DTN Midday Livestock Comments 10/17 11:54
Feeder Cattle Turns Sharply Lower Once Again
Strong gains, which developed in cattle futures Thursday, were short lived
as feeder cattle futures are trading at or near limit losses midday Friday.
Moderate buying is holding through the lean hog complex, allowing for
end-of-week short covering.
By Rick Kment
Feeder cattle futures continue to remain volatile, trading limit higher
trade Thursday for limit down price moves at midday Friday. The weaker tone in
the feeder cattle market is leaving live cattle contracts unsupported, allowing
for losses between $1 and $2 per cwt to quickly step back into the complex.
Corn prices are lower in light trade. December corn futures are 2 cents per
bushel lower. Stock markets are higher in light trade. The Dow Jones is 273
points higher while Nasdaq is up 60 points.
Triple-digit losses are seen through the entire live cattle complex
following light to moderate pressure expanding through morning trade. The
aggressive losses, which are redeveloping in the feeder cattle futures, have
caused traders to move their focus from firm cash trade earlier in the week,
and back to the weaker tone developing in the feeder cattle futures. A close
below $164.90 per cwt in October futures would signal a lower weekly close,
creating potential follow-through pressure early next week. Cash cattle
activity is done for the week after moderate to active trade seen midweek
satisfied needs by packers to gain access to needed cattle. It is expected that
feeders will remain aggressive early next week when show lists are distributed.
Beef cut-outs at midday are lower, $0.39 per cwt lower (select) and down $0.01
per cwt (choice) with light movement of 68 total loads reported (32 loads of
choice cuts, 23 loads of select cuts, zero loads of trimmings, 13 loads of
Feeder cattle futures have returned to the market tone seen early in the
week when aggressive selling pressure was so evident. The limit to near limit
losses which developed Friday, have offset gains which flooded the market
Thursday, allowing for additional concern about long term buyer interest rather
than fundamental support of cash market strength. Total volume through the
morning is uncertain, although the aggressive pressure in the market is opening
the door for additional liquidation early next week.
Nearby lean hog futures remain mixed in a moderate trading range following
as eroding pork values are being offset by short covering following losses
earlier in the week. Deferred contracts are holding moderate to strong gains
based on traders expecting the recent sharp pressure may be a bit aggressive,
leaving the complex in an oversold situation heading into the weekend. Traders
continue to focus on the aggressive slide in cash and meat values as well as
growing supply concerns. Cash prices are lower on the National Direct morning
cash hog report. The weighted average price lost $2.05 per cwt to $98.18 per
cwt with the range from $92.00 to $99.00 per cwt on 2,586 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 143 loads
selling as prices falling $0.98 per cwt. Lean hog index for 10/15 is at
$109.10 down 0.44, with a projected two-day index of $108.21 down 0.89.
Rick Kment can be reached at email@example.com
Copyright 2014 DTN/The Progressive Farmer. All rights reserved.
Get your local Cash Bids emailed to you each morning from DTN – click here
to sign up for DTN Snapshot.