DTN Midday Livestock Comments 05/04 11:54
Sharp Pressure Developing in Deferred Cattle Futures
Strong losses have developed across late 2016 cattle contracts as traders
remain concerned about longer-term supply-and-demand issues. The focus on
short-term stability has brought light buying into nearby contracts, although
the overall tone of the market remains weak.
By Rick Kment
Cattle futures have bounced higher and lower through the morning based on
narrow trading volume, although the overall tone in the market continues to be
based on lack of fundamental activity in the market. Lean hog futures remain
firm fundamentally but are holding strong nearby losses as traders square
positions midweek. Corn prices are mixed. May corn futures are 1 cent lower.
Stock markets are lower in light trade. The Dow Jones is 106 points lower while
Nasdaq is down 39 points.
Even though moderate gains continue to hold in nearby live cattle futures at
midday, the lack of follow through support across the complex has continued to
limit overall buyer support across the market. This has allowed for strong
losses to develop across the back end of live cattle futures trade, focusing on
the pressure seen in the feeder cattle complex. Mixed trade is likely to be
seen through most of the complex, although at the end of the session, there is
likely to be some additional market shifts due to extremely light trade volume
in the market. Cash cattle activity is generally quiet with a few bids starting
to circulate in the North. These prices are listed at $188 to $190 per cwt
dressed basis and $120 live basis, although the overall tone of the market
remains soft given the overall lack of commitment through the market over the
last couple of weeks. It is likely to be the end of the week before active
trade develops. Beef cut-outs at midday are lower, $0.80 lower (select) and
down $0.02 per cwt (choice) with active movement of 138 total loads reported
(72 loads of choice cuts, 26 loads of select cuts, 11 loads of trimmings, 29
loads of ground beef).
Sharp losses have now developed through the feeder cattle complex with the
focus on deferred contracts as November markets are holding a $1.80 per cwt
loss. The lack of support across the market continues to focus on the inability
to draw buyer support into live cattle futures as well as redevelop cash cattle
or beef value support back into the market going into the summer months.
Firm pressure has continued to develop through the morning as traders
continue to focus on short-term liquidation in nearby contracts. June futures
are leading the complex lower, with a 90 cent tumble at midday, while the rest
of the complex is limited to narrow losses of 20 to 40 cents per cwt. The lack
of follow-through support is not surprising, but increased buyer activity may
slowly develop just before closing bell. Cash prices are lower on the National
Direct morning cash hog report. The weighted average price fell $1.38 per cwt
to $68.61 per cwt with the range from $68.47 to $71.50 per cwt on 2,656 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 254 loads selling with prices down $0.37 per cwt. Lean hog index for
4/29 is at $71.77, up 0.64 with a projected two-day index of $71.77, up 0.66.
Rick Kment can be reached at email@example.com
Copyright 2016 DTN/The Progressive Farmer. All rights reserved.
Your local weather forecast from DTN can be sent to your email every morning free through DTN Snapshot