Monday Closing Livestock Market Summary - Cattle Futures Negate Friday's Rally

GENERAL COMMENTS

The cash cattle trade was a typically slow early week affair with the assessment of showlists about the only order of the day. Offerings are mixed, larger in the South (especially Texas) but some smaller in the North. Generally speaking, the supply of ready numbers seems somewhat larger than last week. According to the closing report, the national hog base is $0.88 lower ($54-$62.25, weighted average $60.53). Corn futures recovered from early lows to close fractionally higher. That said, the action was slow and generally featureless. Pressured by trade-war talk, the Dow closed 157 points lower. On the other hand, the Nasdaq finished 27 points in the green.

LIVE CATTLE

Essentially proving that Friday's rally was nothing but a dead-cat bounce, a short spasm of profit-taking, live contracts quickly rolled back down the hill Monday with prices closing mostly 20 to 157 points lower. Right or wrong, there's a big crowd here who expects that the next major shoe to drop will be a bearish one. Struggling markets (as the live futures trade surely is) often have to set modest goals in terms of stabilization. For example, spot April probably needs to hold above last week's low of $120.90 in order to avoid the next big wave of selling. Beef cut-outs: mixed, up $0.23 (select: $217.49) to off $0.24 (choice: $223.90) with light-to-moderate demand and offerings (46 loads of choice cuts, 19 loads of select cuts, 12 loads of trimmings, 14 loads of ground beef).

TUESDAY'S CASH CATTLE CALL:

Steady. We expected bids and asking prices to remain poorly defined on Tuesday with significant trade volume probably delayed until Wednesday or Thursday.

FEEDER CATTLE:

For the most part, feeder futures settled 22 to 67 lower. With deferred live issues stuck in the mud, it becomes very difficult to attract new buyers here. The August issue landed at its lowest level since Jan. 31. On an estimated run of 9,250 head (up from 7,029 last week and 6,592 in 2017), Oklahoma City sold feeder steers and heifers $1-$3 lower (steers over 900 pounds were as much as $4 lower). Stockers and calves were marked mostly steady to $2 lower. CME cash feeder index: 03/09: $143.34, off $0.84.

LEAN HOGS:

Lean hog futures closed on a mixed basis, up 55 to down 77. Price progress was pretty much limited to 2018 contracts. The summer contracts fell south of last week's lows. The carcass value closed significant higher, powered by better demand for bellies (up $7.22), hams (up $2.28), and ribs ($1.28). Pork cut-out: $74.88, up $1.45. CME cash lean index for 03/08: $67.52, off $0.12 (DTN Projected lean index for 03/09: $67.05, off $0.47).

TUESDAY'S CASH HOG CALL:

Steady to $1 lower. Look for opening bids in the morning to be on the soft side as packers work to improve processing margins.