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DTN Midday Livestock Comments          08/22 12:01

   October Live cattle Futures Push Higher 

   Moderate to strong gains redeveloped in live cattle futures despite 
continued pressure in feeder cattle prices. Traders are doing late-day 
pre-report positioning before closing bell. Expectation of lower placement and 
cattle on feed numbers could shift market activity late Friday. 

By Rick Kment
DTN Analyst


   Moderate to strong buyer support redeveloped in live cattle futures despite 
further pressure in beef values and lackluster cash market activity. Lean hog 
futures are mixed as nearby futures are focused on position squaring in front 
of the weekend following Thursday's market bounce. Corn futures are higher at 
midday. September corn futures are 3 cents per bushel higher. Stock markets are 
mixed in light trade. The Dow Jones is 9 points lower while Nasdaq is up 13 


   Moderate to strong buyer support is quickly redeveloping in live cattle 
futures Friday morning. October contracts are leading the complex higher with a 
$1.07 per cwt rally. This support is expected to help draw additional focus on 
the reduced cattle numbers in feed yards after the cattle on feed report is 
released later in the afternoon. But the focus on an oversold market situation 
is likely to be the main momentum to keep prices elevated through closing bell. 
Cash cattle activity remains sluggish with bids redeveloping at $154 live basis 
and $242 per cwt dressed basis. At this point packers remain short bought. But 
even though numbers would indicate that trade may need to develop, it is 
uncertain just how aggressive buyers will be. Or will they wait until next week 
and pick up some early week loads to fill in processing schedules. Asking 
prices are at $154 to $155 in the South and $244 to $245 per cwt in the North. 
Beef cut-outs at midday are lower, 0.75 per cwt lower (select) and down $0.26 
per cwt (choice) with light movement of 87 total loads reported (50 loads of 
choice cuts, 16 loads of select cuts, 13 load of trimmings, eight loads of 
ground beef).


   Last-minute price adjustments are starting to develop through the feeder 
cattle futures with the focus squarely being placed on the upcoming cattle on 
feed report. Most expect strong placement drops to be seen in the report, but 
given the weakness in the complex over the last several days, even expected 
losses of 10% from year ago levels may still be viewed as bearish to the 
market. The momentum shift over the last couple of weeks could make it 
extremely difficult to line up a consistent bullish argument no matter what 
placement of supply numbers come is on Friday's report. 


   Nearby lean hog futures are showing evidence of position-squaring following 
the strong support which developed Thursday, and pre-weekend selling. This has 
pushed October futures 60 cents per cwt lower at midday, but selling volume 
remains limited, likely limiting additional losses through the end of the 
session. The late week surge has helped to bring some solid support into 
deferred futures even though prices are unable to hold significant morning 
gains. Cash prices are lower on the National Direct morning cash hog report. 
The weighted average price fell $2.04 per cwt to $94.22 per cwt with the range 
from $88.00 to $94.36 per cwt on 1,725 head reported sold. Cash prices are 
unreported due to confidentiality on the Iowa Minnesota Direct morning cash hog 
report. The National Pork Plant Report is reported 180 loads selling as prices 
up $0.58 per cwt. Lean hog index for 8/20 is at 107.19 down 2.08, with a 
projected two-day index of $104.99 down 2.20.

   Rick Kment can be reached at rick.kment@dtn.com 


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