DTN Closing Livestock Comments

GENERAL COMMENTS:

As usual, activity in cattle feeding country on Monday was limited to the distribution of new showlists. The early month offering appears to be mixed, larger in Texas and Colorado but smaller in Kansas and Nebraska. The severity of the pending winter storm could work to change the practical offering over the next several days. A few ready steers and heifers have been initially priced around $140-$142. According to the closing report, the Iowa hog base is $1.26 higher compared with the Prior Day settlement ($52.00-$62.00, weighted average $61.75). Corn futures finished modestly lower, tied to slow global growth and a general lack of buying interest. U.S. stocks closed narrowly mixed, despite declines in oil prices and soft China manufacturing data. The Dow closed 17 points lower with the Nasdaq up 6.

LIVE CATTLE:

The live market closed 37 to 105 higher, finally supported by late short-covering and cash premiums. Although futures opened generally higher, buying energy definitely lacked consistency with prices swinging between black and red ink throughout the early session. Beef cut-outs: mixed, up $1.76 (choice, $220.52) to off $1.47 (choice, $215.66) with light to moderate demand and offerings (51 loads of choice cuts, 22 loads of select cuts, 13 loads of trimmings, 19 loads of coarse grinds).

TUESDAY'S CASH CATTLE CALL:

Steady to $2 higher. Tuesday will be extremely quiet with much of cattle country focused on a major winter storm.

FEEDER CATTLE:

Feeders settled mostly 15 to 52 points higher, benefiting from a late-session change of mind by traders. Actually, this market struggled with triple-digit losses for most of the session, a bearish funk largely tied to the larger-than-expected feeder pool implied by the annual herd inventory released last Friday. Yet this negative spell somehow evaporated over the noon hour, allowing feeder issues to recover along with live contracts. On estimated receipts of 9,500 head (i.e., near even with last week but up from 4,300 in 2015), Oklahoma City sold steers and heifers generally steady. Calves were marked mostly $1-2 higher. CME cash feeder index: 01/29: 160.58, off .66.

LEAN HOGS:

Spot February closed 45 points lower, checked a bit by the discount of the cash index. Yet for the most part, lean contracts closed 15 to 40 higher, supported by seasonal fundamentals and solid processing margins. Carcass value closed moderately lower, pressured by lower sales of fresh cuts, ribs, and hams. Pork cut-out: $76.45, off .56. CME cash lean 01/28: 61.07, up .84 (DTN Projected lean index for 01/29: 61.87, up .80).

TUESDAY'S CASH HOG CALL:

Steady to $1 higher. Country movement could be minimal on Tuesday as blizzard conditions and deep snow act as a serious straitjacket.

For more from John, see www.feelofthemarket.com

(CZ)

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