Monday Closing Livestock Market Update - Nearby Cattle Contracts Close Sharply Lower

GENERAL COMMENTS

In a surprising burst of early week buying, cattle buyers succeeded in collecting moderate numbers at lower money. Live business in the South, Colorado, and western Nebraska was marked at mostly $120, roughly $1.50 lower than last week's weighted averages. Such unexpected movement was no doubt tied in some way (either attractive basis strength or mounting bearish psychology) to the imploding board. According to the closing report, the national hog base is $1.60 higher ($57.00-67.75), weighted average $59.39). Corn futures finished generally 4 cents lower, checked by a lack of buying interest and some signs of greater cash selling. Equities closed mixed with the Dow off 12 points and the Nasdaq up by 20.

LIVE CATTLE

Live futures definitely got up from the wrong side of the bed, opening lower and pretty much eroding through the session. Settlements ranged from off 82 to 202 with spot Feb collapsing to its lowest close since October 2. Aggressive selling seemed tied to long liquidation, technical bearishness, and uncertain cash potential. If the early week storm had any silver lining, it might be tied to the fact April and June managed to close above their December lows. Beef cut-outs: significantly higher, up .69 (choice: $210.20) to $1.05 (select: $203.37) with moderate to good demand and moderate offerings (56 loads of choice cuts, 26 loads of select cuts, 10 loads of trimmings, 12 loads of ground beef).

TUESDAY'S CASH CATTLE CALL:

Steady/weak with Monday. While Tuesdays are typically dull trading affairs, we're off to a strange week given Monday's cash volume. Further activity could depend on the question of board stability.

FEEDER CATTLE:

Feeders closed moderately lower, off 5-57 points. Feeders held up better than their live counterparts thanks to the premium of the cash index, further weakness in corn, profit-taking in live/feeder spreads. On estimated receipts of 12,000 head (up from 5,947 in mid-December and near even with last year), Oklahoma City sold feeder steers weighing 600-900 pounds $2 to $5 higher than December's last good market test. Big steers were marked steady to $2 lower. Feeder heifers were not well tested. Steer and heifer calves seemed unevenly steady. CME cash feeder index: 01/05: 153.92, off 1.28.

LEAN HOGS:

Lean futures clearly chose to march to a different drummer than the cattle complex. Indeed, this market closed with wall-to-wall new contract highs. You can't get much more upbeat than that. Prices settled 32 to 155 in the green, supported by further reports of higher cash and general optimism regarding longer-term pork demand. Carcass value closed moderately lower, weighed by softer demand for loins and picnics. Pork cut-out: $78.42, off .65. CME cash lean index for 01/04: 64.22, up .59 (DTN Projected lean index for 01/05: 65.65, up 1.43).

TUESDAY'S CASH HOG CALL:

$1 to $2 higher. Look for opening bids in the morning to continue to firm.