DTN Midday Livestock Comments

Limited Volume Leaves Cattle Futures Mixed

Rick Kment
By  Rick Kment , DTN Analyst
(DTN photo by Russ Quinn)
GENERAL COMMENTS:

Mixed end-of-week market shifts have developed in cattle trade with light support seen in nearby contracts. The early morning pressure that developed in all livestock trade has continued to limit support in deferred contract months. Corn prices are higher in light trade Friday. July corn futures are 1/4 cent higher. Stock markets are lower in light trade. The Dow Jones is 76 points lower while Nasdaq is down 107 points.

LIVE CATTLE:

Mixed trade has developed late morning in live cattle futures with August through December contracts holding moderate support through the complex and could help to draw additional interest through the complex. The gain in these nearby contracts may not be anything more than end-of-week short covering following aggressive market weakness seen through the last few trading sessions. Trade interest remains light Friday and is likely to remain that way early next week as some traders seem to have already closed the book on the month of July, given the market shifts seen over the last few days. Cash cattle trade still remains undeveloped midday Friday, as it appears it will be a mid to late afternoon event. Bids are becoming more readily available, but unable to move significantly from levels seen earlier in the week. Bids are at $109 to $110 live and $174 to $176 dressed. Asking prices have yet to budge in most areas with asking prices seen from $115 to $116 live and $180 to $183 per cwt dressed. Boxed Beef cut-outs at midday are higher, $0.30 higher (select) and up $0.20 per cwt (choice) with light movement of 57 total loads reported (38 loads of choice cuts, 10 loads of select cuts, no loads of trimmings, 9 loads of ground beef).

FEEDER CATTLE:

August and September feeder cattle futures have bounced higher with narrow to moderate buyer support moving into the complex. This has helped to spark some additional support through the entire cattle market as traders look for increased longer-term support that may develop next week. The pullback in prices through the week has quickly shed additional light on the potential that highs set in the middle of the month and may have created significant resistance above these price levels. Nearby contracts have eroded nearly $4 per cwt in the last week and a half. This causes not only fundamental concerns, but may spark some additional technical weakness through early August.

LEAN HOGS:

Firm losses continue to be seen through the entire lean hog complex Friday morning. Although prices have been able to slowly work away from early session lows which posted triple digit losses in most contracts, end of the week activity is adding weakness to the entire complex. August and October contracts have reestablished contract lows, creating additional concern that a weekly close at these levels will offset the potential for additional buyer support in the complex. A close at these levels at the end of the month could also create even more bearish market activity given the overall lack of support in cash markets and general fundamental structure. Cash prices are lower on the National Direct morning cash hog report. The weighted average price is down $0.92 at $62.80 per cwt with the range from $59.00 to $65.00 on 4,915 head reported sold. Cash prices are lower on the Iowa/Minnesota Direct morning cash hog report. The weighted average price is down $0.71 at $63.08 per cwt with the range from $59.00 to $65.00 on 1,660 head reported sold. The National Pork Plant Report posted 160 loads selling with carcass values adding $1.92 per cwt. Lean hog index for 7/24 is at $45.23 down 0.94 with a projected two-day index of $74.43, down 0.80.

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

(SK)

Rick Kment