DTN Closing Livestock Comments

Triple-Digit Gains Hold in Hog Complex

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

GENERAL COMMENTS

Cash cattle trade remains generally light with limited scattered bids developing through Wednesday afternoon. Bids are $110 live basis and $175 dressed. Asking prices remain firm at $115 and higher live basis, and $183 dressed basis. The Fed Cattle Exchange Auction today listed a total of 1,249 head, with zero actually sold, 1,187 head listed as unsold, and 62 head listed as PO (Passed Offer). The state by state breakdown looks like this: Kansas 413 total head, with zero head sold, 351 head unsold, 62 head listed as PO ($111.00); Nebraska no cattle reported; Texas 114 total head, with zero head sold, 114 head unsold, and zero head listed as PO; Colorade no cattle reported; Iowa 651 total head, with zero head sold, 651 head unsold, and zero head listed as PO; other states (Oklahoma) 71 total head, with zero head sold, 71 head unsold, and zero head listed as PO. Asking prices ranged from $111 to $115.00. All cattle listed are for 1 to 9 day delivery. According to the closing report, the national hog base is $0.95 lower compared with the Prior Day settlement ($62.00-$67.50) weighted average $65.13. The corn futures are higher in light activity. July futures were 7 cents higher Wednesday. The Dow Jones Index is 3 points higher with the Nasdaq up 55 points.

LIVE CATTLE

Late-day support quickly moved through live cattle futures with traders looking for additional buying and solidifying potential end-of the week gains (steady to $0.97 higher). The firm undertone, which has held through most of July, has created some additional buyer activity. This has moved August contracts 97 cents per cwt higher with prices moving above $109 per cwt once again. This may add some additional support with the potential to move price to three-month highs over the next couple of weeks. Long-term support is building in live cattle futures with the expectation that overall demand through the end of the year will remain strong. Beef cut-outs: lower, $0.37 lower (select, $197.58) and down $0.01 (choice, $204.64) with moderate demand and offerings (93 loads of choice cuts, 46 loads of select cuts, 12 load of trimmings, 20 loads of coarse grinds).

THURSDAY'S CASH CATTLE CALL:

Steady to $2 higher. Packer interest is expected to increase further through the morning Thursday, although trade may not be seen until later in the day Thursday or quite possibly Friday. The focus on the wide gap between asking prices and bids may continue to keep markets looking for improved cash trade.

FEEDER CATTLE:

Feeder cattle futures have bounced back from strong midday losses with mixed price levels late Wednesday ($0.27 lower to $0.07 higher). The absence of active trade interest in the market and the inability to establish a definite market direction through the week has allowed prices to wander in a moderate trading range. August futures rebounded from early pressure, leading the market higher at the end of the session with a 7-cent gain. The overall pressure in the complex continues to spark some additional uncertainty through the entire market. CME cash feeder index for 7/24 is $148.17 down $0.10.

LEAN HOGS:

Strong buyer support has moved into the complex with nearby contracts holding triple-digit gains ($0.27 to $1.40 Higher). October and December contracts sparked additional support with traders quickly moving into these nearby contracts and pushing prices to $1.40 per cwt gains at closing bell. The overall support through the entire complex helped to offset concerns that widespread pressure will develop. August futures have moved higher, but on limited trade volume which weighed on prices. Pork values stabilized following triple-digit gains in loin, butt, and picnic cuts. Sharp losses in rib and belly primals offset the potential to bring strong support to pork cutouts. Pork cut-out: $78.67 up $0.25. CME cash lean index for 7/23 $76.17 down $0.73. DTN Projected lean index for 7/24 $75.23 down $0.94.

THURSDAY'S CASH HOG CALL:

Steady to $2 lower. Additional market weakness is likely early Thursday with most bids expected $1 per cwt lower. Overall hog slaughter numbers are expected to reach 385,000 Thursday with 55,000 expected Saturday.

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

(BE)

Rick Kment