DTN Closing Livestock Comments

Hog Futures Surge

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

GENERAL COMMENTS

Cash cattle trade remains undeveloped with limited direction seen through the day. Although packer interest increased through the day with bids seen from $103 to $106 per hundredweight (cwt) live basis and $169 to $170 per cwt dressed, the overall lack of activity is causing both sides to become well rooted in their respective position. Asking prices remain near $110 to $111 live basis and $174 and higher dressed. It is possible that light trade could trickle in through the day Friday, but the potential for light-to-moderate trade developing late Friday is becoming a greater possibility. According to the closing report, the national hog base is $1.00 higher compared with the Prior Day settlement ($35-$41, weighted average $38.27). Corn futures were higher in light activity with the September contract closing 1 3/4 cents higher Thursday. Dow Jones Index was 34 points higher with Nasdaq down 82 points.

LIVE CATTLE

Limited interest was seen in live cattle trade Thursday with prices hovering in a very narrow range, closing $0.15 lower to $0.20 higher). With very little additional direction seen across the entire cattle market, most traders opted to stay on the sidelines. Limited activity is expected to redevelop Friday, which may allow markets to continue their sideways slide. This recent move is bringing about some market adjustments, but with prices safe at this point from breaking out of the current range, markets may wander in this level for quite a while. Firming end-of-year demand should help sustain values, but ample cattle will keep traders from getting overly excited. Beef cut-outs: lower, down $3.08 (select, $197.83) to down $1.65 (choice, $208.75) with light demand and offerings (87 loads of choice cuts, 49 loads of select cuts, 23 load of trimmings, 23 loads of coarse grinds).

FRIDAY'S CASH CATTLE CALL:

Steady to $1 lower. Activity is expected to be delayed until sometime Friday with a moderate gap still between asking prices and bids. This may help to spark some late-week trade activity with packers needing to gain access to additional cattle for the next couple weeks of procurement.

FEEDER CATTLE:

Cattle futures traded in a narrow range Thursday, closing $0.32 lower to $0.05 higher. Increased buyer support early in the session pushed nearby September and October futures 5 cents per cwt higher. However, early 2019 contracts saw very little support. All nearby contracts are tightly grouped within a 30-cent price range, hovering around $151.50 per cwt. This lack of wide shifts could help offset any market weakness seen over the last month, though the upside of the market remains limited. CME cash feeder index for 9/4 is $150.60, down $0.02.

LEAN HOGS:

Aggressive buyer support moved into nearby lean hog futures Thursday as firm fundamental support developed. Futures closed $0.12 to $3.00 higher. October futures led the rest of the complex higher with aggressive limit-higher trade seen at closing bell. This pushed markets to expanded trading limits Friday and could help draw additional interest to the complex. Other contracts saw firm support, but not near the intensity of front-month futures. Reports of African swine virus affecting hogs in China are starting to get more attention, but at this point, the news is seen as a flash in the pan. Pork values have eroded midweek following early week support. Pork cut-out: $67.77, down $0.18. CME cash lean index for 9/4: $45.67, up $0.23. DTN Projected lean index for 9/5: $45.92, up $0.25.

FRIDAY'S CASH HOG CALL:

Steady to $1 higher. Strong gains in the futures trade is expected to help spark firm buyer support through the end of the week. Most bids are expected to be 50 cents to $1 per cwt higher Friday. Friday runs are pegged at 449,000 head with 342,000 seen Saturday.

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

(BE)

Rick Kment