DTN Closing Livestock Comments

Cattle Recovery Continues

(DTN file photo)

GENERAL COMMENTS:

Feedlot country was typically quiet for a Monday with packers collecting showlist and then turning for home. The new offering appears to be somewhat smaller than last week with only Colorado showing more ready steers and heifers. Asking prices were poorly defined in the early going. According to the closing report, the Iowa hog base is $0.23 higher compared with the Prior Day settlement ($62.00-$73.00, weighted average $71.65). The corn market continued to slide lower (i.e., settling 1-2 cents lower) in the face of harvest pressure and maps of open weather through the week ahead. U.S. stocks closed mildly higher as investors readied for the first major earnings reports due Tuesday. The Dow finished 47 points higher with the Nasdaq better by 8.

LIVE CATTLE:

After a morning session of fairly choppy action, live cattle issues settled higher across the board. Yet spot October was clearly the center of bullish attention, closing as much as 115 points higher. Indeed, price progress was rather modest through the balance of the market (i.e., up 7 to 35). Of course, the big question is whether or not live contracts are capable of leading cash higher like they did last week. Beef cut-outs: sharply higher, up $1.23 (select, $199.12) to $2.30 (choice, $205.30) with fairly good demand and moderate offerings (66 loads of choice cuts, 28 loads of select cuts, 10 loads of trimmings, 38 loads of coarse grinds).

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TUESDAY'S CASH CATTLE CALL:

Higher. Cash activity is likely to be slow in developing this week with both sides stalling for more clues from the board and beef cut-outs. We don't expect either bids or asking prices to be well-defined on Tuesday.

FEEDER CATTLE:

Feeder futures closed 62 to 172 higher with November and January attracting most of the early week buying interest (i.e., gaining on both spot October and the far deferreds). On an estimated run of 7,100 head (up from 6,850 last week but slightly below 7,411 counted in 2014), Oklahoma City has sold steers and heifers calves weighing under 500 pounds $8-$10 higher in the early rounds. CME cash feeder index: 10/09: $184.00, off $0.29.

LEAN HOGS:

Lean futures settled 10 to 47 higher with the help of positive reports from the cash and product trades. Keep in mind that spot October expires on Wednesday. It will be interesting to see how the December discount behaves once that month takes the lead. Carcass value scored a decent round of appreciation with all primals printing higher except the loin. Pork cut-out: $89.47, up $0.89. CME cash lean 10/08: $74.84, up $0.09 (DTN Projected lean index for 10/09: $74.77, off $0.07).

TUESDAY'S CASH HOG CALL:

Steady to $1 higher. Opening bids in the morning should be steady/firm compared with Monday's close. Both excellent processing margins and firming carcass value seem quite supportive in that regard.

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

(CZ)

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