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DTN Midday Livestock Comments          08/26 12:15

   Aggressive Buying Develops in Hog Futures   

   Livestock futures have turned extremely volatile Friday morning with strong 
triple-digit gains in the hog market creating additional concerns for cattle 
markets which have reacted to sharp triple digit losses. 

By Rick Kment
DTN Analyst

GENERAL COMMENTS: 

   A wide price spread is seen Friday morning between cattle and hog futures 
given that each market is posting triple-digit price moves in opposite 
directions. Front-month hog futures are holding gains over $2 per cwt while 
feeder cattle futures are posting similar losses. Corn prices are lower in 
light trade. September corn futures are 4 cents lower. Stock markets are lower 
in light trade. The Dow Jones is 49 points lower while Nasdaq is down 2 points.

   LIVE CATTLE:

   Cattle futures have continued to erode through the morning with aggressive 
triple-digit losses seen through the market. Traders are focusing on sharp 
losses in feeder cattle markets. There may be additional losses seen through 
the rest of the day Friday, causing long-term pressure on the market and 
creating questions about underlying support levels. Cash cattle trade appears 
to be done for the week following movement of most cattle on Wednesday. This is 
allowing both sides to go back to the drawing board and assess the overall 
market situation before stepping into the market next week. Beef cut-outs at 
midday are lower $0.12 lower (select) and down $0.63 per cwt (choice) with 
light movement of 82 total loads reported (48 loads of choice cuts, 19 loads of 
select cuts, 6 loads of trimmings, 8 loads of ground beef). 

   FEEDER CATTLE: 

   Gains quickly developed across the cattle market Friday morning as traders 
seemed to jump on board with the support developing late in the week in lean 
hog futures. But this support quickly evaporated as sellers moved back into the 
market. Additional selling pressure has continued to be heaped on the cattle 
market with losses in nearby contracts reaching and exceeding $2 per cwt. The 
lack of end-of-week support may continue to pressure the market through the end 
of the day.   

   LEAN HOGS:

   Active buyer support has quickly flooded back into the lean hog futures 
complex as traders look for additional longer-term market support in the 
complex. Fundamentals still remain bearish through the hog complex, which is 
creating some concern that this upward move may just be another one day shift 
higher, leading to even more volatility and potential pressure early next week. 
But the gains over $2 per cwt in front-month October futures cannot be totally 
ignored as traders have once again pushed prices over $60 per cwt. Cash prices 
are lower on the National Direct morning cash hog report. The weighted average 
price fell $1.62 per cwt to $60.06 per cwt with the range from $54.50 to $61.00 
per cwt on 3,292 head reported sold. Cash prices are unreported due to 
confidentiality on the Iowa Minnesota Direct morning cash hog report. The 
National Pork Plant Report reported 153 loads selling with prices falling $0.22 
per cwt. Lean hog index for 8/24 is at $67.04, up 0.05 with a projected two-day 
index of $66.90 down 0.14.

   Rick Kment can be reached at rick.kment@dtn.com 


(CZ)

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