DTN Midday Livestock Comments 10/21 11:46
Light Pressure Redevelops in Hog Futures
Narrowly mixed trade seen in the lean hog futures through most of the
morning has eroded based on aggressive pressure in pork carcass values in the
morning report. The fear that further pork value losses may continue has
created additional weakness in hog futures.
By Rick Kment
Early mixed price direction in lean hog futures has quickly eroded following
strong triple digit pressure in the overall carcass value Tuesday morning. This
is creating additional concern that additional widespread pressure may push
nearby futures prices to or below $85 per cwt. Mixed trade is seen in nearby
live cattle futures despite light gains in beef values in the morning report.
Deferred live cattle futures are heavily influenced by the triple digit losses
in feeder cattle trade. Corn prices are higher in light trade. December corn
futures are 3 cents per bushel higher. Stock markets are higher in light trade.
The Dow Jones is 168 points higher while Nasdaq is up 78 points.
Mixed trade is holding in live cattle futures Tuesday morning following a
renewed fury of buying support which developed in nearby contracts based on
follow through buying interest. The focus on potential support seen in boxed
beef values and the impact on cash values through the end of the week is
helping to limit seller pressure. Deferred contracts remain under light
pressure as the triple digit losses in feeder cattle futures have kept buyers
from stepping into the action. Cash cattle markets remain quiet which is
typical for a Tuesday as bids and asking prices are not yet well developed. It
may easily be Wednesday until initial token bids are seen, which may delay
active trade to the end of the week. Asking prices are expected o develop
around $167 and higher in the South and $260 and higher through the North. Beef
cut-outs at midday are higher, $0.39 per cwt higher (select) and up $0.20 per
cwt (choice) with light movement of 77 total loads reported (38 loads of choice
cuts, 24 loads of select cuts, 5 loads of trimmings, 10 loads of ground beef).
Daily up and down shifts in the feeder cattle futures continue to be seen,
although Tuesday's move has been unable to move prices the daily trading limit
of $3 per cwt, or at least yet. All but front month contracts are holding
triple digit losses ranging from $1.30 to $2.30 per cwt based on uncertainty of
follow through beef demand support through early 2015. Front month October
contracts are trading 85 cents per cwt lower as light buyer support in nearby
live cattle futures is helping to limit initial selling pressure.
Lean hog trade remained well contained in a extremely narrow mixed trading
range through most of the morning based on the potential to draw additional
stability into the pork complex. But the morning pork cutout report dashed any
early expectations of market firmness as sharp losses were seen in pork values.
This has turned the lean hog futures market weaker once again with moderate
losses holding at midday. It is uncertain if the recent turn lower has much
more support given the recent market pressure, or if prices will moderate back
to nearly unchanged once the initial reaction to lower pork prices dissipated.
Cash prices are lower on the National Direct morning cash hog report. The
weighted average price lost $0.87 per cwt to $95.96 per cwt with the range from
$87.00 to $98.00 per cwt on 4,022 head reported sold. Cash prices are higher on
the Iowa Minnesota Direct morning cash hog report. The weighted average price
added $0.44 per cwt to $97.32 per cwt with the range from $94.50 to $98.00 per
cwt on 1,062 head reported sold. The National Pork Plant Report is reported 182
loads selling as prices falling $3.27 per cwt. Lean hog index for 10/17 is at
$106.78 down 1.43, with a projected two-day index of $105.45 down 1.33.
Rick Kment can be reached at firstname.lastname@example.org
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