DTN Midday Livestock Comments 09/30 11:51
Live Cattle Futures Slip Lower in Late-Month Trade
Following aggressive market surges over the last couple trading sessions,
traders have slowly backed away from previous highs as they prepare for month
and quarter end. Moderate to strong buying remains in lean hog futures complex,
as traders remain focused on firming cash values.
By Rick Kment
Firm buyer support remains rooted through the lean hog futures and feeder
cattle contracts Tuesday midday. Traders continue to focus on firmness in cash
hog prices and still tight feeder cattle numbers which is enticing additional
market support at the end of the month. Live cattle futures are holding
moderate losses as traders seem to be focusing on position squaring more than
anything else late Tuesday. Corn futures are lower at midday. December corn
futures are 2 cents per bushel lower. Stock markets are lower in light trade.
The Dow Jones is 5 points lower while Nasdaq is down 6 points.
Trade Tuesday in the cattle complex has been more focused on position
adjustment rather than basing price shifts on fundamental market activity.
Following the aggressive gains Monday which moved prices to new highs, traders
appear to be willing to square positions at the end of both September and the
third quarter of the year. Losses have remained moderate in light trade, which
could help to redevelop additional market support over the next couple of
trading sessions. Cash cattle activity remains undeveloped with bids still
unavailable. Asking prices are also hard to come by, but the few that are seen
are marked around $161 to $162 per cwt in the South and $250 and higher in the
North. These asking prices may adjust as the week continues, but for now it's a
good starting spot given very little additional direction in the market. Beef
cut-outs at midday are mixed, $0.16 per cwt lower (select) and up $1.49 per cwt
(choice) with active movement of 136 total loads reported (37 loads of choice
cuts, 48 loads of select cuts, 32 load of trimmings, 19 loads of ground beef).
Early gains have been nearly cut in half at midday across the feeder cattle
complex with traders focusing on the building pressure in live cattle futures
and uncertainty of just how much buyer momentum remains in the tank through the
end of the session. End-of-the-month and quarter position squaring is likely to
continue within the next couple hours of trade. This could lead to additional
price volatility and potential losses in deferred contracts by closing bell.
Strong early gains have faded slightly leading up to midday as traders are
focusing on the lack of additional aggressive moves in cash markets and general
pressure in the live cattle complex. Front-month October futures are holding
strong 70 cent gains, but this is well off of early session highs, and appears
to be allowing some end-of-the-month pressure into the market before closing
bell. The rest of the complex remains mostly higher, although gains have eroded
through late morning which could allow to additional uncertainty in the
complex. Cash prices are lower on the National Direct morning cash hog report.
The weighted average price fell $1.95 per cwt to $102.27 per cwt with the range
from $95.50 to $108.00 per cwt on 3,641 head reported sold. Cash prices are
lower on the Iowa Minnesota Direct morning cash hog report. The weighted
average price fell $1.87 per cwt to $106.55 per cwt with the range from $95.50
to $108.00 per cwt on 551 head reported sold. The National Pork Plant Report is
reported 161 loads selling as prices gaining $1.06 per cwt. Lean hog index for
9/26 is at $108.30 up 0.66, with a projected two-day index of $108.96 up 0.66.
Rick Kment can be reached at email@example.com
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