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DTN Midday Livestock Comments          07/27 11:53

   Live Cattle Futures Maintain Narrow Gains 

   Livestock futures remain mixed at midday following lack of support in meat 
values and inactivity through the cash cattle market. Lean hog futures continue 
to lead the complex lower, while the cattle market is stuck in a very narrow 
but mixed trading range at midday.

By Rick Kment
DTN Analyst

GENERAL COMMENTS: 

   Additional pressure is seen through the hog complex as traders continue to 
focus on the underlying lack of support in both cash hog values and the sharp 
losses seen in the morning pork cutout report. This continues to limit buyer 
interest, which may allow markets to see further market erosion through the end 
of the week. Cattle futures are mixed following renewed buyer support 
midmorning. The lack of additional market news is causing traders to back away 
from previous buyer support. Corn prices are higher in light trade. September 
corn futures are 2 cents higher. Stock markets are mixed in light trade. The 
Dow Jones is 21 points lower while Nasdaq is up 15 points.

   LIVE CATTLE:

   Mixed trade is seen through the live cattle futures complex as the momentum 
seen from buyer support midmorning has quickly eroded. The lack of 
follow-through support in beef values in the morning report continues to create 
questions through the entire complex if the recent gains in futures prices will 
be able to be sustained and pushed through market fundamentals. If beef values 
and cash cattle trade is unable to follow the recent gains higher in futures, 
the longevity of widespread futures buyer support will be in jeopardy. Nearby 
live cattle futures are holding narrow gains of 10 to 30 cents per cwt, 
although trade volume remains extremely thin, while deferred futures are 
posting narrow losses. Cash cattle activity is quiet Wednesday morning with the 
bids that slowly developed on Tuesday even unable to be reoffered at this 
point. The lack of general direction in the futures market through the morning 
and stable beef values have both sides trying to focus on the potential 
long-term market direction at the end of July. It is likely that trade will be 
pushed into Thursday or Friday with late Friday trade a strong possibility. 
Beef cut-outs at midday are mixed in a narrow range $0.22 lower (select) and up 
$0.04 per cwt (choice) with active movement of 109 total loads reported (46 
loads of choice cuts, 28 loads of select cuts, 8 loads of trimmings, 27 loads 
of ground beef).

   FEEDER CATTLE: 

   Gains seen at midday through the cattle complex have started to erode with 
light to moderate pressure now seen in feeder cattle futures. Trade volume 
through the complex remains at a near standstill as traders are unwilling to 
aggressively sell into the market which has shown significant support over the 
last three sessions. But the lack of fundamental support developing as traders 
head toward the end of July is causing buyers to remain on the sidelines for 
the moment. Nearby contracts are holding 5 to 20 cent losses while deferred 
contracts are holding slightly more aggressive pressure of 40 to 50 cents per 
cwt based more on lack of interest than any other market factor. 

   LEAN HOGS:

   Triple-digit losses are seen through nearby lean hog futures midday 
Wednesday following continued pressure in the cash complex as well as a sharp 
loss posted in pork values on the morning report. The fact that overall pork 
movement was strong at the aggressive price reduction continues to lead traders 
to back away from nearby contracts. Deferred futures posted much less 
aggressive selling activity as prices are holding at 17 to 50 cent losses, But 
volume remains light in these deferred contracts as most traders continue to 
focus on the pressure in nearby contract months. Cash prices are lower on the 
National Direct morning cash hog report. The weighted average price fell $1.31 
per cwt to $66.73 per cwt with the range from $64.00 to $68.50 per cwt on 3,290 
head reported sold. Cash prices are unreported due to confidentiality on the 
Iowa Minnesota Direct morning cash hog report. The National Pork Plant Report 
reported 209 loads selling with prices falling $4.01 per cwt. Lean hog index 
for 7/22 is at $76.45, down 0.68 with a projected two-day index of $75.65 down 
0.80.

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


(CZ)

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