Friday Closing Livestock Market Summary - Feeder Cattle Futures Close Week With Triple-Digit Losses

GENERAL COMMENTS

The cash cattle trade was not tested in the late rounds with buyers and sellers apparently satisfied with trade volume generated at midweek. Showlists could be somewhat larger on Monday, but so should packer appetite given the need to line up the full slaughter schedule following Thanksgiving. The National hog base closed off $0.59 compared with the Prior Day settlement ($51.00-$58.25, weighted average $56.96). From Friday to Friday, livestock futures scored the following changes: Dec LC off $1.72; Feb LC off $2.08; Jan FC off $5.45; Mar FC off $4.95; Dec LH off $1.82; Feb LH off $3.18. Corn futures closed 6 cents plus higher, supported by pre-holiday short-covering and commercial buying interest. The stock market closed lower with the Dow off 100 points and the NASDAQ down by 10.

LIVE CATTLE

Futures closed lower, off 45 to 90. Friday's action was very slow with prices drifting lower in part because of a general lack of buying interest. Additionally, prices were pressured by a traditional lack of beef buying interest going into Thanksgiving. Finally, we saw a late wave of long-liquidation tied to bearish expectations of the Nov. 1 on-feed report. Spot December closed below its 40-day moving average for the first time since mid-September. The monthly inventory did turn out to be more negative than anticipated, especially in terms of October placement activity: on feed, up 6%; placed in October up 10%; marketed in October up 6%. Beef cut-outs: sharply lower on choice and steady on select (choice, $207.24 off $3.00, select $187.85 up $0.02) on light-to-moderate demand and moderate-to-heavy offerings (64 loads of choice cuts, 63 loads of select cuts, 11 loads of trimmings, 20 loads of coarse grinds).

MONDAY'S CASH CATTLE CALL:

Steady. Feedlot trade will start out typically slow with feedlot distribution the main order of the day. Our guess is that buyers and sellers will work hard to complete business by Wednesday afternoon.

FEEDER CATTLE:

Futures closed sharply lower, off 111 to 217. Besides the erosion of deferred live contracts, feeders were pressured Friday by the surprising rally in corn trade. Note that January settled below its 40-day moving average for the first time since Oct. 23. January's next level of good support should be around $147.75 (i.e., its 100-day moving average). CME cash feeder index: 11/16: not available.

LEAN HOGS:

Futures closed mixed, up 55 to off 40. Nearby contracts saw little success this week in staging a rally despite the fact that the cash index continued to hold a definite premium over the nearby board. It would appear that bears remain convinced that negative fundamentals will continue to weigh on cash business through the end of 2017. Pork cut-out: $80.96 (FOB Plant) up $0.41. CME cash lean 11/15: $65.97, off $0.40 (DTN Projected lean index for 11/16: $65.42, off $0.55).

MONDAY'S CASH HOG CALL:

Steady to $1 lower. The cash hog trade is expected to start out on Monday with steady/weak bids. Pre-Thanksgiving supplies should remain ample, and product demand may not catch much of a bounce until after the holiday.