DTN Closing Livestock Comments
Live Cattle Futures Bounced Higher Wednesday
GENERAL COMMENTS
Cash cattle trade was nonexistent on the Fed Cattle Exchange and in feedlot markets. The Fed Cattle Exchange auction has been postponed until Thursday at 10 a.m. Feedlot trade is undeveloped with bids becoming more active through the day. Live bids are $134 while dressed bids ranged from $216 to $220 per cwt. Asking prices are $140 to $142 per cwt live basis and $220 and higher dressed basis. Trade could potentially be a Friday-focused affair. According to the closing report, the national hog base is $0.41 higher compared with the Prior Day settlement ($72.00-$78.00) weighted average $76.30. Corn futures moved higher in light activity. July futures were 7 cents higher Wednesday. The Dow Jones Index is 50 points higher with the Nasdaq up 24 points.
LIVE CATTLE
Firm gains developed in live cattle futures on late-day buying, $0.57 to $1.22 higher. Early trade was relatively shaky, given the triple-digit losses and widespread liquidation of Tuesday. But, as Wednesday developed, renewed support based on strong fundamentals moved into the market from commercial traders. June futures posted a $1 per rally at closing bell, closing at $131.20. Although this remains nearly $1 under the contract high set earlier in the week, the firm bullish trend still continues at this point. Traders expect firm market strength in both beef values and cash cattle trade, even though feeder cattle markets are extremely weak. Beef cut-outs: higher, $0.33 higher (select, $219.90) to up $0.26 (choice, $250.71) with light demand and heavy offerings (57 loads of choice cuts, 45 loads of select cuts, 20 loads of trimmings, 25 loads of coarse grinds).
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THURSDAY'S CASH CATTLE CALL:
Steady to 2 higher. The delay of the Fed Cattle Exchange Action until Thursday morning is creating a little bit of a different feel for the Wednesday afternoon market, which has become accustomed to knowing the results of that internet sale before most feedlot activity starts to develop. Firm fundamental support is still expected given the bounce higher in live cattle futures and the ability of beef values to sustain support through the week. Packers remain short bought, but the amount of cattle the need is still uncertain.
FEEDER CATTLE
Feeder cattle futures battled back from sharp early losses, closing in a moderately mixed range, $0.72 lower to $1.02 higher. Early follow-through liquidation seen Wednesday morning after the limit lower moves Tuesday pushed prices over $2 per cwt lower as traders continued to adjust market positions. Late-day short-covering quickly returned in deferred contracts, helping push most contracts through the end of 2017 and into early 2018 nearly $1 per cwt higher. This allowed additional support through all cattle markets, even though nearby feeder cattle contracts closed lower. CME cash feeder index: 6/6: $152.81, up $0.22.
LEAN HOGS
Lean hog futures closed mixed in a narrow range, $0.45 lower to $0.40 higher, with firm fundamental support. Early strength Wednesday morning lessened in late-day trade due to lack of follow-through buyer support. This may keep prices within a narrow trading range and could limit widespread market shifts over the near future. June and July contracts held prices of $81 per cwt, while the rest of the complex moved prices off previous highs due to the pressure seen in the cattle complex over the last couple of days and other outside markets. Carcass values bounced firmly higher. All primals posted light to moderate gains Wednesday, creating underlying support across the complex. Pork cut-out: $91.06 down $0.81. CME cash lean index for 6/5: $78.20, up $0.30. DTN Projected lean index for 6/6 $78.80, up $0.60.
THURSDAY'S CASH HOG CALL
Steady to $2 higher. Continued aggressive buyer support is expected through the end of the week as packers remain actively focused on securing hogs. The larger number of head needed to keep plants running at optimum levels while maintaining strong margins will require paying extra given the strength in fundamentals. Wednesday runs are expected to once again hit 440,000 head with Saturday levels near 28,000 head.
Rick Kment can be reached at rick.kment@dtn.com
(CZ)
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