Friday Closing Livestock Market Summary - Cattle Futures Close Bearish Week With Short-Covering Rally

GENERAL COMMENTS

The cash cattle trade was not tested Friday thanks to sufficient trade volume generated on Thursday. Feedlot sales for the week were basically steady with last week, $126 to $127 live, and $204 to $205 (mostly $204) dressed. The national hog base closed off $1.11 compared with the prior day settlement ($54-$62.58, weighted average $61.38). From Friday to Friday, livestock futures scored the following changes: Apr LC up $0.95; Jun LC off $0.10; Mar FC off $1.15; May FC off $1.87; Apr LH up $0.28; May LH off $2.65. Corn futures closed generally 3 cents lower, pressured by double-digit losses in beans and winter wheat. The stock market closed significantly higher thanks to the bullish February jobs report. The Dow was 440 points higher with the Nasdaq advancing by 152.

LIVE CATTLE

Futures closed moderately to sharply higher, up 2 to 135. Despite general stability in feedlot country this week, live contracts spent most of the time in the bearish woodshed. Friday's rally seemed primarily fueled by short-covering and late-week profit-taking. Deep discounts relative to cash remain the board's major feature. For example, spot April will start out on Monday nearly $4 under the established cash market. Beef cutouts: firm (choice, $224.14 up $0.26, select $217.26 up $0.48) on light-to-moderate demand and light offerings (38 loads of choice cuts, 13 loads of select cuts, 08 loads of trimmings, 15 loads of coarse grinds).

MONDAY'S CASH CATTLE CALL:

Steady to $2 higher. Activity on Monday will be naturally limited to the distribution of new showlists. We look for ready numbers to be steady to somewhat smaller. Our guess is that feedlots will start out pricing cattle at $128 to $129 in the South, and $207 plus in the North.

FEEDER CATTLE:

Futures closed mostly higher, up 77 to off 22. Needless to say, feeders had a tough week along with their live counterparts. Besides negative psychology flowing from live futures, feeders were additionally pressured by the new late-winter rally in the corn market. CME cash feeder index: 03/08: $144.15, off $0.57.

LEAN HOGS:

Futures closed lower, off 22 to 57. Lean contracts were further pressured Friday by follow-through selling and generally negative fundamentals. This week's hog slaughter was 2.41 million head, and we could easily see the same slaughter level persist for the next two to three weeks. On the other hand, narrowing packer margins could cause packers to slow chain speed next week, especially if carcass values continues to fall like a lead balloon. Pork cutout: $73.43 (FOB Plant) up $0.44. CME cash lean 03/07: $67.64, off $0.02 (DTN Projected lean index for 03/08: $67.52, off $0.12.

MONDAY'S CASH HOG CALL:

Steady to $1 lower. Opening bids on Monday are expected to be generally softer as hog buyers remain defensive relative to late-winter fundamentals.