DTN Midday Livestock Comments 09/17 11:58
Cattle Contracts Holding Strong Gains
Firm buyer support seen early in the session has continued to build through
morning trade. This has pushed live cattle and feeder cattle futures to
triple-digit gains in nearby contracts with traders focusing on retracting
losses which developed earlier in the week. Lean hog futures are under pressure
with strong near-term losses focusing on fundamental market pressure.
By Rick Kment
Strong market support quickly redeveloped through the live cattle and feeder
cattle futures Wednesday morning despite little changes seen in beef market
direction or cash cattle activity. Pressure is developing in lean hog futures
with nearby contracts holding losses of $1 per cwt or greater. Corn futures are
lower at midday. December corn futures are 2 cents per bushel lower. Stock
markets are higher in light trade. The Dow Jones is 8 points higher while
Nasdaq is up 2 points.
Pressure early in the week seemed to clear out an bearish tone in the live
cattle complex even though very little encouragement is being seen in beef
values and ability to increase overall wholesale prices over the last couple of
weeks. Traders have quickly jumped back into all nearby contracts with December
and February futures holding above $160 per cwt. It is uncertain just how much
additional longer-term support this rally will be able to establish over the
next couple of trading sessions. Cash cattle activity is starting to slowly
improve with a few scattered bids of $245 seen in Nebraska Wednesday morning.
It is uncertain just how much attention these will get at this point as asking
prices are still not fully defined in most areas. Asking prices that are seen
remain around $164 in the South and $253 to $255 in the North. Beef cut-outs at
midday are mixed, $0.25 per cwt higher (select) and down $1.53 per cwt (choice)
with active movement of 143 total loads reported (61 loads of choice cuts, 42
loads of select cuts, 14 loads of trimmings, 26 loads of ground beef).
Aggressive buyer support has quickly stepped back into the feeder cattle
futures Wednesday morning. Traders are looking for additional direction from
the entire cattle complex, but so far, October through January futures are
comfortably holding gains above $2 per cwt. It is too early to determine if the
most recent support is driven by short covering, or if these gains can hold and
establish another run higher over the next few days.
The inability for strong support in the cattle markets to break through the
barriers in the lean hog complex is creating some uncertainty about overall
long-term direction of the market and also questioning fundamental support over
the short term in cash hog prices and pork prices. All nearby futures are
holding $1 per cwt losses at midday, with markets remaining extremely stable at
the current price range for the time being. This could limit end-of-day support
from redeveloping in both nearby and deferred contract months. Cash prices are
lower on the Iowa Minnesota Direct morning cash hog report. The weighted
average price fell $0.86 per cwt to $103.76 per cwt with the range from $102.25
to $105.00 per cwt on 2,197 head reported sold The National Pork Plant Report
is reported 261 loads selling as prices falling $1.46 per cwt. Lean hog index
for 9/15 is at $103.22 up 0.96, with a projected two-day index of $104.15 up
Rick Kment can be reached at firstname.lastname@example.org
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