DTN Midday Livestock Comments 07/16 11:54
Sharp Gains Sweep Through Cattle Trade
The overall support in cattle markets has taken the entire complex by
surprise as live cattle futures have moved from sluggishly traded to strong
triple-digit gains during late-morning activity.
By Rick Kment
Sharp triple-digit gains have quickly sparked widespread interest through
the entire cattle complex. This has pushed front-month live cattle trade to
$2.80 per cwt gains, with increased overall support seen in all nearby contract
months. Lean hog futures are moderately lower with traders slowly backing away
from late-week gains. Corn prices are mixed in light trade Friday. July corn
futures are 1/4 cent lower. Stock markets are mixed in light trade. The Dow
Jones is 11 points higher while Nasdaq is down 5 points.
Sharp gains have flooded into live cattle futures late-morning Monday. This
has pushed front-month August futures to a $2.80 per cwt rally near midday with
some traders now looking for the potential to lock trade activity into
limit-higher moves through the rest of the session. The support in the market
has been extremely recent, as very limited support was seen through the first
hour of trade. Even though no direction shifts have been seen in market
fundamentals, the support of renewed technical buyer activity could help to
offset pressure seen last week as traders look for firming short-term gains.
This focus could help to drive commercial and investment traders back into the
market over the near term, with traders also looking at long-term support based
on supply issues expected to be seen in the beef market through the upcoming
year. Cash cattle markets are still undeveloped following light trade seen at
the end of last week. Asking prices and bids are still undefined, and likely
will remain that way until Tuesday or later. Even though packers are expected
to remain short bought, active trade is not expected until the second half of
the week. Boxed Beef cut-outs at midday are mixed, $0.77 Higher (select) and
down $0.30 per cwt (choice) with light movement of 55 total loads reported (28
loads of choice cuts, 10 loads of select cuts, 7 loads of trimmings, 10 loads
of ground beef).
Feeder cattle futures have found additional buyer support late morning
Monday with traders trying to chase the live cattle complex higher. The early
market losses have quickly been offset by triple-digit gains in nearby contract
months. The overall support in the complex continues to spark some increased
buyer activity, and push front-month August futures $1.80 per cwt higher.
Overall trade volume remains light, which is creating the concern that recent
gains may not be able to hold through the end of the session, but as of now,
traders are focused on regaining support in all cattle markets.
Limited pressure is slowly moving into the lean hog complex with July and
August futures holding losses of 20 to 22 cents per cwt with very limited
support seen through the entire complex. There is growing uncertainty that
additional buyers will be willing to move back into the market, even though
prices shifted higher late last week and cash markets are focusing on
establishing a sense of stability through the next couple of weeks. Cash prices
are unreported due to confidentiality on the National Direct morning cash hog
report. Cash prices are unreported due to confidentiality on the Iowa/Minnesota
Direct morning cash hog report. The National Pork Plant Report posted 145 loads
selling with carcass values falling $0.08 per cwt. Lean hog index for 7/12 is
at $80.91 down 0.35 with a projected two-day index of $80.34, down 0.57.
Rick Kment can be reached at firstname.lastname@example.org
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