DTN Closing Livestock Comments

Early Hog Gains Evaporate

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

GENERAL COMMENTS

Cash cattle trade remains undefined with bids and asking prices undeveloped early in the week. Showlists appear mixed with increased offerings in Texas, while Kansas and Colorado are showing smaller listings. Nebraska seems to be generally steady with last week's offerings. Trade is likely to be pushed off until the last half of the week once again with active bids and asking prices potentially not seen until Wednesday or later. According to the closing report, the national hog base is $1.68 higher compared with the prior day settlement ($38.00-$46.50) weighted average $43.08. Corn futures are higher in light activity. September futures were 1 1/4 cent higher Monday. Dow Jones Index is 37 points lower with Nasdaq up 21 points.

LIVE CATTLE

Steady, but narrow gains have slowly developed Monday in live cattle futures. This may add some additional volatility to the market with prices hovering near firm, but showing very little active interest (steady to $0.47 higher). Monday's activity was sluggish the entire session, with very limited direction developing in any contract or at any time during the trading day. October futures scratched out a 20 cent per cwt gain, settling above $110 per cwt, at $110.15 per cwt while December gave away early gains at closing bell and settled unchanged. The lack of direction in the market is causing some additional uncertainty, although the focus on stability while pressure has developed in beef values is looked at as a reason to remain positive long term. Beef cut-outs: mixed, $1.84 higher (select, $198.93) and down $0.26 (choice, $206.30) with light demand and heavy offerings (45 loads of choice cuts, 24 loads of select cuts, 16 load of trimmings, 23 loads of coarse grinds).

TUESDAY'S CASH CATTLE CALL:

Steady. Little to no activity is expected early Tuesday morning as packers and feedlot managers are still trying to assess overall supply of cattle and the potential for packer interest later in the week. Bids may not be seen until midweek, while asking prices may be delayed until late Tuesday or later.

FEEDER CATTLE:

Mixed trade trickled into closing bell across feeder cattle contracts. This may add increased pressure to the entire market with additional focus placed on outside market shifts through the rest of the week. Feeder contracts close $0.45 lower to $0.22 higher. Lack of direction in corn futures Monday allowed traders to focus more on the moves and shifts in live cattle futures and potential beef market direction than production costs early in the week. Nearby contracts saw light to moderate pressure with front-month September futures leading the complex lower with a 45 cent per cwt loss. All other nearby contracts posted narrow price shifts in a narrow trading range. There is likely to be some additional movement through the rest of the complex later in the week. CME cash feeder index for 9/7 is $152.64 up $1.32.

LEAN HOGS:

Firm support through most of the complex during the day Monday quickly eroded in the last hour of trade ($1.10 lower to $0.30 higher). Strong triple-digit gains which held in front-month October futures slid lower as traders neared closing bell and tried to chase pressure seen in other nearby contracts. This pulled October futures from a $1.20 per cwt gain midday, to a 30-cent gain at closing bell -- the only gain across the entire complex. After trading mixed to mostly higher Monday, prices in nearby and deferred futures settled firmly lower with the concern that additional pressure may develop through the week. Pork values in the afternoon pork cutout and carcass values report are delayed and unavailable at this time. CME cash lean index for 9/6 $46.01 up $0.09. DTN Projected lean index for 9/7 $47.00 up $0.99.

TUESDAY'S CASH HOG CALL:

Steady to $3 higher. Moderate to strong buyer support is expected to redevelop Tuesday morning as traders are looking for increased underlying market support. Even though firm gains are expected in most areas, bids are likely to remain in a wide range as most bids may remain only $1 per cwt higher early in the day. Tuesday runs are likely to hit 469,000 head.

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

(BE)

Rick Kment