DTN Midday Livestock Comments 09/01 11:56
Cattle Futures Follow Outside Markets Lower
Heavy influence has been seen from outside markets Tuesday morning with
stock markets posting triple-digit losses in both Dow Jones and Nasdaq markets.
This has led to sharp losses across the cattle complex.
By Rick Kment
Strong pressure is seen through cattle trade Tuesday morning as traders
focus on the lack of support in most other outside markets and quickly back
away from previous gains. Lean hog futures are holding up well with most
contracts slightly higher at midday despite the widespread softness in outside
markets. Corn prices are lower in light trade. September corn futures are 6
cents per bushel lower. Stock markets are lower in light trade. The Dow Jones
is 385 points lower while Nasdaq is down 105 points.
Live cattle market have turned lower in a uniform pattern with losses at
midday contained between $1.40 and $1.80 per cwt. The lack of strong support in
boxed beef values was not a surprise to the overall market, but the aggressive
widespread pressure through most all commodity and financial markets led to
consistent and concise pressure through the entire market. It is uncertain just
how much long-term damage this move will create, but a move below last week's
lows in October futures is possible if losses reach near daily trading limits.
This would create widespread uncertainty into the market. Cash cattle activity
remains quiet with just a few scattered bids through the South at $144 per cwt.
It is uncertain if this will bring any interest to the market given the
aggressive pressure in futures trade. Asking prices are not fully developed,
but around $148 to $150 per cwt in the South and $232 and higher in the North.
Beef cut-outs at midday are mixed, $0.28 higher (select) and down $0.46 per cwt
(choice) with light movement of 84 total loads reported (49 loads of choice
cuts, 20 loads of select cuts, 9 loads of trimmings, 7 loads of ground beef).
Feeder cattle futures are leading the entire cattle complex lower with
losses at or near $3 per cwt through most contracts. The focus in the cattle
market is driven by outside market pressure as strong triple-digit losses are
seen in the Dow Jones Index while energy and grain markets have turned
aggressively lower during morning trade. The test in the feeder cattle market
will be if October futures will be able to maintain support levels at last
week's lows of $194.35 per cwt. A break below that is still possible given the
current trading limit, but would spark additional bearish undertones through
the entire complex.
Despite the aggressive downward turn in most commodity and financial
markets, lean hog futures are holding in there nicely Tuesday morning. Although
most of the morning, nearby lean hog futures posted narrow losses, the ability
for firm pork value support to redevelop in the morning cutout report and
deferred market strength has pushed the complex mostly higher. Even though
gains are not aggressive Tuesday morning, the ability to hang around near
unchanged price levels, with several contracts moderately higher is impressive
in itself. Cash prices are lower on the National Direct morning cash hog
report. The weighted average price fell $0.84 per cwt to $71.90 per cwt with
the range from $64.00 to $71.50 per cwt on 6,100 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 250 loads
selling with prices adding $0.99 per cwt. Lean hog index for 8/28 is at $77.70
down 0.58, with a projected two-day index of $77.23, down 0.47.
Rick Kment can be reached at firstname.lastname@example.org
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