DTN Midday Livestock Comments 08/27 12:05
Lean Hog Contracts Push Higher
Strong follow through support is seen through the lean hog complex once
again Tuesday. This is drawing additional commercial buyer interest to nearby
hog contracts. Cattle markets are under pressure as light volume is creating
some added instability in the feeder cattle market.
By Rick Kment
Trade volume remains light through most of the morning with traders focusing
on the combination of weekend activity limiting end of the week market
participation as well as the ability to square positions midweek. More focus
will continue to develop surrounding the development of cash trade, and
direction of beef and pork values. Corn futures are lower at midday. September
corn futures are 2 cents per bushel lower. Stock markets are higher in light
trade. Dow Jones is 13 points higher while Nasdaq is up 2 points.
Narrow losses are seen in live cattle futures with traders focusing on the
lack of support through the complex. Traders continue to draw additional
interest from outside markets and the uncertainty about upcoming weekend
product movement. Many traders seem to be taking a wait and see approach when
it comes to weekend demand and product clearance, if overall movement is better
than expected, there is the expectation that additional volume will be seen in
early September to replenish working stocks. But until that, most retailers
will have focus on keeping supplies extremely manageable. Cash cattle activity
remains sluggish with trade still undeveloped, although packers are becoming
more aggressive with bids starting to develop Wednesday morning. Bids are seen
at $151 in the South and $240 in the North. It is expected that packers would
like to get trade wrapped up by Thursday, but it is still yet determined if
that will be the case. Asking prices are seen at $154 to $155 in the South and
$245 to $248 per cwt in the North. Beef cut-outs at midday are lower, 0.35 per
cwt lower (select) and down $0.64 per cwt (choice) with moderate movement of
137 total loads reported (59 loads of choice cuts, 40 loads of select cuts, 17
loads of trimmings, 21 loads of ground beef).
Feeder cattle futures are mixed to mostly lower Wednesday with front month
August futures holding a narrow gain due to the lack of open interest and light
trade in the complex. All other contracts are holding aggressive triple-digit
losses as light volume and uncertainty about upcoming weekend product movement
is creating widespread concerns through the complex at the moment.
Moderate to strong gains continue to hold through the complex with traders
looking for additional support at midweek. Initial gains have started to erode,
allowing for triple digit prices to evaporate as the session continued. But the
focus across lean hog futures appears to be based on the ability to stabilize
fundamentals through the end of August and help to draw additional buyer
support back into nearby contracts. Widespread price gains may be hard to
sustain, but the oversold status of the market should help to draw additional
commercial buyers back into the market. Cash prices are lower on the National
Direct morning cash hog report. The weighted average price fell 1.53 per cwt to
$91.40 per cwt with the range from $91.00 to $92.00 per cwt on 5,655 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 277 loads selling as prices up $0.31 per cwt. Lean hog index for 8/25
is at $101.91 down 1.41, with a projected two-day index of $100.34 down 1.57.
Rick Kment can be reached at firstname.lastname@example.org
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