DTN Midday Livestock Comments 08/22 12:22
Cattle Futures Surge Higher on Short-Covering Gains Tuesday
Aggressive triple-digit gains have quickly moved into cattle markets as
feeder cattle futures have posted gains as high as $3 per cwt. This is helping
to bring buyers back into the complex despite still weak market fundamentals.
By Rick Kment
Strong gains have flooded through cattle futures Tuesday morning following
gains in feeder cattle markets which reached $3 per cwt through the morning.
This is helping to draw gains as strong as $2 per cwt in many live cattle
contracts. Lean hog futures remain under pressure as nearby contracts are
holding triple digit losses. Corn prices are lower in light trade. September
corn futures are 2 cents lower. Stock markets are higher in light trade. The
Dow Jones is 161 points higher while Nasdaq is up 75 points.
Strong triple-digit gains have surged into the complex with gains following
the aggressive morning support seen in the feeder cattle futures. Triple-digit
price moves are seen in nearly all contracts with traders focusing on the
potential to square positions following the recent price pressure. Continued
softness in fundamentals may lead to additional market softness long term, but
the shift higher Tuesday is giving traders a reprieve from the consistent
weakness over the last couple of weeks. Cash cattle is starting to show some
light movement with some initial bids developing in the South at $106 per cwt.
This is unlikely to get much feeder attention at this point, especially given
the support in futures trade, but it is a starting point. Asking prices are
seen at $112 in the South and $177 in the North, but active trade may not be
seen until the later part of the week. Beef cut-outs at midday are higher,
$0.01 higher (select) and up $0.73 per cwt (choice) with moderate movement of
84 total loads reported (40 loads of choice cuts, 17 loads of select cuts, 17
loads of trimmings, 10 loads of ground beef).
Sharp gains quickly developed Tuesday as short covering activity moved back
into the feeder cattle complex even though very little directional change was
seen in the overall cattle complex. Nearby feeder cattle futures are holding
gains of $2 to $3 per cwt with traders focusing on the potential to draw
additional underlying support and move prices above $142 per cwt once again. It
is uncertain just how long this support will last as traders remain cautious
given the upcoming cattle on feed report.
Triple-digit losses are seen once again in nearby lean hog futures trade
even though light buyer support attempted to step into the complex through
morning trade. The lack of support during the morning has allowed nearby
contracts to break through short-term support levels, as October futures have
fallen below $64 per cwt. The potential for additional technical pressure to
develop along with already existing fundamental weakness through the end of the
month could bring increased softness to the entire complex. Cash prices are
lower on the National Direct morning cash hog report. The weighted average
price fell $1.36 at $70.36 per cwt with the range from $67.00 to $71.50 on
4,506 head reported sold. Cash prices are lower on the Iowa/Minnesota Direct
morning cash hog report. The weighted average price fell $0.96 at $70.60 per
cwt with the range from $67.00 to $71.50 on 1,692 head reported sold. The
National Pork Plant Report reported 225 loads selling with prices falling $2.43
per cwt. Lean hog index for 8/18 is at $82.35 down $0.84 with a projected
two-day index of $81.53, down $0.82.
Rick Kment can be reached at email@example.com
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