DTN Closing Livestock Comments

GENERAL COMMENTS:

The cash cattle trade was very quiet through the day with only a few starter bids identified in parts of the North (i.e. $194 to $195 dressed). Significant trade volume could be delayed until Thursday or Friday. According to the closing report, the Iowa hog base is .42 higher compared with the Prior Day settlement ($47.00-$53.50, weighted average $52.70). Corn futures closed up 1 1/2 cents in the March contract and up 3/4 cent in the July.

LIVE CATTLE:

It's not how you start, it's how you finish. Live futures opened lower, pressured by follow-through selling and beef demand worries. However, selling pressure evaporated near midday, opening the door for significant bullish reversal. Most contracts settled 115 to 240 higher with nearby issues finishing nearly 300 points above early session lows. The February contract closed at $134.85, its highest settlement since Nov. 12. Note that spot December is now more than $5 above last week's live trade. Beef cut-outs: lower, down $1.84 (choice, $203.81) to off $2.17 (select, $192.69) with light demand and offerings (57 loads of choice cuts, 21 loads of select cuts, 22 loads of trimmings, 28 loads of coarse grinds).

WEDNESDAY'S CASH CATTLE CALL:

Steady to $2 higher. Packer inquiry could start to develop at midweek. Packers are clearly short bought, but feedlot managers are likely to insist on higher asking prices. Such an impasse could delay significant business until Thursday or Friday.

FEEDER CATTLE:

Mirroring the flip-flop action in the live market, feeder contracts reversed late in the day to close miles above early-session lows. Feeder contracts finished generally 152 to 232 higher. It's been a long time since we've seen such a dramatic reversal. Nearby contracts, for example, closed nearly 600 points above early session lows. CME cash feeder index: 11/30: 174.05, up 0.25.

LEAN HOGS:

Lean hog futures settled with another round of impressive gains, up 122 to 275. Spot December settled at 59.65, its highest level seen since Oct. 29. Buying energy seemed to be related to short-covering, technical buying, and building evidence that charts reflect major seasonal bottoms. The carcass value fell back Tuesday with all primals posting lower prices except bellies. Pork cut-out: $73.01, down $0.89. CME cash lean 11/27: 55.62, off .12 (DTN Projected lean index for 11/30: 55.54, off .08).

WEDNESDAY'S CASH HOG CALL:

Steady to $1 higher. Hog buyers at midweek should open with steady/firm bids. Country receipts remain manageable in the face of better packer spending. That seems to be a good sign that market numbers have moved past the seasonal peak and will probably tighten through the end of the year.

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

(AG)

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