Friday Closing Livestock Market Summary - Fourth-Quarter Lean Hog Futures Close With New Contract Lows

GENERAL COMMENTS

Light to moderate trade volume developed in several areas of cattle feeding country Friday. Late-week sales ranged from $107 to $108 on a live basis, $1 to $2 higher than midweek, and generally $1 to $2 lower than last week. The National hog base closed off $0.19 compared with the Prior Day settlement ($68-$78.50, weighted average $76.69). From Friday to Friday, livestock futures scored the following changes: Jun LC off $1.27; Aug LC up $0.82; Aug FC up $2.12; Sep FC up $1.13; Jul LH up $3.05; Aug LH up $1.08. Corn futures closed a nickel plus higher despite USDA reports that looked somewhat negative (corn acers totaled 89.13 million; June 1 corn stocks totaled 5.3 billion bushels), supported by hot weather worries in areas experiencing pollination. The stock market closed higher with the Dow up 55 points and the Nasdaq better by 6.

LIVE CATTLE

Futures closed mostly sharply higher, up 300 to off 120. Besides expiring June, most live contracts finished the month and quarter with an impressive bullish flurry. New spot August and October closed limit up, over 100-day moving averages and at the highest price levels seen since March 19. The late-week burst in buying energy seemed tied to aggressive short-covering, technical-buying and signs of late-week packer appetite. Beef cutouts: lower (choice, $211.96 off $1.28, select $198.57 off $2.09) on light demand and moderate-to-heavy offerings (55 loads of choice cuts, 39 loads of select cuts, 13 loads of trimmings, 23 loads of coarse grinds).

MONDAY'S CASH CATTLE CALL:

Steady. Activity on Monday should be typically slow as packers move to assess the early July size of showlists.

FEEDER CATTLE:

Futures closed sharply higher, up 155 to 450. Feeders followed the bullish lead of their counterparts in the live market. Spot August closed limit up, landing its highest finish since March 5. There's some thinking that aggressive placement through the first half of 2018 could mean that feeder supplies in the second half of the year will be tighter. CME cash feeder index: 06/28: $142.00, off $0.55.

LEAN HOGS:

Futures closed widely mixed, off 202 to up 175. Action here seemed logical in the face of the June 1 Hogs and Pigs report. Specifically, deferred contracts closed significantly lower with traders bracing for record fourth-quarter pork production now that they know of the huge spring pig crop. Indeed, October and December broke to new contract lows early in the session. Positively, most deferred contracts did manage to close approximately 100 points above session lows. Pork cutout: $87.38 (FOB Plant) off $0.21. CME cash lean 06/27: $84.32, off $0.50 (DTN Projected lean index for 06/28: $83.69, off $0.63.

MONDAY'S CASH HOG CALL:

Steady/weak. Hog buyers should resume work on Monday with near-steady bids, mindful that the season's most promising combination of supply and demand may have already come and gone.