Widespread losses have quickly developed in both
live cattle and feeder cattle markets at midday. The sluggish early
morning activity which kept prices contained in a moderate price range,
has quickly evaporated. This may lead to even more long term pressure in
the cattle complex as front month futures have broken through support
levels set in June. The potential that this will bring about even more
liquidation is very likely, and is creating some additional concerns
both short and long term across the complex. Corn prices are higher in
light trade. July corn futures are 1/4 cent higher. Stock markets are
mixed in light trade. The Dow Jones is 2 points lower while Nasdaq is up
32 points.
LIVE CATTLE:
Early pressure in live cattle futures remained
light, but additional widespread losses quickly developed across the
complex as pressure in the feeder cattle market added to softness in
live cattle trade. Nearby live cattle futures are holding losses from
$1.50 to $2 per cwt as traders not only focus on the overall lack of
support in the market, but the potential for additional pressure in cash
markets through the week. Cash cattle business through feedlot country
remains at a standstill with bids and asking prices still undeveloped.
With packers and feeders returning from the holiday, and little activity
started Monday, it is likely that trade will be pushed off until later
in the week. The Fed Cattle Exchange Auction report today listed a total
of 2,093 head, with 429 actually sold, 455 head listed as unsold, and
1,209 head listed as PO. The state by state breakdown looks like this:
KS 257 total head, with 92 head sold at $117.75, 165 head listed as PO
($117.75); NE 1,334 total head, with 337 head sold at $117.25, 821 head
listed as PO ($117.25); TX 502 total head, with no actual sales, 223
head listed as PO ($117.75); CO no test; IA no test; other states no
test. The weighted averages are as listed: 1-9 day delivery: 92 head,
$117.75; 17-30 day delivery 337 head, $117.25. Beef cut-outs at midday
are mixed, $0.62 lower (select) and up $1.18 per cwt (choice) with light
movement of 75 total loads reported (32 loads of choice cuts, 26 loads
of select cuts, 11 loads of trimmings, 6 loads of ground beef).
FEEDER CATTLE:
Strong market pressure has continued to develop
through the feeder cattle futures with losses now seen from $2 to $2.70
per cwt in all nearby contract months. The combination of follow through
pressure seen Monday, as well as concerns that beef fundamentals may
continue to remain generally weak over the near future is allowing for
traders to quickly and aggressively back away from the complex. Nearby
contracts continue to trade at $143 per cwt with the recent losses
breaking through support in front month August futures.
LEAN HOGS:
Firm gains have redeveloped through the entire
lean hog futures complex. This support is pushing front month July
futures $1 per cwt higher during morning trade, although the rest of the
complex remains sluggish with gains holding from 10 to 40 cents per
cwt. The overall lack of direction outside of front month contracts is
allowing for increased market interest during early July. This continues
to be based on firming fundamental support. Cash prices are lower on
the National Direct morning cash hog report. The weighted average price
fell $1.26 at $85.21 per cwt with the range from $82.00 to $87.00 on
3,509 head reported sold. Cash prices are lower on the Iowa/Minnesota
Direct morning cash hog report. The weighted average price fell $1.32 at
$86.28 per cwt with the range from $82.00 to $87.00 on 854 head
reported sold. The National Pork Plant Report reported 178 loads selling
with prices gaining $0.25 per cwt. Lean hog index for 6/30 is at $91.71
down $0.01 with a projected two-day index of $91.93 up $0.22.
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