DTN Midday Livestock Comments 08/27 11:58
Cattle Futures Hold Onto Gains
Triple-digit gains continue to hold through the live cattle and feeder
cattle markets Thursday. The inability to hold onto strong session highs above
$2 per cwt in both markets is creating some erosion of price levels, but the
bounce higher remains firmly planted. Hog futures have backed away from early
pressure with prices hovering in a narrowly mixed range.
By Rick Kment
Buyer interest has been intense through both live cattle and feeder cattle
futures. The focus on gains over $2 per cwt has held through most of the
morning based on the potential to bounce from previous market pressure seen
earlier in the week. Buyer support is starting to erode at midday, pushing
prices well off of session highs, as volume appears to have slowed
significantly. Corn prices are higher in light trade. September corn futures
are 1 cent per bushel higher. Stock markets are higher in active trade. The Dow
Jones is 321 points higher while Nasdaq is up 103 points.
Strong gains continue to hold triple-digit price rallies through the entire
live cattle complex Thursday. But current trade levels are starting to slowly
back away from session highs set during the morning, and could erode further
before closing bell, even though it is not expected that all of the buyer
support will erode before the end of the session. Cash cattle markets are
undeveloped with just a few scattered bids of $144 per cwt seen in the South
and $226 bids redeveloping in Nebraska. It is expected that trade will be
pushed off until Friday, with packers doing very little to entice feeders to
step back into the market at this point. Asking prices remain at $150 in the
South and $236 and higher in the North. Beef cut-outs at midday are mixed,
$0.07 Lower (select) and up $0.58 per cwt (choice) with light movement of 67
total loads reported (46 loads of choice cuts, 12 loads of select cuts, 8 loads
of trimmings, 9 loads of ground beef).
August feeder cattle futures remain dead in the water, as these futures
contracts inch toward expiration before the end of the trading session. It
appears that August futures will be able to hold above $210 per cwt, leaving
some questions as to what impact September contracts will have once they take
over as front month futures, potentially under the $200-per-cwt level. Although
September futures have traded over $200 per cwt through most of the morning, to
expect the complex to close nearly $2 per cwt higher for the day is a tall
order to ask of the complex, especially given the market weakness seen through
the early part of the week.
Early losses seen through the lean hog futures complex have eroded to a
narrowly mixed bag of choppy trade on either side of steady Thursday morning.
With the cattle market and aggressive moves in the stock market gaining most of
the attention Thursday, there is very little interest being shown through the
rest of the complex. This could help to establish some more balanced trading
ranges at current price levels, although the recent pressure in pork values
could have further impact through the rest of the complex at the end of the
month. Cash prices are lower on the National Direct morning cash hog report.
The weighted average price fell $0.77 per cwt to $72.90 per cwt with the range
from $72.00 to $74.00 per cwt on 5,332 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 $0.47 per cwt. Lean hog index for 8/25 is at $78.79 unchanged, with a
projected two-day index of $78.68, down 0.11.
Rick Kment can be reached at email@example.com
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