Friday Closing Livestock Market Summary - Beef Futures Close Week in the Red

GENERAL COMMENTS

The cash cattle market was not tested Friday following sharply lower business on Tuesday through Thursday. For the week, live prices slumped as much as $10 to $12 lower than last week. The National hog base closed off $0.16 compared with the prior day settlement ($59-$66, weighted average $64.89). From Friday to Friday, livestock futures scored the following changes: Jun LC off $5.22; Aug LC off $6.20; May FC off $6.20; Aug FC off $6.28; Jun LH off $0.40; Jul LH up $0.28. Corn futures staged an impressive rally to close the week advancing by 7 cents and more. This market was supported by rumors of a new deal between the U.S. and China, lower estimates of the Brazilian corn crop, and a large wave of commercial-buying. The stock market closed narrowly mixed with the Dow up 1 point and the Nasdaq down by 28.

LIVE CATTLE

Futures closed lower, off 12 to 87. For most of the session, the live trade was narrowly mixed. But late in the day, selling resurfaced based upon long liquidation, technical-selling and beef demand fears. Note that August live closed at 98.22, a new life-of-contract low close. Beef cutouts: weak on choice and steady on select (choice $232.21, off $0.47; select $208.46, up $0.22) on light-to-moderate demand and moderate offerings (53 loads of choice cuts, 25 loads of select cuts, 13 loads of trimmings, 18 loads of coarse grinds).

MONDAY'S CASH CATTLE CALL:

Steady to $2 lower. Activity on Monday will be limited to the distribution of new showlists. We expect ready numbers to be about steady.

FEEDER CATTLE:

Futures closed sharply lower, off 87 to 142. Like their live counterparts, feeder futures were victimized by late-session selling. Besides the negative drift of deferred live futures, feeder contracts were also pressured by the big rally in the corn market. CME cash feeder index: 05/17: $133.58, off $1.25.

LEAN HOGS:

Futures closed moderately to sharply lower, off 12 to 177. Unlike cattle futures, lean hog contracts struggled with triple-digit losses all session long. Indeed, given that fact, settling prices were actually more moderate than they could have been, possibly helped late by some short-covering. Summer contracts put in a rather choppy week, reflecting mixed ideas regarding the appropriateness of board premiums to cash. While some wonder if board premiums are large enough to accommodate bullish cash fundamentals over the next several months, others fear that the board maybe over estimating cash potential. Pork cutout: $73.91 (FOB Plant), off $1.59. CME cash lean 05/16: $67.01, up $0.87 (DTN Projected lean index for 05/18: $67.74, up $0.73).

MONDAY'S CASH HOG CALL:

Steady. Hog buyers should start work on Monday with generally steady bids, closely monitoring the availability of ready numbers and checking the strength of pork demand moving toward the Memorial Day holiday.