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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
DTN Analyst


   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 rick.kment@dtn.com 


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