DTN Closing Livestock Comments

GENERAL COMMENTS

Cash cattle trade started to develop in all areas Wednesday afternoon with light movement seen in the North and South. Trade was seen at $120 per cwt live basis and $188 to $190 per cwt dressed basis. This is steady to $2 per cwt higher than last weeks price levels. The Fed Cattle Exchange Auction listed a total of 2,655 head: 1,907 head listed as sold, 525 head listed as PO and 233 head listed as unsold. The individual state breakdown looks like this: KS 266 head total, 266 head sold with a price range of $117.75-$118.00; NE 1,703 head total, 1,240 head sold with a price range of $117.25-$118.75, 240 head listed as PO ($117.75, and 223 head listed as unsold; TX 471 head total with a price range of $117.00-$118.00, 150 head listed as PO ($117.75); CO 135 head total, all of which were listed as PO ($117.00); IA 80 head total, all 80 head listed as sold at $118.00. The weighted averages are as listed: 1-9 day delivery 667 head $117.80; 1-17 day delivery 580 head, $118.45; 17-30 day delivery 660 head, $117.34. According to the closing report, the national hog base is $0.02 lower compared with the Prior Day settlement ($82.00-$88.50) weighted average $86.86. The corn futures moved lower in light activity. July futures were 16 cents lower Wednesday. The Dow Jones Index is 123 points higher with the Nasdaq up 67 points.

LIVE CATTLE

Aggressive buyer support flooded into the live cattle futures complex following a surge feeder cattle support Wednesday. Commercial and noncommercial buying activity developed across the complex leaving triple digit gains across the market ($1.875 to $3.00 higher). There's still a lot of questions about the ability to draw follow through buyer support back into the market over the next couple of months. The limit gains in August through December contracts will allow for expanded trading limits Thursday and potential increased market volatility across the entire cattle complex. Beef cut-outs: lower, $1.78 lower (select, $198.69) to down $2.55 (choice, $212.69) with light demand and heavy offerings (86 loads of choice cuts, 47 loads of select cuts, 29 loads of trimmings, 25 loads of coarse grinds).

THURSDAY'S CASH CATTLE CALL: Steady to $2 higher. Light cash trade started to develop Wednesday afternoon at $120 live basis. This is generally $2 per cwt higher than last week's average. It is likely that additional trade will be seen Thursday within the same range, although early activity may remain sluggish as traders try to focus on the early moves in futures trade.

FEEDER CATTLE

Feeder cattle futures surged to daily trading limits in most contracts following sluggish early trade ($2.22 to $4.50 Higher). The lack of pressure in the complex, despite previous fundamental market weakness, has allowed all nearby contracts to post a limited $4.50 per cwt market rally during midmorning trade, and hold these supportive moves through the end of the session. The ability to maintain this support given the recent market concerns seen through the entire cattle complex is adding even more uncertainty to the market. This latest support moved futures to month long highs with contracts at $151.75 per cwt as traders have the opportunity to focus on additional underlying support through the rest of the week. Feeder cattle futures will open Thursday with expanded trading limits due to the limit moves seen midweek. CME cash feeder index: 7/11: $148.72, down $0.36.

LEAN HOGS

Mixed trade in a moderate range ($1.07 lower to $0.42 higher) once again developed across the complex with commercial buying activity stepping back into the nearby summer contracts. The concern surrounding cash market pressure and long-term supply issues has continued to put pressure on deferred lean hog futures trade with all other contracts holding firm pressure as traders back away from the complex. The support in pork values on the morning report was not enough to add strong spill over support to the entire hog complex. Carcass values moved higher with gains in all primals except loins and hams. Sharp triple digit gains developed in butts, picnics, ribs and bellies, but the focus was placed on the $8 gain in ribs. Pork cut-out: $105.82 up $0.56. CME cash lean index for 7/10: $92.59, up 0.13. DTN Projected lean index for 7/11 $92.75, up $0.16.

THURSDAY'S CASH HOG CALL: Mixed. Light trade is expected to continue to develop through the last half of the week with early bids seen 50 cents lower to 50 cents higher although most activity is likely to be steady early Thursday. Thursday's slaughter expectations are set at 435,000 head with 34,000 likely to be seen Saturday.

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

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