DTN Midday Livestock Comments 07/25 12:11
Cattle Futures Continue Higher
Firm triple-digit gains continue to develop in front-month cattle futures.
The focus on the upcoming cattle on feed report Friday afternoon is keeping
most traders active during midday. Lean hog futures have eroded from early
gains as trade volume has slowed.
By Rick Kment
Firm follow-through buyer support is holding through the cattle complex with
August futures able to sustain and hold triple-digit gains through most of the
session. Hog futures have backed away from early buyer support as traders once
again turn to concern about longer-term supply growth. Corn futures are lower
at midday. September corn futures are 1/2 cent per bushel lower. Stock markets
are lwoer in light trade. The Dow Jones is 125 points lower while Nasdaq is
down 21 points.
Strong gains are seen in front-month August futures with traders focusing on
the strong fundamental support seen through the complex. If cattle on feed
numbers come in at or below estimated levels, additional strong support could
redevelop early next week. There is so much focus on the tight supplies of
cattle, that even a hint of reduced demand at higher prices could cause a
significant market correction. But so far, that has been held at bay. Cash
cattle activity still continues to be seen through the morning, with aggressive
price support firm to higher from Thursday's sales levels. The expectation that
most business will be done before the cattle on feed report could help to
solidify additional trade activity midday. Beef cut-outs at midday are higher,
$1.80 per cwt higher (select) and up $1.74 per cwt (choice) with light movement
of 53 total loads reported (28 loads of choice cuts, 17 loads of select cuts,
zero loads of trimmings, seven loads of ground beef).
Moderate to strong buyer support has redeveloped in the feeder cattle
futures despite mixed trade activity early in the session. The focus on the
cattle on feed report and cattle inventory report is helping to drive prices
higher. Deferred futures are holding triple-digit gains with any long-term
shift in cow numbers likely to be affecting 2015 contracts most significantly
as traders look for longer-term trends.
Early support in the lean hog futures market was unable to hold as trade
pressure developed in nearby contracts. Once short covering was accomplished,
the market has once again felt a vacuum of buyer interest, which could erode
markets even further through afternoon trade. It is uncertain just how much
additional volume will develop before closing bell. Cash prices are lower on
the National Direct morning cash hog report. The weighted average price fell
$1.82 per cwt to $122.64 per cwt with the range from $111.00 to $124.50 per cwt
on 2,710 head reported sold. Cash prices are lower on the Iowa Minnesota Direct
morning cash hog report. The weighted average price fell $2.80 per cwt to
$123.48 per cwt with the range from $122.00 to $124.50 per cwt on 530 head
reported sold. The National Pork Plant Report is reported 100 loads selling as
prices gaining $1.56 per cwt. Lean hog index for 7/23 is at 131.19 down 0.85,
with a projected two-day index of $130.33 down 0.86.
Rick Kment can be reached at firstname.lastname@example.org
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