DTN Midday Livestock Comments 07/18 12:04
Active Buying Moves Into Cattle Futures
Sharp buyer support has quickly developed early Wednesday morning. This has
helped to bring about even more buyer support through the entire cattle
complex. Lean hog trade remains under light to moderate pressure, following the
recent trend lower.
By Rick Kment
Strong market support is seen across all cattle trade with nearby contracts
holding $2 per cwt gains in live cattle futures and spot feeder cattle futures
trading over $3 per cwt higher. The overall support in the complex is becoming
well-rooted, with prices moving to summer highs. Corn prices are higher in
light trade Tuesday. July corn futures are 3/4 cent higher. Stock markets are
higher in light trade. The Dow Jones is 81 points higher while Nasdaq is up 2
Live cattle futures have aggressively moved back into the complex with
August futures surging $2.20 per cwt higher and moving prices to $108.62 per
cwt at midday. This has moved through short term resistance levels, with prices
in the August contract trading at the highest levels since March. There is
growing support that overall supply levels may continue to be tight through the
fall and winter months, given the current and expected demand for beef
projected by many market watchers. Cash cattle bids have started to develop
through the morning, but bids are still well below asking prices. Given the
support in futures trade, it is unlikely that feedlot managers will pull the
trigger quickly without some movement from packers. Bids are seen at $107 to
$108 live and $172 to $173 dressed. This is well below asking prices that are
holding at $114 and higher live and $180 to $183 dressed. It may easily be
Friday before active sales are reported. The Fed Cattle Exchange Auction today
listed a total of 428 head all for Kansas, with 142 actually sold at $112.00,
109 head were marked as unsold, and 177 head marked as PO (Passed Offer of
$111.00) All cattle listed were set for a 1-9 day delivery. Boxed Beef cut-outs
at midday are higher, $0.28 Higher (select) and up $0.26 per cwt (choice) with
light movement of 89 total loads reported (57 loads of choice cuts, 15 loads of
select cuts, 4 loads of trimmings, 14 loads of ground beef).
Sharp triple-digit gains have flooded into feeder cattle trade. This is
moving additional buyer support back into the complex, with traders looking for
the ability to add increased market support to the entire complex. August
futures are leading the complex higher with a $3.17 per cwt rally. The ability
to move live cattle futures above $108 per cwt in front-month futures is
helping to solidify buyer interest which just a week ago seemed to be uncertain
about stepping back into the complex.
Limited pressure is seen in lean hog futures trade Wednesday. But the
overall weaker tone in the market continues to hold with nearby contracts
setting new contract lows and giving every indication that buyer support may be
hard to find in the near future. August futures have eroded 30 cents per cwt,
moving to $67.90 per cwt as traders focus on current supply levels and the
uncertainty of demand growth for both short- and long-term market activity.
Cash prices are lower on the National Direct morning cash hog report. The
weighted average price is down $1.39 at $70.59 per cwt with the range from
$70.00 to $73.00 on 5,376 head reported sold. Cash prices are lower on the
Iowa/Minnesota Direct morning cash hog report. The weighted average price is
down $1.09 at $70.97 per cwt with the range from $70.00 to $73.00 on 2,639 head
reported sold. The National Pork Plant Report posted 226 loads selling with
carcass values falling $1.74 per cwt. Lean hog index for 7/16 is at $79.69 down
0.65 with a projected two-day index of $79.15, down 0.54.
Rick Kment can be reached at firstname.lastname@example.org
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