DTN Closing Livestock Comments

GENERAL COMMENTS:

Cash cattle trade is fairly quiet. There are some $182 bids in Nebraska and Iowa. According to the closing report, the Iowa hog base is .46 higher compared with the Prior Day settlement ($69.00-$73.75, weighted average $71.68). Corn futures closed up 4 3/4 in the December contract and up 5 cents in the July.

LIVE CATTLE:

Prices surged limit-higher higher at midday, as buyers focused on firmness in morning boxed beef values and expectations that additional strong support may continue to develop through the rest of the week. Although it is way too early to determine a change in market trend, the aggressiveness behind the recent price move higher seems to be focused on underlying longer-term support. October and December futures were the only contract to close limit higher, although the rest of the complex held gains well above $2 per cwt into market settlement. Beef cut-outs: mixed, up 0.20 (choice, $204.17) to down 0.18 (select, $198.87) with moderate to heavy demand and offerings (101 loads of choice cuts, 42 loads of select cuts, 14 loads of trimmings, 20 loads of coarse grinds).

WEDNESDAY'S CASH CATTLE CALL:

Steady to $2 lower. Initial bids are developing well below last week's average price with the focus through the complex on the ability of recent futures gains to hold through the end of the week. It is unlikely that active cash trade will be seen before Thursday of Friday, although packers once again have come into the week short-bought. However, packers remain defensive about cash bids in order to try to maintain margins.

FEEDER CATTLE:

Feeder cattle futures closed limit higher with the exception of front-month October which missed the mark by 10 cents per cwt, settling $4.40 per cwt higher. This move higher was sparked by a quick and aggressive surge in live cattle futures as well as firming support in boxed beef values. CME cash feeder index: 10/05: 182.29, off 0.47.

LEAN HOGS:

Buyer support was heavily influenced by limit-higher trade in cattle futures. December and February contracts posted the most aggressive gains, holding triple-digit higher levels into market settlement. The expectation that additional cash market support will continue to develop through the end of the week could help to draw additional interest into both nearby and deferred contracts. Carcass value fell back modestly on weakness in loins, butts and bellies. Pork cut-out: $87.03, down $0.14. CME cash lean 10/02: 73.38, up .32 (DTN Projected lean index for 10/05: 73.75, up .37).

WEDNESDAY'S CASH HOG CALL:

Steady to 50 cents higher. Early bids are expected to remain mostly steady to firm at midweek as packers try to keep procurement levels high; they want to put additional product into storage at current processing margins. Firmness in pork values and futures trade continues to point to steady to firming cash market activity.

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

(CZ)

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