DTN Closing Livestock Comments 10/01 15:30

Massive Cattle Selloff Continues Summary: Once again, live and feeder cattle contracts closed sharply lower pressured by aggressive long liquidation and a general lack of buying interest. Lean hog contracts also closed significantly lower, especially in nearby issues. GENERAL COMMENTS: The cash cattle market was very slow despite the fact that short-bought packers seem to need inventory. A few packages reported sold in Kansas at $120 -- $4 lower than Wednesday and $10 lower than a week ago. According to the closing report, the Iowa hog base is $1.27 lower compared with the Prior Day settlement ($62.00-$73.50, weighted average $71.11). Corn futures closed down 1 cent in the December contact and unchanged in the July. LIVE CATTLE: Live cattle contracts settled sharply lower with spot October once again taking most of the heat. Panic liquidation continues in the face of sharply lower cash sales and wholesale business. Spot October closed at its lowest point since August of 2013. Clearly, traders are nervous about the possibility of delivery activity over the next several weeks. Beef cut-outs: lower, off $1.07 (choice, $207.55) to $0.99 (select, $203.21) with light- to-moderate demand and heavy offerings (96 loads of choice cuts, 48 loads of select cuts, 12 loads of trimmings, 30 loads of coarse grinds). FRIDAY'S CASH CATTLE CALL: Lower. We see no reason why the defensive tone would improve any on Friday. Short-bought packers need to buy cattle, but the cash market just can't find reason for stability. FEEDER CATTLE: Feeder issues followed their live counterparts sharply lower. Given extreme feedlot losses, commercial interest in replacement steers and heifers is understandably minimal. CME Feeder Index for 09/30 188.93, down $0.94. LEAN HOGS: Although a few lean contracts closed somewhat higher in the far deferreds, most contracts settled under pressure thanks to profit-taking and spillover bearishness from the cattle complex. October through February stumbled by triple-digits, probably linked to profit-taking and the unwinding of bull spreads. The carcass value closed strongly higher with strength in loins, picnics, hams and bellies overcoming weakness in butts and ribs. Pork cut-out: $86.41, up $1.55. CME cash lean 09/29: $72.23, up $0.22 (DTN Projected lean index for 09/30: $72.65, up $0.42). FRIDAY'S CASH HOG CALL: Steady to $1 higher. We expect to see a firm undertone in hog country Friday as profitable packers do what it takes to fund fairly aggressive chain speed. For example, Saturdays kill could be close to 140,000 head. John A. Harrington john.harrington@dtn.com