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Wednesday, July 1, 2015  
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DTN Midday Livestock Comments          07/01 11:56

   Cattle Futures Post Strong Rally              

   Buyers in cattle futures quickly reacted to Tuesday's sharp losses by 
quickly flooding the market with buy orders Wednesday morning. This has pushed 
live nearby cattle futures $3 per cwt higher at midday with aggressive buyer 
activity seen through the entire cattle complex. 

By Rick Kment
DTN Analyst


   Wide prices shifts have quickly developed through the cattle complex with 
aggressive triple digit gains seen through the entire market. Nearby live 
cattle futures are locked in limit higher trade with the focus on buyers 
stepping back into the complex after the first of the month. Hog futures are 
mixed, and expected to remain that way through the rest of the session. Corn 
prices are lower in light trade. September corn futures are 8 cents per bushel 
lower. Stock markets are higher in light trade. The Dow Jones is 105 points 
higher while Nasdaq is up 15 points.


   The market that seemed to be characterized by "doom and gloom" Tuesday has 
surged back with nearby contracts locked $3 per higher after hitting daily 
trading limits. The aggressive nature of the market, combined with firming cash 
market support and preholiday light volume is sparking a wild ride across the 
cattle market Wednesday morning. Cash cattle trade has quickly shifted into 
high gear with prices paid in the South and Western Nebraska at $150 per cwt 
live basis. This is a $2 per cwt rally from last week's level. Although no 
dressed business has been reported, bids are available as from $236 to $240 per 
cwt, which would suggest a moderate shift higher over last week's prices if 
this momentum holds. Asking prices are at $150 and higher per cwt in the South 
and $240 and higher in the North. Beef cut-outs at midday are higher, 0.17 
higher (select) and up 0.05 per cwt (choice) with light movement of 98 total 
loads reported (44 loads of choice cuts, 23 loads of select cuts, 17 loads of 
trimmings, 15 loads of ground beef).


   Feeder cattle futures have regained most of the aggressive limit-down losses 
seen Tuesday. The fact that feeder cattle futures have expanded limits through 
the trading session, creates the opportunity to push markets significantly 
higher than where they were before the sharp end of the month selloff. 
Currently August futures are holding a $4.22 per cwt rally, while other 
contracts are limiting gains to $3 to $4 per cwt. The sharp rally in live 
cattle futures, combined with cash market support midweek is causing 
wide-ranging volatility through the complex. 


   Lean hog futures are mixed as traders are once again going back to previous 
market activity with nearby summer contracts trading in an opposite direction 
than deferred contracts. The focus on the complex remains directed on adjusting 
short-term activity based to cash markets, while adjustments are still being 
surrounding potential supplies through the end of the year and in early 2016. 
Cash prices are lower on the National Direct morning cash hog report. The 
weighted average price fell $2.03 per cwt to $71.82 per cwt with the range from 
$71.66 to $74.75 per cwt on 3,090 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 274 loads selling with prices 
adding $0.09 per cwt. Lean hog index for 6/29 is at $77.32 down 0.32, with a 
projected two-day index of $77.15 down 0.17.  

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


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