DTN Closing Livestock Comments

Lean Hogs Settle Moderately Higher Thanks to Follow-Through Buying

(DTN file photo)

GENERAL COMMENTS:

While actual cash cattle business remained at a standstill Thursday, buying interest in the South became much better defined with several packers starting out with fully steady bids (i.e., $138). Some steers and heifers in Texas and Kansas were priced around $140-$142. Both bids and asking prices in the North remained pretty much hidden. According to the closing report, the Iowa hog base is $0.93 higher compared with the Prior Day settlement ($60.00-63.00, weighted average $62.34). The corn market closed generally 2 cents lower, weighed by higher estimates of the Brazilian crop. U.S. equities closed slightly higher in choppy trading as investors digested weaker-than-expected economic data. Dow closed 79 points higher with the Nasdaq better by 5.

LIVE CATTLE:

Modestly supported by suggestions of near-steady money in the Southern tier of cattle feeding country, spot February managed to close 22 points higher. Yet the rest of the market drifted moderately lower, off 10 to 45. Trade volume seemed rather lackluster as buyers and sellers cautiously positioned ahead of late-week cash. Beef cut-outs: higher, up $0.46 on both choice ($223.03) and select ($218.48) with moderate demand and light to moderate offerings (66 loads of choice cuts, 20 loads of select cuts, 14 loads of trimmings, 12 loads of coarse grinds).

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FRIDAY'S CASH CATTLE CALL:

Steady to $2 higher. Short-bought packers will have to find a way to generate light-to-moderate trade volume sometime before calling it a week. Between this week's tough blast of winter, firm futures and encouraging fundamentals, feedlot managers are likely to set their heels deep in terms of higher asking prices.

FEEDER CATTLE:

Feeders seemed to be the bearish leader in the cattle complex Thursday with most contracts finishing with triple-digit losses (i.e., off 92 to 142 points). Bullish momentum here is tough to maintain given the ongoing equity damaged suffered by the feedlot sector of the substantial discounts of deferred live contracts. CME cash feeder index: 02/03: $159.68, off $0.46.

LEAN HOGS:

Lean hog futures settled mostly 20 to 57 higher, supported by spillover buying and ideas of constructive fundamentals persisting at least through the end of the month. Note that spot February is scheduled to expire a week from Friday. The carcass value closed moderately lower, pressured by lower sales of fresh cuts, ribs, and hams. Pork cut-out: $76.52, off $0.71. CME cash lean 02/02: $63.30, up $0.79 (DTN Projected lean index for 02/03: $63.30, up $0.79).

FRIDAY'S CASH HOG CALL:

Steady to $1 higher. Look for the late-week cash market to maintain a firm undertone thanks to tightening live supplies, solid packer margins, and aggressive Saturday kill plans.

For more from John, see www.feelofthemarket.com

(CZ)

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