DTN Closing Livestock Comments

Limited Interest Seen Wednesday

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

GENERAL COMMENTS

Cash cattle activity remains sluggish with just a few token bids developing in the North through the afternoon Wednesday. Bids of $170 per hundredweight dressed basis have developed, but are still well below asking prices, and at this point, are unlikely to gain much interest. Trade is expected to be delayed until sometime Thursday or Friday, with Friday becoming a strong possibility. According to the closing report, the national hog base is $0.45 higher compared with the Prior Day settlement ($34-$39, weighted average $37.30). Corn futures are lower in light activity with the September contract 2 cents lower Wednesday. The Dow Jones Index is 4 points higher with the Nasdaq down 91 points.

LIVE CATTLE

Mixed trade developed in the last minutes of the session, eroding a portion of the early pressure seen in the complex. Futures closed $0.82 lower to $0.07 higher. Strong pressure developed early in the front-month October contract as traders continued to focus on the lack of support in beef values in the morning report and quickly backed away from strong gains seen Tuesday. Although the overall tone of the market remains stable with prices hovering within the wide sideways trading range seen through most of the summer, the potential to push prices lower through the rest of the week could bring about some increased market volatility. Beef cut-outs: lower, $1.30 lower (select, $200.91) to down $0.42 (choice, $210.40) with light demand and heavy offerings (87 loads of choice cuts, 49 loads of select cuts, 23 load of trimmings, 23 loads of coarse grinds).

THURSDAY'S CASH CATTLE CALL:

Steady. Limited activity is expected early Thursday morning, although the tone of the market may firm based on packers becoming more active over the next couple of days.

FEEDER CATTLE:

Limited trade left prices mixed at closing bell ($0.35 lower to $0.67 higher). Following the strong triple-digit gains on Tuesday, traders seemed much more subdued and cautious through the midweek session. With light-to-moderate pressure holding in the live cattle trade, feeder cattle markets focused more on the lack of support in the grain trade, which will lower production costs due to lower feed costs. This helped to draw increased buyer activity into deferred contract months. CME cash feeder index for 9/3 is $150.62, up $0.89.

LEAN HOGS:

Firm gains early in the session eroded near closing bell with mixed trade leaving the market generally steady ($0.27 lower to $0.30 higher). Underlying buyer support stepped back into the lean hog complex midmorning, which helped to spark some additional market gains. But overall buyer interest was unable to hold through the end of the session. This caused light pressure to develop in nearby contracts. Traders seem to be hesitant to quickly follow the bounce higher seen in morning cash reports, although there seems to be underlying support being built across the entire complex in early September. Traders are focusing on outside market moves and potential demand changes through the next several weeks, which may help bring additional price support. Pork values have eroded midweek following early week support. Pork cut-out: $67.95, down $0.65. CME cash lean index for 8/31: $45.44, down $0.19. DTN Projected lean index for 9/4: $45.67, up $0.23.

THURSDAY'S CASH HOG CALL:

Steady to $1 lower. Most early bids Thursday morning are expected to be steady in light activity with the firmness developing across the hog complex. Thursday runs are expected at 469,000 head with 359,000 head expected Saturday.

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

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Rick Kment