DTN Midday Livestock Comments

Hog Prices Rally Midweek

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

Firm gains in hog trade has allowed some traders to move their attention from the early morning losses. Mixed trade continues to be seen through the complex with live cattle markets still unable to bring buyers back to the table, but remaining stuck in the sideways trend that has been established over the last couple of months. Corn markets are lower in light trade activity. September corn futures are 2 cents lower. Stock markets are mixed in light trade. The Dow Jones is 30 points higher while Nasdaq is down 72 points.

LIVE CATTLE:

Moderate selling activity has quickly developed in live cattle trade following mixed moves in beef values and the overall uncertainty surrounding trade interest through the rest of the session. October live cattle futures are leading the complex lower with an 82-cent-per-cwt loss, as traders continue to hold prices near $109 per cwt. The entire complex continues stuck within the wide sideways trending market that has held through most of the summer. It is expected that prices will continue to wander within this range over the next several weeks, with no real sense of direction developing. Cash cattle activity remains quiet with bids undeveloped and asking prices not fully defined. There are a few asking prices developing at $110 to $111 live and $173 and higher dressed. But at this point, it is likely to be late in the week before activity is seen. The Fed Cattle Exchange Auction today listed a total of 512 head (KS 271 head, NE 184 head, and TX 57 head), with no cattle actually sold, 401 head listed as unsold, and 111 head listed as PO (Passed Offer, in KS, bid $106.00). Asking prices ranged from 106.00-109.00. All cattle listed were set for 1-9-day delivery. Boxed Beef cut-outs at midday are mixed, $0.54 lower (select) and up $0.49 per cwt (choice) with active movement of 104 total loads reported (58 loads of choice cuts, 27 loads of select cuts, 5 loads of trimmings, 14 loads of ground beef).

FEEDER CATTLE:

Feeder cattle futures have battled back from early losses with prices trading steady to 50 cents higher at midday. It is possible that the recent late-morning support could waiver, allowing prices to hover in a mixed but mostly higher range through the end of the session. Pressure in live cattle futures is being curbed by growing weakness seen in grain markets, which will affect overall production costs. This could help to sustain the sluggish, but obvious buyer support that has moved into the complex.

LEAN HOGS:

Firm buyer interest has slowly but steadily moved back into the lean hog complex Wednesday morning with front-month October futures leading the complex higher with a $1.37 per cwt rally. This may add even more underlying support to the entire complex with the rest of the complex mostly higher but trading 5 cents lower to 47 cents higher. Traders are looking for increased interest following the bounce higher cash and pork values. Any follow-through gains in market fundamentals is expected to help bring additional interest back to the table and could spark underlying support from commercial and investment traders through the upcoming days. Cash prices are higher on the National Direct morning cash hog report. The weighted average price is $0.17 higher at $37.02 per cwt with the range from $34.00 to $38.50 on 6,045 head reported sold. Cash prices are higher on the Iowa/Minnesota Direct morning cash hog report. The weighted average price is $0.21 higher at $37.72 per cwt with the range from $36.00 to $38.50 on 2,285 head reported sold. The National Pork Plant Report posted 239 loads selling on the morning report. Pork carcass values gained $0.47 per cwt at $69.07 per cwt. Lean hog index for 8/31 is at $45.44 down 0.19 with a projected two-day index of $45.67, up 0.23.

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

(SK)

Rick Kment