DTN Midday Livestock Comments

Feeder Cattle Futures Rebound Midday

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

Aggressive early losses in feeder cattle futures has quickly been curbed as buyer interest is moving into nearby trade with mixed prices seen at midday. Hog futures continue to erode as pressure has developed, pushing contracts to new contract lows, as well as fundamental pressure developing in most areas of the market. Corn markets are higher in light trade activity. September corn futures are 1 cent higher. Stock markets are mixed in light trade. The Dow Jones is 35 points lower while Nasdaq is up 6 points.

LIVE CATTLE:

Limited trade is seen in live cattle futures as the direction of the market continues to remain lower, but traders seem to have much less incentive or desire to move into the complex given the sharp early-market pressure in feeder cattle. Live cattle futures have calmly posted losses from 30 to 50 cents lower as the softness over the last couple of days in feeder cattle trade has limited any buyer activity. But the overall support expected in beef values and potential longer-term demand through the end of the year is likely to limit the downward shift in the complex over the near term. Cash cattle activity remains sluggish with a few token bids still seen in Kansas, while packers remain unwilling to float bids through other areas at this point. A few asking prices are seen at $116 live basis, but feedlot managers are still cautious to step into the market as active trade is not expected to be seen until late in the week. The Fed Cattle Exchange Auction today listed a total of 464 head all from Kansas and all with a 1-9 day delivery date, none of those actually sold, 120 head were listed as unsold, and 344 head were listed as PO (Passed Offer of 112.00). Boxed Beef cut-outs at midday are higher, $0.59 higher (select) and up $0.32 per cwt (choice) with active movement of 102 total loads reported (50 loads of choice cuts, 27 loads of select cuts, 6 loads of trimmings, 19 loads of ground beef).

FEEDER CATTLE:

Feeder cattle futures have calmed significantly following the sharp early pressure seen Wednesday morning. With aggressive triple digit losses Tuesday leading the complex lower, and the concern that additional widespread liquidation would step into the market, traders became very defensive through the morning. But pressure in nearby contracts was unable to hold as seller interest remained lighter than earlier expected, allowing for prices to move back to a narrowly mixed trading range at midday. August through October futures are steady to 22 cents per cwt higher, which is a moral victory compared to the aggressive triple-digit losses early in the session. Due to the lack of volume in deferred contracts, firm losses still are holding across the complex.

LEAN HOGS:

Widespread pressure has once again quickly moved into lean hog futures with nearby contracts posting losses nearing $2 per cwt. The overall lack of buyer support seen through the week has instilled bearish market tones through the entire complex. This may add even more pressure to market technical factors as well as fundamental support. October contracts are holding a $1.90 per cwt loss, with prices at new contract lows near $48 per cwt. The overall lack of support in the market continues to add uncertainty to the entire complex. Cash prices are lower on the National Direct morning cash hog report. The weighted average price is down $1.76 at $48.10 per cwt with the range from $46.00 to $50.00 on 5,835 head reported sold. Cash prices are lower on the Iowa/Minnesota Direct morning cash hog report. The weighted average price is down $2.18 at $48.01 per cwt with the range from $46.00 to $50.00 on 2,019 head reported sold. The National Pork Plant Report posted a total of 241 loads selling with cutout values falling 0.25 per cwt at $71.80 per cwt in the morning report. Lean hog index for 8/6 is at $64.64 down 1.40 with a projected two-day index of $63.17, down 1.47.

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

(SK)

Rick Kment