DTN Midday Livestock Comments 06/30 12:08
Cattle Futures Slide Lower
Sharp pressure is holding across cattle futures as traders focus on higher
feed prices following the grain market rally as well as uncertainty. Hog
futures are holding sharp gains Tuesday.
By Rick Kment
Sharp losses in cattle futures are being offset by the aggressive nature of
gains developing in lean hog trade. The support in grain prices is adding to
the market shifts, as well as end of the month and quarter positioning that is
taking place. Corn prices are higher in active trade. December corn futures are
20 cents per bushel higher. Stock markets are higher in light trade. The Dow
Jones is 9 points higher while Nasdaq is up 15 points.
The bearishness seen through feeder cattle futures has been impossible for
live cattle traders to overlook through the morning Tuesday. This could spark
additional end-of-day concern as not only are traders dealing with uncertain
fundamental support surrounding the holidays, but also the wild shifts in
outside markets, and end-of-month and -quarter positioning taking place. Cash
cattle markets are quiet which may continue to limit activity through the rest
of the day. Asking prices remain limited, but starting around $150 per cwt in
the South and $240 in the North. Beef cut-outs at midday are mixed, 0.46 lower
(select) and down 0.76 per cwt (choice) with light movement of 74 total loads
reported (37 loads of choice cuts, 12 loads of select cuts, 15 loads of
trimmings, 10 loads of ground beef).
Limit down trade has swept through the complex Tuesday morning. The market
was already bearish in early trade, and the bullishness of the USDA crop
reports only added weakness to the entire complex. A close at the $4.50 per cwt
imposed trading limit would allow for expanded limits Wednesday, which could
add even more uncertainty to the volatile market.
Sharp triple-digit gains have quickly flooded back into the market with
summer contracts focusing on short covering activity. There is expected to be
some additional longer term support developing after the first of July, but
this could spark additional volatility given the light trade seen over next
couple of trading sessions. Cash prices are lower on the National Direct
morning cash hog report. The weighted average price fell $0.61 per cwt to
$72.94 per cwt with the range from $71.66 to $74.75 per cwt on 4,601 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 253 loads selling with prices falling $1.08 per cwt. Lean hog index
for 6/26 is at $77.64 down 0.49, with a projected two-day index of $77.32 down
Rick Kment can be reached at email@example.com
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