DTN Midday Livestock Comments 12/13 12:20
Buying Seen in Feeder Cattle Futures
Strong feeder cattle gains have focused on the reduction of grain markets
Thursday morning. This is allowing for increased overall support across the
entire cattle market.
By Rick Kment
Light activity has developed in cattle trade as feeder cattle markets
sparking follow-through support based on pressure in grain markets. Lean hog
futures are unsupported through most of the day with traders uncertain how the
latest outside market pressure will affect the hog complex long term. Corn
markets are steady in light trade. March corn futures are unchanged. Stock
markets are lower in light trade. Dow Jones is 15 points lower with Nasdaq down
Mixed trade in live cattle futures has once again limited overall direction
across the entire complex. There continues to be some increased overall support
in deferred contract months based on the strong buyer activity in feeder
cattle. But nearby trade remains mixed in a narrow trading range as overall
limited direction is seen through the entire cattle market. Cash cattle bids
have started to become more active with interest seen at $115 live basis in the
South, while dressed bids are seen from $185 to $187 per cwt. It is still
expected that most trade will be pushed off until Friday considering the
current gap between bids and asking prices. Asking prices remain at $121 to
$122 live and $190 and higher dressed. Boxed Beef cut-outs at midday are mixed,
$0.62 lower (select) and up $0.47 per cwt (choice) with moderate movement of 67
total loads reported (40 loads of choice cuts, 13 loads of select cuts, 7 loads
of trimmings, 7 loads of ground beef).
Buyer interest in the feeder cattle futures have been exclusively focused on
the overall pressure in soybean markets and early softness in the corn trade.
This will reduce overall production costs, allowing for traders to become more
aggressive due to limited information available surrounding beef demand through
the last couple of days.
Strong underlying pressure has redeveloped across lean hog futures with
February futures holding pressure at 90 cents per cwt through late morning. The
overall pressure in the complex has been sparked by aggressive softness in
soybean markets as traders seem to be disappointed by the latest rounds of
sales to China following all of the anticipation over the last couple of weeks.
This is creating concerns about how much support the pork industry will see
from any China buying activity. Cash prices are higher on the National Direct
morning cash hog report. The weighted average price is $0.32 higher at $46.74
per cwt with the range from $43.00 to $47.21 on 5,215 head reported sold. Cash
prices are unreported due to confidentiality on the Iowa/Minnesota Direct
morning cash hog report. Pork carcass values added $0.32 per cwt at $73.76 per
cwt on 136 loads. Lean hog index for 12/11 is $55.54, down 0.44, with a
projected two-day index is $55.36, down 0.18.
Rick Kment can be reached at email@example.com
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