DTN Midday Livestock Comments 01/27 11:22
Cattle Futures Surge Higher
Active buyer support has quickly developed in nearby and deferred cattle
contracts Tuesday as traders react to the aggressive previous losses on the
complex. Trade appears to be slowing through the last half of the trading
session, which could allow for more moderate price shifts near closing bell.
By Rick Kment
DTN Livestock Analyst
Strong gains continue to hold through the cattle complex, although traders
are slowly backing away from early session highs with the focus on position
taking likely going to be the main order of business through the rest of the
complex. Lean hog futures are mixed with moderate to strong gains holding in
April through June contract months. Corn prices are lower in light trade. March
corn futures are 2 cents per bushel lower. Stock markets are lower in active
trade. The Dow Jones is 354 points lower while Nasdaq is down 87 points.
Strong triple-digit gains continue to hold in nearby live cattle futures as
traders are trying to quickly bounce back from the softness seen in the complex
over the last couple of trading sessions. February futures are holding gains of
$2 per cwt based on expectation of renewed support may develop through the end
of the week. Cash cattle markets remain quiet Tuesday morning with bids still
undeveloped and asking prices sketchy. It is likely possible that active trade
will be delayed until the end of the week, moving back to a more normal pattern
after trade trickled in through the week over the last three weeks. Asking
prices that have developed are seen around $162 and higher in the South and
$258 and higher in the North. Beef cut-outs at midday are lower, $2.23 lower
(select) and down $1.71 per cwt (choice) with light movement of 85 total loads
reported (44 loads of choice cuts, 18 loads of select cuts, 12 loads of
trimmings, 12 loads of ground beef).
January futures are holding moderate to strong losses as traders try to
shift out of the lightly traded January contract and into other spring contract
months. January futures are still holding a $9 per cwt premium over March
contracts, but this price spread is expected to continue to erode over the near
future. Although other feeder cattle futures have backed off of session highs
which ranged from $2 to $3 per cwt higher earlier in the morning, strong
triple-digit gains continue to be maintained by traders trying to bounce back
from previous pressure seen over the last couple of trading sessions.
Lean hog futures remain mixed as early support in nearby contracts is
holding in April through June contracts, but uncertainty through the rest of
the complex is creeping into the market. There is growing concern about the
ability to push pork values significantly higher given the lack of fundamental
support in beef prices and lack of explosive demand for pork over the next few
weeks. This could keep futures prices choppy over the near future. Cash prices
are unreported on confidentiality on the Iowa Minnesota Direct morning cash hog
report. The National Pork Plant Report is reported 188 loads selling as prices
falling $1.78 per cwt. Lean hog index for 1/22 is at $73.57 down 0.54, with a
projected two-day index of $72.91 down 0.66.
Rick Kment can be reached at email@example.com
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