DTN Midday Livestock Comments 06/17 12:16
Buying Develops Midday Monday
Moderate to firm support moved into livestock trade Monday morning following
aggressive initial pressure. The inability to spark further market liquidation
has quickly changed the tone of the market, pushing prices higher midday Monday.
By Rick Kment
Initial market pressure seen early Monday was quickly offset by active
buying. This quickly posted triple-digit gains in live cattle and lean hog
futures as buyers move into the complex early in the week. The inability to
expand last week's losses in lean hog trade could help to bring longer-term
stability to the entire complex. Corn futures are higher in moderate trade.
July corn futures are 2 cents higher. Stock markets are higher in light trade.
Dow Jones is 52 points higher with NASDAQ up 59 points.
Strong triple-digit gains have quickly and aggressively moved into live
cattle trade through the morning. This is breaking away from the light to
moderate pressure late last week, and confirming the sideways trading range
seen during most of June. The potential to bring additional commercial support
to the table in the next couple of days may spark long-term buyer support,
although the amount of cattle on feed and expected stable demand may limit
upward market potential during summer months. Cash cattle markets are quiet
with show list distribution and inventory taking being done. Given the fact
that active trade never developed last week, showlists are expected higher in
most areas, while short-bought packers may need to buy cattle sooner than later
this week. Boxed Beef cut-outs at midday are mixed, $0.37 lower (select) and up
$0.42 per cwt (choice) with moderate movement of 49 total loads reported (23
loads of choice cuts, 18 loads of select cuts, 3 loads of trimmings, 5 loads of
Mixed trade is seen early Monday following strong initial pressure. The
surge higher in live cattle futures and pullback in corn prices from morning
highs has allowed for increased buyer support to slowly trickle into nearby
contracts. Narrow trading ranges are expected through the end of the session as
buyer confidence remains generally weak given the uncertainty of feed supplies
over the next year.
Strong underlying support is moving into the lean hog complex midday Monday
following the limited attempts for further liquidation. Given the already soft
market structure and technical pressure that developed last week, buyers moved
into the oversold market complex, sparking additional long-term support through
the entire complex. This may add even more underlying support through the week
as traders continue to establish a market range over the next several weeks.
Most of the buyer support is seen in nearby contracts, based on potential
demand support for current production, not long-term supply issues which have
weakened the entire hog complex during early June. Cash prices are lower on the
National Direct morning cash hog report. The weighted average price is down
$1.01 at $74.70 per cwt with the range from $67 to $76 on 4,815 head reported
sold. Cash prices are unreported due to confidentiality on the Iowa/Minnesota
Direct morning cash hog report. Pork values slipped lower in limited volume.
Pork cutouts fell $0.43 per cwt at $82.78 per cwt with 141 loads traded. Lean
hog index for 6/13 is $79.46, down 0.11, with a projected two-day index is
$79.27, down 0.16.
Rick Kment can be reached at email@example.com
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