DTN Midday Livestock Comments 02/04 11:50
June Live Cattle Contracts Lead Complex
The lackluster buyer interest in the hog and feeder complex has kept prices
under pressure through most of the morning. The June live cattle futures are
holding strong gains, with traders focusing on longer term summer demand for
By Rick Kment
Despite building pressure in the lean hog and feeder cattle futures markets
at midday, live cattle futures are holding light nearby gains, while strong
gains are seen in the summer contract months based on expectations of increased
demand and tight supplies. Corn futures are trading lower at midday in light
trade. March corn futures are holding 3 cent losses at midday. Stock markets
are lower in light trade. The Dow Jones is 116 points lower while Nasdaq is
down 35 points.
Although trade activity remains sluggish in the live cattle markets, the
midmorning gains in summer contracts are still able to hold as trades are
focusing on supplies still remaining tight and increasing summer demand helping
to draw traders back to the complex. June futures are $1 per cwt higher,
although the ability to support front-month futures seems to be extremely
limited during morning trade. Cash cattle trade will most likely hold out until
the second half of the week, although it is expected that packers are coming
into the week relatively short bought. Both asking prices and bids are still
yet not well defined, which could limit additional activity early in the week.
Beef cut-outs at midday are lower, $0.03 lower per cwt (select) and down $0.42
per cwt (choice) with light movement of 118 total loads reported (65 loads of
choice cuts, 29 loads of select cuts, one load of trimmings, 24 loads of ground
Moderate to strong pressure is developing in the feeder cattle futures
market, although trade volume remains typically quiet as usually seen on a
Monday morning. The optimism of higher cash cattle trade last week has now
filtered through the market, with traders focusing on the renewed strength in
the soybean market and early support in corn values. The lack of support in
outside markets is also creating some concern that additional demand
uncertainty could keep most feeder cattle traders unwilling to become
aggressive over the near future.
The initial support that developed in the lean hog futures has quickly faded
at midday due to very little additional buyer interest developing through the
trading session. Nearby contracts are holding 50 to 60 cent losses at midday
with the lack of support in the non ag markets creating some concerns about the
ability to draw additional investment traders into the lean hog futures market.
Cash prices are unreported due to confidentiality on the Iowa/Minnesota morning
cash hog report. Fresh pork trade posted four loads of selling on the midday
pork carlot report. Lean hog index for 1/31 is at $88.41 up 0.16 with a
projected two-day index of $88.88 up 0.47.
The 14-to-16-pound belly markets are unreported on the midday carlot report.
Rick Kment can be reached at firstname.lastname@example.org
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*Disclaimer: The information in the Market Commentaries was obtained from sources believed to be reliable, but we do not guarantee its accuracy. Neither the information nor any opinion expressed therein constitutes a solicitation of the purchase or sale of any futures or options contracts.