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DTN Midday Livestock Comments          10/23 12:00

   Cattle Futures Hold Onto Narrow Gains             

   Early support in cattle futures has eroded through nearby contracts as 
traders have focused on weaker beef values in morning reports. Lean hog market 
is under pressure as traders remain concerned about further cash market 
pressure.  

By Rick Kment
DTN Analyst



GENERAL COMMENTS: 

   Mixed trade is seen through the livestock complex as moderate to strong 
morning losses in the lean hog futures are being overshadowed by buyer interest 
through the cattle markets. Corn prices are higher in light trade. December 
corn futures are 4 cents per bushel higher. Stock markets are higher in light 
trade. The Dow Jones is 246 points higher while Nasdaq is up 73 points.

   LIVE CATTLE:

   Gains have slowed significantly through the morning with nearby contracts 
holding 12 to 20 cent gains as pressure in the boxed beef value on morning 
reports has eroded early buyer support. Moderate buyer support is expected to 
continue in deferred futures contracts through the end of the session. Traders 
are focusing on cash market direction, but may not be able to hold on to 
moderate gains long enough based on recent pressure in boxed beef values. Cash 
cattle activity remains quiet although bids are becoming more evident through 
the morning. Bids are seen Nebraska and Kansas at $164 to $166 live basis, and 
$258 per cwt dressed basis. The firmness in futures prices continues to push 
the envelope toward late market cash market strength. But so far packers have 
been able to hold out. It may be Friday before trade develops in most areas. 
Beef cut-outs at midday are lower, $0.49 per cwt lower (select) and down $0.66 
per cwt (choice) with active movement of 133 total loads reported (64 loads of 
choice cuts, 53 loads of select cuts, one load of trimmings, 15 loads of ground 
beef).

   FEEDER CATTLE:

   It is interesting and maybe even somewhat comical that gains in the feeder 
cattle market hovering around $1 per cwt, can be generally considered 
disappointing. But that seems to be the case in the feeder cattle complex 
Thursday morning, as aggressive early support seems to have slowly eroded away 
into the background with very little fanfare, or direction for late day market 
moves. Traders are starting to look at the upcoming cattle on feed report 
released Friday. An expected increase in placements from last year's levels 
could put limit the recent market support which has developed in the complex. 

   LEAN HOGS:

   Even though lean hog futures continue to remain lower at midday, initial 
pressure has eased at midday based on the bounce in pork values on the morning 
cutout report. Although it is far from sounding the "all clear" on lower pork 
prices, the lack of sharp follow through pressure in the morning report is a 
breath of fresh air that may help to bring some balance to the hog complex. 
December futures are holding triple-digit losses, but well over session lows, 
while other nearby contracts are content with moderate pressure at midday. Cash 
prices are lower on the National Direct morning cash hog report. The weighted 
average price lost $1.46 per cwt to $91.35 per cwt with the range from $81.00 
to $91.71 per cwt on 2,414 head reported sold. Cash prices are unreported due 
to confidentiality on the Iowa Minnesota Direct morning cash hog report. The 
National Pork Plant Report is reported 240 loads selling as prices gained $0.69 
per cwt.  Lean hog index for 10/21 is at $104.17 down 1.28, with a projected 
two-day index of $102.40 down 1.77.

   Rick Kment can be reached at rick.kment@dtn.com 


(SK)

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