DTN Midday Livestock Comments 08/26 12:15
Aggressive Buying Develops in Hog Futures
Livestock futures have turned extremely volatile Friday morning with strong
triple-digit gains in the hog market creating additional concerns for cattle
markets which have reacted to sharp triple digit losses.
By Rick Kment
A wide price spread is seen Friday morning between cattle and hog futures
given that each market is posting triple-digit price moves in opposite
directions. Front-month hog futures are holding gains over $2 per cwt while
feeder cattle futures are posting similar losses. Corn prices are lower in
light trade. September corn futures are 4 cents lower. Stock markets are lower
in light trade. The Dow Jones is 49 points lower while Nasdaq is down 2 points.
Cattle futures have continued to erode through the morning with aggressive
triple-digit losses seen through the market. Traders are focusing on sharp
losses in feeder cattle markets. There may be additional losses seen through
the rest of the day Friday, causing long-term pressure on the market and
creating questions about underlying support levels. Cash cattle trade appears
to be done for the week following movement of most cattle on Wednesday. This is
allowing both sides to go back to the drawing board and assess the overall
market situation before stepping into the market next week. Beef cut-outs at
midday are lower $0.12 lower (select) and down $0.63 per cwt (choice) with
light movement of 82 total loads reported (48 loads of choice cuts, 19 loads of
select cuts, 6 loads of trimmings, 8 loads of ground beef).
Gains quickly developed across the cattle market Friday morning as traders
seemed to jump on board with the support developing late in the week in lean
hog futures. But this support quickly evaporated as sellers moved back into the
market. Additional selling pressure has continued to be heaped on the cattle
market with losses in nearby contracts reaching and exceeding $2 per cwt. The
lack of end-of-week support may continue to pressure the market through the end
of the day.
Active buyer support has quickly flooded back into the lean hog futures
complex as traders look for additional longer-term market support in the
complex. Fundamentals still remain bearish through the hog complex, which is
creating some concern that this upward move may just be another one day shift
higher, leading to even more volatility and potential pressure early next week.
But the gains over $2 per cwt in front-month October futures cannot be totally
ignored as traders have once again pushed prices over $60 per cwt. Cash prices
are lower on the National Direct morning cash hog report. The weighted average
price fell $1.62 per cwt to $60.06 per cwt with the range from $54.50 to $61.00
per cwt on 3,292 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 153 loads selling with prices falling $0.22
per cwt. Lean hog index for 8/24 is at $67.04, up 0.05 with a projected two-day
index of $66.90 down 0.14.
Rick Kment can be reached at email@example.com
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