DTN Midday Livestock Comments

August Live Cattle Futures Tumble

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

Sharp losses swept through August live cattle contracts as traders try to exit the expiring contract month. This has pushed prices $3 per cwt lower midday. Very little long term market direction is seen in all markets with traders adjusting positions ahead of the long weekend. Corn markets are higher in light trade activity. September corn futures are 9 cents higher. Stock markets are mixed in light trade. The Dow Jones is 79 points lower while Nasdaq is up 11 points.

LIVE CATTLE:

The thinly traded, and expiring front-month August live cattle futures have moved $3 per cwt late Friday morning as traders continue to try to exit the contract and move into other nearby contracts. The rest of the live cattle trade is hovering in narrow to moderate losses of 20 to 47 cents per cwt. Even though the sharp loss in August trade will not significantly impact overall trade interest due to the light open interest and sluggish activity, a close below $107 per cwt on the monthly chart will continue to add volatility to the market. Cash cattle trade still remains undeveloped as both sides move into Friday afternoon with the desire to get business done as quickly as possible before the holiday weekend. Bids have firmed slightly through the morning with current bids at $107 live and $168 to $170 dressed in most areas. It is likely that trade will become more active through the afternoon, with the expectation that trade will finish quickly once it starts to develop. Boxed Beef cut-outs at midday are lower, $1.56 lower (select) and down $1.73 per cwt (choice) with light movement of 53 total loads reported (13 loads of choice cuts, 18 loads of select cuts, no loads of trimmings, 22 loads of ground beef).

FEEDER CATTLE:

Light to moderate pressure is seen in feeder cattle futures as traders continue to focus on the inability to draw buyers back into the complex late in the week. October feeder cattle trade remains under pressure, holding $1.15 per cwt as the overall focus is pushing prices below $150 per cwt. A close at these levels at the end of August could create some uncertainty through the entire cattle market despite the expectation that firm demand support is likely to be seen through the upcoming weeks.

LEAN HOGS:

Sharp gains have quickly developed Friday morning across the entire lean hog complex. This is adding to some additional support across the market as triple digit gains are seen in all nearby contracts. Even though prices have slowly backed away from session highs, the desire to move into the complex before month end has helped to push prices above recent market pressure. The lean hog complex continues to remain in a sideways trading range following the wide price shift seen during the month of August. This range could contain prices through the next few months. Cash prices are lower on the National Direct morning cash hog report. The weighted average price is $0.29 lower at $36.40 per cwt with the range from $34.00 to $38.00 on 4,140 head reported sold. Cash prices are lower on the Iowa/Minnesota Direct morning cash hog report. The weighted average price is $0.12 lower at $36.66 per cwt with the range from $33.00 to $37.00 on 1,502 head reported sold. The National Pork Plant Report posted 182 loads selling on the morning report. Pork carcass values fallen $0.06 per cwt at $66.69 per cwt. Lean hog index for 8/29 is at $45.85 down 0.60 with a projected two-day index of $45.63, down 0.22.

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

(SK)

Rick Kment