driven by active buying in the grain complex Friday. Cash trade was starting to develop in parts of the North at $198 to $199 per cwt dressed basis by midafternoon Friday. At the time these comments were posted, it was unclear whether there would be enough trade at these levels to set the pace for activity later in the day. Markets at this level would be generally $1 to $2 per cwt higher than last week. Bids were seen at $121 to $123 live basis midafternoon Friday, but feedlot managers had not given in at that point. It may be late afternoon or early evening Friday before trade is finished. Asking prices remain at $125 to $126 live, and $200 to $203 per cwt dressed. The National Daily Direct afternoon hog report was $0.32 lower ($47-$51.50, weighted average $50.38) on 8,498 head sold. From Friday to Friday, livestock futures scored the following changes: Feb LC off $0.60, Apr LC off $0.57, Mar FC off $0.85, Apr FC off $0.72, Feb LH off $2.03 and Apr LH off $2.00. Corn futures were higher in light activity with the March contract closing up 1 3/4 cents. The Dow Jones Index was 15 points higher with Nasdaq down 30 points.

LIVE CATTLE: Light buyer support moved into the live cattle market on the first day of February as traders focused on short-covering. Futures closed mixed, down $0.02 to up $0.65. The market could see more volatility next week, as traders still feel longer-term demand could lead to underlying support. Beef cut-outs: mixed, $0.27 higher (select, $213.15) to down $1.13 (choice, $214.26) with good demand and light to moderate offerings on 73 loads (42 loads of choice cuts, 9 loads of select cuts, 8 load of trimmings, 13 loads of coarse grinds).

MONDAY'S CASH CATTLE CALL: Steady. Cash markets are expected to be undeveloped early in the week with Monday activity reserved for showlist distribution and inventory-taking as both sides set expectations for the week.

FEEDER CATTLE: Nearby feeder cattle futures were pressured by higher grain prices. Futures closed $1.35 lower to $0.15 higher. Even though the full range of the market remained wide, most contracts were stuck in a narrow trading range from 20 to 30 cents lower. Strength in corn and soybean markets pushed feeder cattle futures lower on the prospect of increasing production costs through early 2019. The announcement Thursday that China would move back into the market to buy soybeans will likely continue to pressure the feeder cattle trade. CME cash feeder index for 1/31 is $141.86, down $0.71.

LEAN HOGS: Lean hog futures saw moderate gains Friday as traders covered short positions following Thursday's selloff. Futures close $0.10 lower to $1.20 higher. The April futures contract started to erode during the last hour of trade, closing $0.10 per cwt lower. All other contracts shifted higher. The most aggressive gains developed in summer and fall contracts as traders may be adjusting market expectations on supply availability. News articles on how African swine fever in China is affecting small hog farms and continuing to disrupt hog production in the country has helped bring support to lean hog trade late in the week. Pork cutout values fell $1.06 per cwt, moving to $66.99 per cwt on 278 loads. CME cash lean index for 1/30 is $57.40, down 27. DTN Projected lean index for 1/31 $57.18, down $0.22.

MONDAY'S CASH HOG CALL: Steady to $1 lower. Despite it being a new month and a new week, packers seem to be returning to the previous pattern of offering steady-to-lower prices early in the day and adjusting from there. Initial bids are expected to be mostly steady to weak. But, given the weather delays, more hogs are expected to be sought as the week continues. Monday slaughter is expected to hit 477,000 head.

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

(AG)

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