DTN Closing Livestock Comments

GENERAL COMMENTS:

The cash cattle trade remained locked in indecision as asking prices soared along with the board. The few bids that made it on the table seemed embarrassingly low given the new implications of recovering futures (e.g., $118 live, $190 dressed). According to the closing report, the Iowa hog base is $1.27 lower (albeit on a very light test) compared with the Prior Day settlement ($63.00-$72.00, weighted average $71.63). Corn futures generally faltered by 4 cents as traders positioned ahead of Friday's USDA crop report. The Dow closed 138 points lower (i.e., over 17,000 for the first time since August) and the Nasdaq improved by 19.

LIVE CATTLE:

Although early session profit taking caused some weakness here in the early rounds of business, buying interest soon reconvened to push spot October well over 130 for the first time since late September. Contracts settled 125 to 182 higher with traders apparently confident that feedlot sales would follow their friendly lead in due course. Beef cut-outs: narrowly mixed, up $0.03 (choice, $203.61) to off $0.24 (select, $197.46) with good demand and heavy offerings (113 loads of choice cuts, 77 loads of select cuts, 9 loads of trimmings, 47 loads of coarse grinds).

FRIDAY'S CASH CATTLE CALL:

Higher. Short-bought packers should have to get with the program sometime Friday, probably required to pay significantly more money than last week given the towering premium of live cattle futures.

FEEDER CATTLE:

Feeder futures once again mirrored the bullish action in the live market, closing another 125 to 292 points higher. Spot October scored its best close since Sept. 16. Yet, note that it closed nearly $5 above the cash index. CME cash feeder index: 10/07: $183.43, up $1.16.

LEAN HOGS:

For the most part, lean futures finished moderately higher, up 17 to 45 on the close. Spot October settled at its highest close since May 12. On the other hand, soon-to-be-spot December appears to be in no hurry to give up its discount. Carcass value surged significantly higher with all primals appreciating except the butt. Pork cut-out: $88.82, up $1.89. CME cash lean 10/06: $74.29, up $0.54 (DTN Projected lean index for 10/07: $74.75, up $0.46).

FRIDAY'S CASH HOG CALL:

Steady to $1 higher. Late-week cash hog bids should open on a steady/firm basis. Wholesale pork demand remains in good shape, and profitable packers should want to keep numbers moving to town.

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

(CZ)

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