DTN Midday Livestock Comments 07/22 11:36
Cattle Futures Blast Higher Triple-Digit Recovery at Midday
The cattle complex is sharply higher at midday, sparked by significant
short-covering and profit-taking before the release of the July 1 Cattle on
Feed report. Lean hog futures are also moving higher in late-morning business,
supported by short-covering and the technical correction of oversold charts.
By John Harrington
DTN Livestock Analyst
Cash cattle trade is very quiet in late-morning business with both bids and
asking prices poorly defined. We have seen a few dressed bids in the North at
$180 to $182. Additionally, a few live bids have surfaced in Kansas at $115. It
is possible that trading is done for the week. According to the midday report,
the national hog base is $0.93 lower compared with the Prior Day settlement
($63.00-70.21, weighted average $68.95). Corn futures at midday were slightly
lower, down 1 to 2 cents.
After a very bearish week, live cattle futures are trying to adjust some
higher at midday. Specifically prices are currently 92 to 135 higher, supported
by aggressive short-covering and pre-report positioning. Live issues actually
opened lower thanks to follow-through selling. But late-week buying interest
quickly surfaced, lifting the market from extreme contract lows posted on
Thursday. The July 1 Cattle on Feed report will be released at 2 p.m. CDT.
Average guesses suggest that total on feed will be up 1% to 2%, placed in June
will be 6% to 7% larger, and marketed in June will be 9% to 10% higher. Beef
cut-outs are mixed at midday, off .34 (choice, $200.36) to down .14 (select,
$189.96) with light box movement (45 loads of choice cuts, 19 loads of select
cuts, 3 loads of trimmings, 6 loads of coarse grinds).
Like their live counterparts, feeders quickly reversed from a lower opening.
Feeder contracts are now trading sharply higher, up 177 to 392. The late-week
buying interest is tied to short-covering and pre-on feed report profit-taking.
Lean hog contracts are also correcting from Thursday's aggressive round of
selling. Prices are 45 to 192 higher at this writing with deferred issues
outperforming nearbys. But even if the board manages to hold significant gains
through the close, real technical progress is unlikely. In short, the positive
action at midday looks like nothing more than a dead cat bounce. Carcass value
is modestly higher at midday, as strength in hams and bellies outweighed
weakness in other cuts. Pork cut-out: $89.37, up 0.46. CME cash lean index for
07/20: 77.87, off 0.51 (DTN Projected lean index for 07/21: 77.13, off 0.74).
John A. Harrington can be reached at email@example.com
Copyright 2016 DTN/The Progressive Farmer. All rights reserved.
DTN offers additional daily information available free through DTN Snapshot – sign up