DTN Midday Livestock Comments 11/20 11:55
Sharp Losses Sweep Through Cattle Trade Monday Morning
Pressure has quickly developed Monday morning in cattle futures following
the bearish Cattle on Feed report last Friday. Trade volume is expected to
remain sluggish all week in most livestock markets, which may add even more
volatility to the complex over the near future.
By Rick Kment
Sharp losses in cattle futures were offset by similar gains in nearby lean
hog futures late morning Monday. Trade volume remains sluggish in all markets
as cattle traders quickly adjust to last week's Cattle on Feed report and try
to account for the increased supply levels in futures trade. Corn prices are
higher in light trade. December corn futures are 1/4 cents per bushel higher.
Stock markets are higher in light trade. The Dow Jones is 87 points higher
while Nasdaq is up 2 points.
Live cattle futures saw triple-digit losses Monday morning as traders
focused on increased market activity following the weekend. The shifts in the
Cattle on Feed report have sparked most of the bearish market news, but the
recent lack of stability continues to draw trade activity back to the complex.
Nearby contracts are holding losses near $2 per cwt, while deferred futures
remain stuck from $1.20 and $1.50 per cwt lower in sluggish late-morning trade.
Cash cattle activity remains quiet with very little interest expected from
either side early in the week. The holiday weekend ahead will likely keep
traders actively focused on getting business done by Wednesday, although at
this point, bids and asking prices remain undeveloped. Beef cut-outs at midday
are mixed, $0.67 higher (select) and down $1.68 per cwt (choice), with light
movement of 60 total loads reported (25 loads of choice cuts, 10 loads of
select cuts, 11 loads of trimmings, 13 loads of ground beef).
Triple-digit losses are evident in all cattle markets Monday morning as
feeder cattle futures are trading from $1.50 to $2.30 per cwt lower. The most
aggressive selling pressure is seen in spring 2018 contract months with overall
trade activity developing through the complex. All but January futures have
fallen below $150 per cwt through the morning, which continues to pressure the
market through the holiday week.
Sluggish trade has been seen through most of the morning across hog futures.
The mixed trade early in the session has finally worn down the deferred
contract pressure and allowed buyers to move into the complex in all but 2019
contract months. This pushed nearby contracts to triple-digit gains with
aggressive support building on the ability to draw support in most contracts.
This may spark additional longer-term support through the complex, which may
bring additional buyer activity to the market through the week. Even though
trade volume is expected to slow as the week progresses, the potential to post
additional gains exists as traders also focus on contract-spreading between the
cattle and hog complex. Cash prices are lower on the National Direct morning
cash hog report. The weighted average price fell $0.33 at $56.63 per cwt with
the range from $55.50 to $57.00 on 3,670 head reported sold. Cash prices are
unreported due to confidentiality on the Iowa/Minnesota Direct morning cash hog
report. The National Pork Plant Report posted 166 loads selling with cutout
values gaining $2.08 per cwt. Lean hog index for 11/16 is at $65.42 down $0.55
with a projected two-day index of $64.83, down $0.59.
Rick Kment can be reached at firstname.lastname@example.org
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