DTN Midday Livestock Comments

Triple-Digit Gains Hold in Cattle Markets

Rick Kment
By  Rick Kment , DTN Analyst
(DTN photo by Russ Quinn)
GENERAL COMMENTS:

Strong end of the week support developing in cattle futures is helping to allow for a positive bounce in live cattle and feeder cattle markets. Short covering activity is the motive behind the sharp triple-digit price shift during the morning. Although volume remains light, the consistency of through the market and ability for prices to hold at these levels may help to rekindle another round of activity early next week. Hog markets have firmed in late-week buying although prices remain moderate Friday. Corn prices are mixed in light trade. July corn futures are 1/4 cent lower. Stock markets are mixed in light trade. The Dow Jones is 31 points lower while Nasdaq is up 2 points.

LIVE CATTLE:

Strong buyer support quickly developed across live cattle futures as traders stepped into the complex at the end of the week. What has been characterized as a generally bearish weak in the cattle market seems to be having a positive end. But most of the activity seems to be based mostly on position taking more than anything else. June futures are holding moderate gains at best, while the rest of the complex is holding an aggressive triple-digit rally. Cash cattle business appears to be done for the week with markets quiet during the morning Friday. Trade that developed across the North on Thursday afternoon seems to be enough to take care of needed clean-up activity. The uncertainty of how the futures market rally Friday will affect cash markets early next week will create more questions than answers for packers and feed yard managers to contemplate over the weekend. Beef cut-outs at midday are mixed, $1.54 lower (select) and up $0.36 per cwt (choice) with light movement of 41 total loads reported (19 loads of choice cuts, 15 loads of select cuts, no loads of trimmings, 7 loads of ground beef).

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FEEDER CATTLE:

End-of-week short covering has flooded into the market as little additional resistance has developed across the complex. This as quickly allowed markets to move $3 to $3.50 per cwt higher in nearby contracts as August and September contracts are now trading above $150 per cwt at midday. After posting these strong gains, trade volume has slowed significantly during the day, allowing markets to hold these values, but showing little signs of life, or little additional interest. There could be some additional late day moves toward daily limit highs, in a potential to cover additional positions given the aggressive market losses seen during the week, but the few traders left in the complex may keep prices volatile.

LEAN HOGS:

Light end-of-week buying is developing across lean hog futures. This is allowing prices to move moderately higher summer and fall contracts following the strong support moving back into the cattle complex as well as buyers covering positions following a move lower Thursday. June and July contracts are leading the market higher with prices 72 and 95 cents per cwt higher respectively although overall trade volume remains light midday, and will likely remain sluggish through the rest of the session. Cash prices are lower on the National Direct morning cash hog report. The weighted average price lost $0.82 at $68.74 per cwt with the range from $66.00 to $70.50 on 3,668 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 128 loads selling with prices fell $0.33 per cwt. Lean hog index for 5/10 is at $69.12 up $1.48 with a projected two-day index of $70.63 down $1.51.

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

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Rick Kment