DTN Midday Livestock Comments 07/20 12:18

DTN Midday Livestock Comments          07/20 12:18

   Sharp Losses Hold in Cattle Futures Thursday Morning

   Cattle futures have posted sharp losses Thursday morning as traders back 
away from recent market support which moved into the complex. Even though 
triple-digit gains continue to hold in feeder cattle futures, contracts have 
pulled back from session lows. 

By Rick Kment
DTN Analyst

GENERAL COMMENTS: 

   Strong buyer support flooded into cattle markets late Wednesday morning. 
This offset the sharp triple digit losses which were seen early in the trading 
day as buyers are quickly moving back into the complex following the aggressive 
market pressure over the last couple of sessions. 

   Sharp losses have quickly developed through cattle trade Thursday morning 
with traders adjusting positions following the strong move higher midweek. Even 
though losses remain significant, losses at midday have pulled back from 
session lows as buyers are stepping back into the complex. Corn prices are 
higher in light trade. September corn futures are 9 cents higher. Stock markets 
are higher in light trade. The Dow Jones is 14 points lower while Nasdaq is up 
7 points.

   LIVE CATTLE:

   Firm pressure is holding in live cattle futures with traders focusing on the 
triple-digit losses in feeder cattle markets. Aggressive gains once again 
developing in the grain complex has allowed for increased market volatility 
through the entire cattle market. This may spark some additional trade volume 
through the end of the week, but the pullback from the sharp highs seen 
Wednesday is causing many traders to square positions. If markets can curb 
losses to $1 per cwt through the end of the week, and rebuild additional buyer 
support early next week, follow through support is likely to develop across all 
markets. Cash cattle markets are generally quiet Thursday morning following the 
light trade in the North on Wednesday. Bids redeveloped in the South at $115 to 
$117 live basis and are seen in the North at $187 to $190 dressed. It is 
expected that trade will be delayed until sometime Friday following the latest 
pullback in futures trade. Asking prices remain unchanged, at $120 to $122 live 
basis and $192 and higher dressed. Beef cut-outs at midday are higher, $0.37 
higher (select) and up $0.36 per cwt (choice) with active movement of 104 total 
loads reported (52 loads of choice cuts, 39 loads of select cuts, no loads of 
trimmings, 13 loads of ground beef). 

   FEEDER CATTLE:

   Strong triple-digit losses have quickly developed across the feeder cattle 
complex with traders focusing on the overall lack of support from commercial 
traders and lack of market activity Thursday morning. Even though feeder cattle 
trade is currently $1 to $1.50 per cwt lower, markets have pulled back from 
session lows which were well above $2 per cwt earlier in the morning. The 
widespread pressure in the market is likely to have very little long-term 
impact in the market due to the volatility in the complex. This may spark 
additional concerns about further buyer activity, but may bring some needed 
support later in the session.    

   LEAN HOGS:

   Lean hog futures remain mixed but prices have moved in a much wider trading 
range through the morning with nearby contracts quickly eroding based in 
underlying pressure seen in cash markets as well as the sharp losses developing 
in the cattle trade. Gains continue to hold across deferred lean hog futures 
trade with buyers slowly stepping back into the complex and gains of 10 to 30 
cents per cwt seen through the complex. There is expected to be some additional 
market shifts seen through the end of the session, but outside markets will 
continue to play a significant role in lean hog market direction during the end 
of the week. Cash prices are lower on the National Direct morning cash hog 
report. The weighted average price fell $0.93 at $83.86 per cwt with the range 
from $79.00 to $85.25 on 3,931 head reported sold. Cash prices are lower on the 
Iowa/Minnesota Direct morning cash hog report. The weighted average price fell 
$0.42 at $84.84 per cwt with the range from $83.75 to $85.25 on 413 head 
reported sold. The National Pork Plant Report reported 176 loads selling with 
prices falling $0.86 per cwt. Lean hog index for 7/18 is at $92.40 down $0.06 
with a projected two-day index of $92.00, down $0.40.  

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


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