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DTN Midday Livestock Comments          02/27 11:43

   Cattle Futures Turn Sharply Lower

   Early support in the livestock market was quickly dashed as aggressive 
end-of-the-month selling pressure developed across both live cattle and feeder 
cattle futures. The inability to hold early gains could weaken the trend of the 
market going into the month of March.

By Rick Kment
DTN Analyst



GENERAL COMMENTS: 

   Cattle futures have posted sharp aggressive losses at midday, which is a 
significant shift from early gains. The focus through the complex is being 
placed on end-of-the-month positioning before the end of February. Corn prices 
are higher in light trade. March corn futures are 4 cents per bushel higher. 
Stock markets are lower in light trade. The Dow Jones is 22 points lower while 
Nasdaq is down 5 points.

   LIVE CATTLE:

   Front-month February futures expire at noon Friday, and continue to hold 
moderate gains ahead of closing bell. The rest of the complex has fallen upon 
significant pressure through the morning trade, as early triple-digit gains 
have quickly been erased. The expectation that traders are trying to take 
profits following the recent gains over the last couple of month before the end 
of February is the likely culprit of the morning market slide. Cash cattle 
trade remains quiet midday Friday with bids seen in the north at the same level 
as seen earlier in the week. There is still expected to be some trade seen 
before the end of the day, but it is uncertain just how much, as packers could 
try to get buy into next week once again as they have done several times over 
the last couple of months. Asking prices remain at $162 and higher in the South 
and $260 to $262 in the North. Beef cut-outs at midday are higher, $1.03 higher 
(select) and up $0.81 per cwt (choice) with light movement of 74 total loads 
reported (34 loads of choice cuts, 25 loads of select cuts, 3 loads of 
trimmings, 13 load of ground beef).

   FEEDER CATTLE:

   Early strong gains seen in the feeder cattle futures market have quickly 
eroded through midmorning with traders focusing more on end-of-the-month 
position taking than any fundamental or technical shift which has developed in 
the market. The inability to close markets at or near the morning highs could 
create significant follow through damage when traders once again step back into 
the complex early next week. Nearby contracts are holding losses of 40 to 80 
cents per cwt, while deferred contacts are trading losses between $1 and $2 per 
cwt. 

   LEAN HOGS:

   Lean hog contracts have traded mixed in a wide and volatile range through 
the morning Friday. At midday, the complex is trading mostly higher with the 
focus on firming support in the cash markets. Spillover buying has once again 
stepped into the nearby lean hog complex in reaction to the morning losses 
which are developing in the cattle complex. End-of-the-month position taking is 
likely to be the main order of business between now and the end of the trading 
session. This could allow for additional moderate to wide price swings, as 
fundamental market news is likely to play a very small factor in end of the day 
trade direction and activity. Cash prices are lower on the Iowa Minnesota 
Direct morning cash hog report. The weighted average price added $1.66 per cwt 
to $64.72 per cwt with the range from $57.00 to $66.00 per cwt on 312 head 
reported sold. The National Pork Plant Report is reported 183 loads selling as 
prices rose $1.85 per cwt. Lean hog index for 2/25 is at $63.38 up 1.32, with a 
projected two-day index of $64.49 up 1.11.  

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


(SK)

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