DTN Midday Livestock Comments
Sharply Higher Feeder Contracts Set Firm Midday Undertone for Cattle Complex
Cattle country is very quiet with just a few scattered bids noted in parts of the North at $186. Asking prices are poorly defined at this time, but we suspect feedlot managers will start out around $120 in the South and $190 in the North. Look for the cash arena to assume more definite parameters of potential on Wednesday. The midday hog report is not available due to packer transmission problems. The corn trade is under pressure as we move toward the top of the noon hour, off 7-plus cent thanks to imploding bean prices and crop-friendly growing conditions.
LIVE CATTLE:
For the most part, live contracts are modestly higher near midday, supported by cautious short covering and the premium status of last week's feedlot cash. Given the lackluster tone seen so far this morning, it would appear that many specs and commercials remain nervous about the possible burden of third quarter tonnage.
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Beef cut-outs are solidly higher at midday, up 0.87 (select, $198.71) to $1.08 (choice, $206.83) with light box movement (24 loads of choice cuts, 12 loads of select cuts, zero loads of trimmings, 5 loads of coarse grinds).
FEEDER CATTLE:
Feeder futures are significantly higher as we move toward higher noon with buying interest much more active than in the live paper market. The attractiveness of feeder contracts may be tied in part to the defensiveness in the corn market and prospects for cheaper costs of gain going forward.
LEAN HOGS:
Just when you this the enormous spread between August and fourth quarter issues can't get any wider, it yawns further.
Specifically, October through April are being clobbered by aggressive selling and triple-digit losses. Note how December has plunged below psychological support at 60. The carcass value at midday is some lower with strength in butts, picnics, and ribs offset by weakness in processing cuts. Pork cut-out: $100.67, up $1.92. CME cash lean index for 07/28: 88.10, off .65 (DTN Projected lean index for 07/31: NA).
John A. Harrington can be reached at john.harrington@dtn.com
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