DTN Midday Livestock Comments 10/20 12:01
Cattle Futures Rally Sharply Higher
Strong gains have redeveloped across nearby cattle futures. This is pushing
contracts to or near limit highs as traders focus once again on tight supplies
of cattle. Lean hog futures remain mixed in light Monday trade.
By Rick Kment
Sharp gains have quickly redeveloped through the live cattle and feeder
cattle markets. The focus through the complex has been on tight supplies, which
at least temporarily has offset any demand concerns about selling beef at
current to higher price levels. Lean hog futures are mixed in a narrow to
moderate trading range as nearby contracts are weighing on earlier market
support. Corn prices are lower in light trade. December corn futures are 2
cents per bushel lower. Stock markets are mixed in light trade. The Dow Jones
is 52 points lower while Nasdaq is up 29 points.
Any market weakness that existed late last week was quickly evaporated
through morning trade as live cattle futures surged near or to limit highs of
$3 per cwt. This is helping set new trading limits in nearby contracts, with
the focus still on tight supplies and little emphasis through the morning being
placed on the ability to sustain beef values. Cash cattle markets remain quiet
with both asking prices and bids undeveloped so far this week. Following trade
through the middle of last week, there could be some additional interest
stepping into the market Tuesday or Wednesday, although sales may not be seen
until the second half of the week. Beef cut-outs at midday are mixed, $0.11 per
cwt lower (select) and up $0.64 per cwt (choice) with light movement of 68
total loads reported (34 loads of choice cuts, 21 loads of select cuts, zero
loads of trimmings, 13 loads of ground beef).
The up-and-down teeter-totter routine in the feeder cattle futures continues
to be seen Monday as aggressive buyer interest quickly moved back into the
market following limit down trade which developed Friday. Although there remain
concerns about the sustainability of current price levels through the rest of
the year and well into 2015, traders keep coming back to the "tight supply"
argument, which is still able to get the attention of traders. Nearby prices
are hovering between $2.30 and $2.90 per cwt at midday, although it is
uncertain just how much further support will be seen through the rest of the
trading session, and if buyers will push contracts to the $3 per cwt trading
limit before the end of the day.
Early support, which trickled into the lean hog futures market Monday
morning, was unable to hold through midday in several contracts as traders
return to a bearish attitude concerning both cash hog and pork values prices
over the near future. The overall fear of sharply growing supplies through the
rest of the year and stretching well into 2015 is creating widespread concerns
through the complex. Nearby futures are holding loses of 70 to 85 cents per
cwt, while trade through deferred contract months is hovering in a narrowly
mixed price range. Cash prices are unreported Monday morning. The National Pork
Plant Report is reported 118 loads selling as prices falling $1.68 per cwt.
Lean hog index for 10/16 is at $108.21 down 0.89, with a projected two-day
index of $106.78 down 1.43.
Rick Kment can be reached at email@example.com
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