DTN Closing Livestock Comments

Cattle Futures Crash Late, Pressured By Profit-Taking and Outside Markets

(DTN file photo)

GENERAL COMMENTS:

From Friday to Friday livestock futures scored the following Changes: Feb LC, Up $0.75; Apr LC, Up $0.40; Mar FC, Off $3.43; May FC, Off $3.62, Feb LH, Off $1.00 Apr LH, Off $0.40. Besides a few scattered dressed sales in parts of the North, the cash cattle trade remains very slow at this time as feedlots managers continue to resist packer bids. A light test in Nebraska and Iowa has been reported at $210 on a dressed basis, about steady with last week. Yet, the broader market is not likely to be established until late this afternoon. Asking prices are around $140 to $142 in the South and $215-plus in the North. According to the closing report, the Iowa hog base is $0.13 higher compared with the Prior Day settlement ($60.75-$63.25, weighted average $62.41). Corn futures closed down 2 3/4 cents in the March and July contracts.

LIVE CATTLE:

It looks like live traders got tired of waiting for cash business to develop. Most contracts settled 30 to 125 lower, pressured by late-week profit-taking and bearish rumblings from outside markets. Many are blaming the late weakness on successful bulls taking money off the table. Indeed, live futures did rally to three-month highs on Thursday, supported by the early-week storm and recent cash premiums. Beef cut-outs: lower, down $2.43 on choice ($220.60) and down $1.97 on select ($216.51) with light demand and light to moderate offerings (45 loads of choice cuts, 28 loads of select cuts, 4 loads of trimmings, 47 loads of coarse grinds).

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MONDAY'S CASH CATTLE CALL:

Steady. Monday's activity will be typically limited to the distribution of new showlists. Needless to say, price potential will depend upon the success of significant trade volume later today.

FEEDER CATTLE:

Feeders closed significantly lower for the second consecutive session, pressured by long liquidation, commercial defensiveness and the discount status of deferred live futures. Like their live counterparts, feeders were also pressured by spillover selling from outside markets. CME cash feeder index: 02/04: $159.67, off $0.01.

LEAN HOGS:

Lean hog contracts settled on a mixed basis tied to uneven spreading and pre-weekend positioning. Spot February is scheduled to expire next Friday. Further progress will therefore be limited to the behavior of the cash index through mid-February. The carcass value regained Thursday's loss and then some on strength in all cuts except picnics. Pork cut-out: $77.57, up $1.05. CME cash lean 02/03: $63.98, up $0.68 (DTN Projected lean index for 02/04: $64.30, up $0.32).

MONDAY'S CASH HOG CALL:

Steady to $1 higher. Cash hog trade is expected to start out with a firm undertone, supported by further narrowing of cash receipts and decent pork processing margins.

For more from John, see www.feelofthemarket.com

(CZ)

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