DTN Midday Livestock Comments 09/02 11:55
Strong Gains Flood into Livestock Futures
Early-week buyer support has become aggressive in both cattle and hog
futures Tuesday morning. Traders are focusing on higher cash market activity
after the holiday weekend with the expectation that demand will continue to
strengthen in the coming days.
By Rick Kment
Trade volume is moderate across the livestock futures market with aggressive
triple-digit gains seen in all cattle markets and nearby lean hog contracts.
Firming demand is expected through the upcoming weeks, which could help to
sustain additional market support. Corn futures are lower at midday. September
corn futures are 3 cents per bushel lower. Stock markets are mixed in light
trade. The Dow Jones is 62 points lower while Nasdaq is up 2 points.
Traders continue to refocus on tight supplies now that traders are past the
phase of worrying about holiday weekend beef clearance. It is still too early
to give the holiday weekend a grade as far as beef consumption is, but from all
early indications, it was not expected to be very disappointing. The focus on
firmer support and additional tight cattle supplies through the next couple of
months may help to maintain early-week support across the complex. All nearby
and deferred futures are holding triple-digit gains at midday, although prices
seem to have stabilized for the moment. Cash cattle markets are inactive so far
Tuesday morning following higher prices last week and the long holiday weekend
delaying weekly show list distribution by a day. It is likely that active trade
will be delayed until late in the week with active bids maybe not developing
until Wednesday or later. Asking prices are still hard to pin down but
potentially around $158 to $159 in the South and $247 and higher per cwt in the
North. Beef cut-outs at midday are higher, 0.81 per cwt higher (select) and up
$0.41 per cwt (choice) with active movement of 115 total loads reported (60
loads of choice cuts, 27 loads of select cuts, nine loads of trimmings, 18
loads of ground beef).
October through March feeder cattle futures continue to lead the market
higher Tuesday morning. The focus on tight supplies and potentially steady to
strong demand growth through the next several months is helping to draw
additional buyers into all feeder cattle markets. It is uncertain just how much
additional support will develop over the next couple hours, but buyer support
is likely to hold.
Aggressive buyer interest is jumped back into the October and December lean
hog futures as traders focus on the potential for additional pork value support
and firming cash hog prices. October contracts are $1.70 per cwt higher at
midday, but have backed off slightly from earlier highs due to lack of
aggressive volume stepping back into the market. There is some additional
caution seen in early 2015 contracts as traders remain unconvinced that strong
demand will outpace the expected supply increases over the next year. Cash
prices are lower on the National Direct morning cash hog report. The weighted
average price fell $0.80 per cwt to $90.23 per cwt with the range from $89.00
to $92.00 per cwt on 3,459 head reported sold. Cash prices are unreported due
to confidentiality the Iowa Minnesota Direct morning cash hog report. The
National Pork Plant Report is reported 160 loads selling as prices down $0.18
per cwt. Lean hog index for 8/28 is at $97.56 down 1.30, with a projected
two-day index of $96.45 down 1.11.
Rick Kment can be reached at email@example.com
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