DTN Midday Livestock Comments 02/24 11:52
Active Pressure Develops Through Cattle Futures Midday Friday
Lackluster market direction early in the session quickly turned into wild
market moves. Cattle futures have reversed gains seen earlier in the week with
triple digit losses developing through most contracts. Hog markets on the other
hand have sparked some late week buyer interest as traders try to square
positions following the aggressive price tumble through previous sessions.
By Rick Kment
Sharp cattle market losses are being led by the aggressive price pressure
developing in feeder cattle trade. Most feeder cattle contracts are trading $2
per cwt lower or greater, although prices have backed away from session lows at
midday. This softness in feeder cattle markets and lack of follow through buyer
interest has allowed all but front month February live cattle futures to trade
$1 per cwt or greater at midday. Hog markets are firming as short covering is
moving back into the market at the end of the week. Corn prices are lower in
light trade. March corn futures are 1 3/4 cents lower. Stock markets are lower
in light trade. The Dow Jones is 36 points lower while Nasdaq is down 10 points.
The tone of the cattle market has quickly changed Friday as aggressive
losses are seen in all but front month February contract months. February
futures, which are lightly traded with dwindling open interest before
expiration at the end of the month are steady. All other contracts are holding
triple-digit losses at midday. The combination of sharp pressure quickly
developing across feeder cattle trade as well as the inability for significant
support to develop in deferred live cattle contracts through the week has
quickly pushed prices lower. There is also some pre-report positioning being
done in front of the cattle on feed report released Friday afternoon. Overall
cattle on feed numbers are not expected to change significantly from year ago
levels, although placements are likely to see a strong bump. Cash cattle
markets appear to be done for the week with no additional bids surfacing since
moderate to active trade was seen on Wednesday. At this point, most cattle
still on show lists will likely be rolled over to next as packers and feeders
try to assess needs through early March. Beef cut-outs at midday are higher,
$2.52 higher (select) and up $2.24 per cwt (choice) with light movement of 68
total loads reported (41 loads of choice cuts, 13 loads of select cuts, 4 loads
of trimmings, 11 loads of ground beef).
Sharp losses have flooded into the feeder cattle futures market with triple
digit losses seen across the entire complex. Even though price levels have
backed away from early session lows, the tone of the market has quickly
weakened given the strong buyer interest seen in live cattle markets through
much of the week. March feeder cattle futures are holding losses of $1.95 per
cwt at midday, while the April contracts are holding pressure of $2.35 per cwt.
Increased concern surrounding the upcoming cattle on feed report and the
potential for strong placement increases is adding to market pressure.
Light late-week buying is slowly trickling into the lean hog complex
following the overall lack of support seen in the market during the morning.
Short coving is being seen in nearby contracts with prices posting gains of 20
to 60 cents per cwt. The combination of sharp losses seen in cattle trade as
well as firmness in pork cutout values at the end of the week has brought
additional focus on unwinding price spreads between the cattle and hog complex
which have developed earlier in the week. Deferred contracts remain under light
to moderate pressure, but overall light volume in all markets is likely to
spark increased market shifts. Cash prices are lower on the National Direct
morning cash hog report. The weighted average price fell $2.46 at $68.27 per
cwt with the range from $63.00 to $69.19 on 2,315 head reported sold. Cash
prices are unreported due to confidentiality on the Iowa Minnesota Direct
morning cash hog report. The National Pork Plant Report reported 113 loads
selling with prices up $2.32 per cwt. Lean hog index for 2/22 is at $77.73 up
$0.09 with a projected two-day index of $77.39 down $0.34.
Rick Kment can be reached at email@example.com
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