Thursday Closing Livestock Market Summary - Cattle Futures Reverse From Early Session Highs to Close Significantly Lower

GENERAL COMMENTS

While a few token bids were floating here and there in feedlot country (e.g., $121 in Texas; $193 in Nebraska), some showlists seemed firmly priced at $126-$127 in the South and $200 in the North. According to the closing report, the national hog base is $1.41 higher ($55.50-$64.75), weighted average $61.83). Nearby corn futures closed 2 cents at the conclusion of a quiet and lackluster session. Psyched by further evidence of decent job growth in December, the Dow closed with yet another record (i.e., 25,075, up 152 points). The Nasdaq advanced by 12.

LIVE CATTLE

Action here looked fairly impressive through midmorning. But when traders began to doubt the potential of early year cash, a late-session reversal developed, sending most contracts to settlements 100-140 points below early highs. Besides cash uncertainty, sellers reacted to technical chart resistance near 40-day moving averages. April was the only contract that managed (barely) to close above its 40-day moving average. Beef cut-outs: higher, up $0.05 (choice: $208.67) to $1.70 (select: $200.85) with light-to-moderate demand and moderate offerings (100 loads of choice cuts, 19 loads of select cuts, 12 loads of trimmings, 12 loads of ground beef).

FRIDAY'S CASH CATTLE CALL:

Steady to $2 higher. Apparently, Friday will be the first cash corner of 2018. But exactly who has trapped whom remains to be seen. Look for at least moderate trade volume to surface sometime between late morning and midafternoon.

FEEDER CATTLE:

The same type of reversal that deflated live cattle hit this market as well (actually even harder). Most contracts finished with triple-digit losses (off 105-125). March experienced the most awkward close. Spot Jan fell only 35 points, supported a bit by the premium of the cash index. After spiking early above its 40-day moving average, it settled well below the 100-day moving average. CME cash feeder index: 01/03: $155.60, off $0.30.

LEAN HOGS:

Lean hog issues finished moderately higher, up 17-67 for the most part. Early year cash strength has been quite impressive. And given the way summer months are firming, traders obviously feel chesty about pork demand prospects over much of the year ahead. For the second consecutive session, June through December were successful in notching new contract highs. Carcass value closed near steady money with fresh cuts and bellies higher but picnics, ribs and hams lower. Pork cut-out: $78.70, off $0.06. CME cash lean index for 01/02: $62.75, up $0.52 (DTN Projected lean index for 01/03: $63.63, up $0.88).

FRIDAY'S CASH HOG CALL:

Steady to $1 higher. Expect late-week cash bids to remain firm as processors move toward another busy Saturday (probably around 385,000 head to be slaughtered).