Friday Closing Livestock Market Summary - Cattle Futures Close Opening Week of 2018 With Bearish Crash

GENERAL COMMENTS

Moderate trade volume developed Friday in most areas of cattle-feeding country. Most live sales in the South were marked at $122.00, $1 lower than last week's weighted average basis Kansas. Dressed business in the North ranged from $193.00 to $195.00, steady to $2 lower than last week's weighted average basis Nebraska. The national hog base closed up $1.35 compared with the prior day settlement ($56.00-$66.00, weighted average $64.01). From Friday to Friday, livestock futures scored the following changes: Feb LC off $2.30; Apr LC off $1.57; Jan FC up $0.62; Mar FC off $0.70; Feb LH off $0.35; Apr LH up $0.42. Corn futures closed virtually unchanged with neither buyers nor sellers inspired to move prices one way or the other. The stock market closed higher with the Dow up 138 and the NASDAQ better by 58.

LIVE CATTLE

Futures closed sharply lower, off 80 to 300. The board opened moderately lower and quickly sank into triple-digit red ink. While some have suggested the board was disappointed with lower cash sales, that's probably putting the cart before the horse. Our sense is that lower country business was instead prompted by lower futures. Technical traders were clearly disappointed by Thursday's reversal, defensiveness that re-enforced chart resistance near 40-day moving averages. Selling interest accelerated through the session thanks to long liquidation, technical selling, and worries linked to large first-quarter beef supplies. Note that most contracts have closed the week well below 100-day moving averages. Beef cut-outs: higher (Choice, $209.51 up $0.84, Select $202.32 up $1.46) on moderate demand and light offerings (51 loads of choice cuts, 16 loads of select cuts, 04 loads of trimmings, 27 loads of coarse grinds).

MONDAY'S CASH CATTLE CALL:

Steady. Monday's activity will be limited to the distribution of new showlists. Our guess is that ready numbers will be steady to somewhat larger.

FEEDER CATTLE:

Futures closed sharply lower, off 240 to 357. Needless to say, feeder bearishness mirrored sharply lower action in the live market. With deferred live contracts falling below levels of technical support, commercial buying interest logically retreated from the feeder market. Note that spot January settled nearly $9 below the cash index. CME cash feeder index: 01/04: $155.20, off $0.40.

LEAN HOGS:

Futures closed narrowly mixed up 10 to off 30. Hog bulls seemed to take a well-deserved rest Friday, engaging in mild profit-taking and position-evening. Most contracts enjoyed a bullish week with summer issues repeatedly setting new contract highs. Indeed, the June issue was again successful Friday in notching a new high. The red-hot cash index has been very successful this week in moving closer to the premium of spot February. Pork cut-out: $79.07 (FOB Plant) up $0.37. CME cash lean 01/03: $63.63, up $0.88 (DTN Projected lean index for 01/04: $64.22, up $0.59.

MONDAY'S CASH HOG CALL:

Steady to $1 higher. Look for hog buyers to resume procurement chores on Monday with firm bids as numbers tighten further from the fourth-quarter peak.