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Tuesday, July 28, 2015  
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DTN Midday Livestock Comments          07/28 11:55

   Cattle Futures Surge Higher          

   The aggressive gains seen in the cattle complex Tuesday are expected to be a 
combination of firming seasonal demand support expected to develop over the 
next several weeks and aggressive short covering following previous market 

By Rick Kment
DTN Analyst


   Strong buying activity is seen through the entire livestock market with live 
cattle and feeder cattle gains leading the surge higher due to aggressive 
triple-digit gains seen in nearby contracts. The focus on seasonal support 
developing over the near future as well as recent pressure in grain markets is 
helping to draw additional buyers back to the table Tuesday morning. Corn 
prices are lower in light trade. September corn futures are 2 cents per bushel 
lower. Stock markets are higher in light trade. The Dow Jones is 136 points 
higher while Nasdaq is up 33 points.


   Triple-digit gains are holding through the live cattle complex with nearby 
fall contracts leading the move higher with gains over $2 per cwt. At this 
point, buyer support has stayed away from trade limits of $3 per cwt, but with 
October contracts at $2.82 per cwt higher at midday, closing markets at daily 
trading limits is a significant possibility. Cash cattle activity sales are 
undeveloped Tuesday morning; although a few bids are seen in the South at $143 
per cwt. Packers are expected to be pushed into buying cattle due to short 
bought status expected after light trade the last couple of weeks. But this may 
not speed the process before the last half of the week. Beef cut-outs at midday 
are higher, 0.56 higher (select) and up 0.93 per cwt (choice) with light 
movement of 70 total loads reported (35 loads of choice cuts, 14 loads of 
select cuts, 12 loads of trimmings, 7 loads of ground beef).


   Gains in nearby feeder cattle futures are the main focus of the entire surge 
higher in the entire cattle complex. There is growing support based on firmness 
of beef values over the last couple of days, but also on the expectation that 
seasonal support is likely to be seen in the market over the next couple of 
weeks. Once the dust clears through the complex the main focus of most traders 
is expected to be based on determining if the recent gains are based on 
longer-term fundamental support developing in the market or on short covering 
following the previous market slide. 


   Moderate to strong gains have developed through the lean hog futures complex 
as the aggressive buyer support seen in the cattle complex is helping to create 
some additional and renewed interest into all meat markets. Triple-digit gains 
have been confined to nearby contracts through the morning, although the rest 
of the complex is trying to unify support as prices are now 12 to 70 cents 
higher in deferred contract months. Cash prices are higher on the National 
Direct morning cash hog report. The weighted average price gained $0.30 per cwt 
to $73.50 per cwt with the range from $71.15 to $76.00 per cwt on 5,280 head 
reported sold. Cash prices are higher on the Iowa Minnesota Direct morning cash 
hog report. The weighted average price added $1.48 per cwt to $75.61 per cwt 
with the range from $71.15 to $76.00 per cwt on 1,880 head reported sold. The 
National Pork Plant Report reported 188 loads selling with prices adding $0.07 
per cwt. Lean hog index for 7/24 is at $78.53 down 0.19, with a projected 
two-day index of $78.36 down 0.17.  

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


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