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
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
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).
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 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 email@example.com
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