DTN Midday Livestock Comments 12/18 11:53
Strong Gains Hold in Hog Futures
Active buyer support is redeveloping in lean hog futures, which is
accounting for aggressive morning price rallies. Cattle markets remain under
pressure, led by additional weakness in feeder cattle futures.
By Rick Kment
Livestock futures are mixed Wednesday morning with strong gains quickly
redeveloping in lean hog futures markets. Cattle contracts are showing
additional uncertainty as light to moderate liquidation is accounting for
losses in both live cattle and feeder cattle futures. Corn futures are lower at
midday. March corn futures are 3 cents per bushel lower. Stock markets are
mixed in light trade. The Dow Jones is 25 points higher while Nasdaq is down 19
Light to moderate pressure once again developed through live cattle futures
Wednesday morning. December contracts are holding 40 cent losses at midday
despite the light gains in wholesale beef values and firming support in the
neighboring lean hog complex. Traders remain cautious about the direction of
corn markets over the near future as well as lack of follow through support in
the feeder cattle complex. A significant break away from recent market highs,
could indicate a top has been set in the market and create further liquidation.
Cash cattle activity is dead quiet Wednesday morning without even a token bid
developing through the market. Active trade is likely to be delayed until the
end of the week and most likely until after the Friday Cattle on Feed report is
released. Asking prices remain at $133 and higher in the South and $210 and
higher in the North. Beef cut-outs at midday are higher, $0.23 per cwt higher
(select) and up $0.50 per cwt (choice) with moderate movement of 127 total
loads reported (50 loads of choice cuts, 41loads of select cuts, six loads of
trimmings, 30 loads of ground beef).
Weakness in feeder cattle futures continues to develop through the complex
Wednesday. The lack of additional aggressive corn market pressure and soft live
cattle markets have created additional liquidation in nearby feeder cattle
contracts. These shifts can still be explained away as "profit taking"
following the previous market rally. But continued softness in the market could
create longer term pressure through the complex that could lead to even more
significant liquidation in front of the holidays.
It is uncertain if lean hog futures have officially turned the corner and
have drawn enough support back into the complex to counter previous bearish
market shifts, but aggressive early gains continue to hold at midday. A strong
close in nearby lean hog futures contracts could spark additional commercial
buying and also draw additional investment into the market through the end of
the week. Nearby futures are holding gains of $0.77 to $1.05 per cwt at midday.
Cash prices are lower on the National Direct morning cash hog report. The
weighted average price fell $0.12 per cwt to $77.88 per cwt with the range from
$63.00 to $78.00 per cwt on 3,910 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 234 loads with prices slipping
$2.28 per cwt. Lean hog index for 12/16 is at 80.77 down 0.17, with a projected
two-day index of $80.59 down 0.18.
Rick Kment can be reached at email@example.com
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