DTN Midday Livestock Comments 12/06 11:57
Red Hot Hog Futures Lean Meat Complex Higher at Midday
Hog futures are blasting to new highs at midday, powered by technical buying
and ideas that the country is turning the corner toward more manageable
fundamentals. The cattle complex is also sharply higher in late-morning
business with aggressive short covering triggered by spillover bullish from the
lean hog market and the tall premium status of late week's feedlot trade.
By Rick Kment
DTN Livestock Analyst
Feedlot country is generally quiet as we move toward the top of the noon
hour. Some bids of $112 have been identified in the South. Asking prices are
now well defined, but we know of some ready steers and heifers in Kansas and
Texas priced around $115. According to the midday report, the national hog base
is 0.83 higher compared with the Prior Day settlement ($43.50-50.50, weighted
average $48.36). Corn futures are several cents higher right before midday,
supported by follow-through buying and confirmation of extremely strong ethanol
sales in October. The stock market is mostly flat at this time as investor fret
over the Fed's next move. The Dow is 13 points higher near midday with the
Nasdaq positive by 5.
Through midmorning, live contracts seemed to be stuck in the same old gear
of indecision. But buying energy suddenly took hold around midsession, no doubt
boosted to some extent by the surging bullishness in the lean hog trade. Prices
are 95 to 150 higher with spot Dec now almost 200 points above its early
session low. If the basis can continue to weaken like this, feedlot managers
will find it easier to dig in their boots in terms of higher asking prices.
Beef cut-outs some higher at midday, up 0.24 (choice, $191.63) to 0.25 (select,
$173.48) with light box movement (30 loads of choice cuts, 14 loads of select
cuts, a half load of trimmings, 11 loads of coarse grinds).
Like their live counterparts, feeder issues got off to a sluggish start. Yet
bulls have really picked up steady near midday, responding both to outside
markets and the substantial premium of the cash index. Triple-digit gains
dominate the market with prices currently 165 to 207 higher.
Hog bulls are clearly through the party at the CME with contracts now
willing to race again of spot cash news, confidently anticipating tighter
supplies and decent demand over the next several quarters. Currently 67 to 247
points higher, most contracts are scoring multi-months higher, generating more
attractive technical signs in the process. The carcass value at midday is
solidly higher, supported by better demand for fresh cuts and well as rib and
belly items. Pork cut-out: $74.03, off .29. CME cash lean index for 12/02:
50.56, up 1.04 (DTN Projected lean index for 12/05: 51.03, up 0.47).
John A. Harrington can be reached at email@example.com
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