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DTN Midday Livestock Comments          02/24 11:52

   Active Pressure Develops Through Cattle Futures Midday Friday   

   Lackluster market direction early in the session quickly turned into wild 
market moves. Cattle futures have reversed gains seen earlier in the week with 
triple digit losses developing through most contracts. Hog markets on the other 
hand have sparked some late week buyer interest as traders try to square 
positions following the aggressive price tumble through previous sessions. 

By Rick Kment
DTN Analyst

GENERAL COMMENTS: 

   Sharp cattle market losses are being led by the aggressive price pressure 
developing in feeder cattle trade. Most feeder cattle contracts are trading $2 
per cwt lower or greater, although prices have backed away from session lows at 
midday. This softness in feeder cattle markets and lack of follow through buyer 
interest has allowed all but front month February live cattle futures to trade 
$1 per cwt or greater at midday. Hog markets are firming as short covering is 
moving back into the market at the end of the week. Corn prices are lower in 
light trade. March corn futures are 1 3/4 cents lower. Stock markets are lower 
in light trade. The Dow Jones is 36 points lower while Nasdaq is down 10 points.

   LIVE CATTLE:

   The tone of the cattle market has quickly changed Friday as aggressive 
losses are seen in all but front month February contract months. February 
futures, which are lightly traded with dwindling open interest before 
expiration at the end of the month are steady. All other contracts are holding 
triple-digit losses at midday. The combination of sharp pressure quickly 
developing across feeder cattle trade as well as the inability for significant 
support to develop in deferred live cattle contracts through the week has 
quickly pushed prices lower. There is also some pre-report positioning being 
done in front of the cattle on feed report released Friday afternoon. Overall 
cattle on feed numbers are not expected to change significantly from year ago 
levels, although placements are likely to see a strong bump. Cash cattle 
markets appear to be done for the week with no additional bids surfacing since 
moderate to active trade was seen on Wednesday. At this point, most cattle 
still on show lists will likely be rolled over to next as packers and feeders 
try to assess needs through early March. Beef cut-outs at midday are higher, 
$2.52 higher (select) and up $2.24 per cwt (choice) with light movement of 68 
total loads reported (41 loads of choice cuts, 13 loads of select cuts, 4 loads 
of trimmings, 11 loads of ground beef). 

   FEEDER CATTLE: 

   Sharp losses have flooded into the feeder cattle futures market with triple 
digit losses seen across the entire complex. Even though price levels have 
backed away from early session lows, the tone of the market has quickly 
weakened given the strong buyer interest seen in live cattle markets through 
much of the week. March feeder cattle futures are holding losses of $1.95 per 
cwt at midday, while the April contracts are holding pressure of $2.35 per cwt. 
Increased concern surrounding the upcoming cattle on feed report and the 
potential for strong placement increases is adding to market pressure.  

   LEAN HOGS:

   Light late-week buying is slowly trickling into the lean hog complex 
following the overall lack of support seen in the market during the morning. 
Short coving is being seen in nearby contracts with prices posting gains of 20 
to 60 cents per cwt. The combination of sharp losses seen in cattle trade as 
well as firmness in pork cutout values at the end of the week has brought 
additional focus on unwinding price spreads between the cattle and hog complex 
which have developed earlier in the week. Deferred contracts remain under light 
to moderate pressure, but overall light volume in all markets is likely to 
spark increased market shifts. Cash prices are lower on the National Direct 
morning cash hog report. The weighted average price fell $2.46 at $68.27 per 
cwt with the range from $63.00 to $69.19 on 2,315 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 113 loads 
selling with prices up $2.32 per cwt. Lean hog index for 2/22 is at $77.73 up 
$0.09 with a projected two-day index of $77.39 down $0.34. 

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


(ES)

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