Friday Closing Livestock Market Summary - Sizzling Cattle Rally Late in the Week Trumps Early Weakness

GENERAL COMMENTS

Besides a few odds and ends, the cash cattle trade was essentially quiet Friday. Trade volume totals for the week look moderate at best, and packers could find themselves relatively short-bought early next week. The National hog base closed up $1.08 compared with the Prior Day settlement ($64-$73.83, weighted average $72.59). From Friday to Friday, livestock futures scored the following changes: Feb LC up $2.25; Apr LC up $1.50; Mar FC up $4.20; May FC up $4.72; Feb LH up $2.93; Apr LH off $0.25. Corn futures closed fractionally lower thanks to late-week profit-taking. However, spot March moved as much as a nickel higher from Friday to Friday. Despite aggressive job growth in January (i.e., up 200,000), the stock market plummeted sharply lower with the Dow off as much as 665 points. The Nasdaq lost as much as 144 points.

LIVE CATTLE

Futures closed higher, up 15 to 50. Live issues were supported by follow-through buying and technical enthusiasm. Note that spot February settled at its highest point since Nov. 9. The market will start next week with cash nearly $1 under spot February, a weaker basis that could lend feedlot managers more leverage. Beef cut-outs: weak to lower (Choice, $209.10 off $0.50, Select $203.45 off $1.09) on light-to-moderate demand and offerings (56 loads of choice cuts, 12 loads of select cuts, 04 loads of trimmings, 25 loads of coarse grinds).

MONDAY'S CASH CATTLE CALL:

Steady to $2 higher. Monday's activity will be typically limited to the distribution of new showlists. We expect the early month offering to be steady to somewhat larger.

FEEDER CATTLE:

Futures closed sharply higher, up 47 to 165. Feeders seemed to extend the bullish reaction to the cattle inventory report and the suggestion that feeder cattle numbers outside of feedlots totaled 2% to 3% below a year ago. Spot February closed at $150.92, its highest close since Nov. 30. CME cash feeder index: 02/01: $148.03, up $0.50.

LEAN HOGS:

Futures closed higher up 2 to 90. The lean trade put in a solid week, especially nearby contracts. Indeed, spot February closed with a new contract high for the second consecutive session. Scheduled to expire on Feb. 14, spot February now seems concerned about keeping up with the cash index. Closing at the top of recent price ranges, summer lean issues settled right on 40-day moving average. Pork cut-out: $81.63 (FOB Plant) off $0.19. CME cash lean 01/31: $73.87, up $0.02 (DTN Projected lean index for 02/01: $74.10, up $0.23.

MONDAY'S CASH HOG CALL:

Steady to $1 higher. Cash hog buyers are expected to resume work on Monday with steady/firm bids, processing margins have narrowed this week, but still look decent enough to inspire buying incentive.