DTN Closing Livestock Comments

Triple-Digit Gains Flooded Through Cattle Markets Midweek

Rick Kment
By  Rick Kment , DTN Analyst
(DTN file photo)

GENERAL COMMENTS

Cash cattle trade in feedlot country remains quiet at this point Wednesday afternoon. But active bids have developed through the day with live bids seen at $104 per cwt while dressed bids are at $165 per cwt. Packer interest still remains light given the overall outside market support. Asking prices have firmed through the day due to the sharp gains in futures prices. Live cattle are showing asking prices of $110 to $111 per cwt, while dressed asking prices are much less defined, but expected to be seen from $172 to $175 per cwt. The Fed Cattle Exchange Auction report today listed a total of 1,450 head, with 636 actually sold, 440 head listed as unsold and 374 head listed as PO. The state by state breakdown looks like this: KS 608 total head, with 382 head sold at $106.50-$106.75, 0 head unsold, 226 head listed as PO ($106.00); NE 300 total head, with 0 head sold, 300 head unsold, and 0 head listed as PO; TX 542 total head, with 254 head sold at $106.75, 140 head unsold, and 148 head listed as PO ($106.50); CO no cattle listed; IA no cattle listed; other states no cattle listed. The delivery date/weighted averages breakdown is as listed: 1-9 day delivery: 1,150 head total, 636 head sold, with a weighted average price of $106.67; 1-17 day delivery 97 head total, no sales; 10-17 day delivery 0 head total; 17-30 day delivery 203 head total, no sales. According to the closing report, the national hog base is $0.90 lower compared with the Prior Day settlement ($45.50-$52.00) weighted average $51.75.The corn futures moved higher in light activity. December futures were 2 cents higher Wednesday. The Dow Jones Index is 26 points higher with the Nasdaq down 6 points.

LIVE CATTLE

Strong triple-digit gains have quickly developed Wednesday as widespread buyer support flooded into the entire cattle complex ($1.00 to $2.97 Higher). Aggressive commercial and investment buyer support quickly moved into the complex Wednesday afternoon. This helped to push nearby contracts to near limit gains as October futures fell short of the $3 per cwt trading limit by 3 cents per cwt. The strong move higher has pushed front month spot contracts above $110 per cwt once again. Other nearby contracts are trading at $116 to $121 per cwt based on technical support across the complex. Beef cut-outs: lower, $0.31 lower (select, $188.52) and down $0.07 (choice, $192.04) with light to moderate demand and heavy offerings (73 loads of choice cuts, 28 loads of select cuts, 37 loads of trimmings, 38 loads of coarse grinds).

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THURSDAY'S CASH CATTLE CALL:

Steady $2 Higher. Bids have quickly developed midweek following the sharply higher futures trade. But the support in the futures market has increased the expectations of feedlot managers which have increased asking prices. Trade may be delayed until either late Thursday or sometime Friday at this point.

FEEDER CATTLE:

Extremely active price gains quickly flooded through the cattle market. This helped to post triple digit gains in all contracts ($2.37 to $4.47 Higher) at the end of the session. The inability to close markets limit higher will keep contracts from expanded limits Thursday, but the overall bullish tone of the market continues to be seen in the complex. September contracts posted a $2.40 per cwt gain, moving within pennies of $154 per cwt while October and November contracts moved above $157 per cwt as traders take aim at breaking through June highs. A move above $157.50 per cwt in October contracts would set contract highs, and likely spark additional underlying market support over the next few trading sessions. CME cash feeder index: 9/19: $150.46, down $0.01.

LEAN HOGS:

Light buyer interest slowly developed in lean hog futures as traders backed away from the previous market pressure seen early in the session. This pushed December through August contracts higher at the closing bell, with markets holding narrow, but positive moves of 10 to 25 cents per cwt. Front month October futures continue to erode lower, with futures holding a $1.47 per cwt loss, settling well below the $60 per cwt price target seen over the last couple of weeks. Carcass values stabilized midweek following wide market shifts in a mixed price range. Rib values increased $6.99 per cwt, while Picnic and Belly prices fell $2.70 and $1.35 per cwt respectively. Pork cut-out: $76.28 down $0.04.CME cash lean index for 9/18: $61.88, down 0.94. DTN Projected lean index for 9/19 $60.92 down $0.96.

THURSDAY'S CASH HOG CALL:

Steady to $1.50 lower. Additional cash market pressure is expected to develop early Thursday morning with packers focusing on similar market conditions Thursday as well as the rest of the week. Most bids are expected to be 50 cents to $1.50 per cwt lower early Thursday morning. Thursday slaughter runs are expected at 450,000 head with Saturday procurement likely to hit 228,000 head.

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

(BE)

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Rick Kment