DTN Midday Livestock Comments 10/24 11:51
Live Cattle Futures Turn Lower
Early futures support and strong gains in cash cattle markets have had
little impact midday Friday when sharp losses have flooded into the market.
End-of-week positioning and pre report adjustments are leading to moderate to
strong price weakness.
By Rick Kment
Moderate to strong pressure has developed through the livestock markets with
cattle futures showing the most pressure with triple-digit losses seen at
midday. The interest based on sharply higher cash cattle prices was short
lived, with traders now moving onto the afternoon cattle on-feed report as well
as end-of-week positioning. Lean hog futures are under pressure although trade
volume has slowed significantly. Corn prices are lower in light trade. December
corn futures are 4 cents per bushel lower. Stock markets are higher in light
trade. The Dow Jones is 88 points higher while Nasdaq is up 17 points.
Light to moderate gains started the Friday trading session, but this support
was unable to hold as the morning continues. Traders quickly gave back early
gains, with most contracts now holding triple digit losses. Even the strong
support in the cash market is not able to keep traders interested through the
end of the session. The focus through the last couple hours of trade has now
quickly moved to the upcoming cattle on feed report as well as prime position
squaring opportunities after setting record high price levels in nearby
contract months. Following sharply higher cash cattle trade in all areas on a
live basis Thursday afternoon, some additional dressed deals are being done at
$265 per cwt. This puts cash trade generally $6 to $7 per cwt over last-week
levels, which is expected to set the tone on cattle being priced for next week.
Beef cut-outs at midday are lower, $1.10 per cwt lower (select) and down $2.39
per cwt (choice) with active movement of 173 total loads reported (77 loads of
choice cuts, 64 loads of select cuts, 22 loads of trimmings, nine loads of
Triple-digit losses are seen in nearby feeder cattle futures midday Friday
despite the complex starting out in positive territory. After the cash market
support seemed to clear the market, traders started to focus on the afternoon
cattle on feed report which is expected to show a slight increase in feeder
cattle placements through the month of September. The fear that a strong bounce
in placements will move the focus over the already well traded fact that
supplies remain tight, and on concerns of an overbought market like seen within
the last couple of weeks. October futures are leading the market lower with
losses near $1.70 per cwt.
Nearby lean hog futures losses have remained narrow despite growing pressure
through early 2015 contracts and further erosion in pork values in the morning
report. The focus across the complex has been put on further fundamental market
weakness although at this point, traders in the December and February contracts
appear to be more focused on position squaring in front of the weekend. The
thinly traded contracts in the fourth quarter of 2015, are showing some
additional price support, but this is not expected to change the overall tone
through the rest of the market. Cash prices are lower on the National Direct
morning cash hog report. The weighted average price lost $1.05 per cwt to
$90.28 per cwt with the range from $78.00 to $90.47 per cwt on 1,782 head
reported sold. Cash prices are unreported due to confidentiality on the Iowa
Minnesota Direct morning cash hog report. The National Pork Plant Report is
reported 172 loads selling as prices falling $2.34 per cwt. Lean hog index for
10/22 is at $102.40 down 1.77, with a projected two-day index of $100.35 down
Rick Kment can be reached at firstname.lastname@example.org
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