GENERAL COMMENTS: Buyers flooded into the cattle trade Wednesday, pushing futures higher. Feeder cattle futures led the complex higher with the August contract closing limit up. Hog futures remained mixed in limited trade. Cash cattle interest was at a standstill Wednesday with a few bids still seen from the morning at $107 live and $174 to $175 dressed basis. Packers may purchase fewer cattle next week due to the holiday on Thursday. That being said, at least light trade is expected in all areas over the next two days, although shifts in market direction are not likely. The National Daily Direct afternoon hog report is $1.39 lower than the prior day settlement ($62-$74.50, weighted average $70.68) on 8,441 head sold. Corn futures ended lower Wednesday in limited trade with July down 4 1/4 cents. The Dow Jones Index was 11 points lower with the NASDAQ up 25 points.
LIVE CATTLE: Live cattle futures followed feeder cattle higher with all contract months posting triple-digit gains. The full range of closes was $1.15 to $2.12 higher. The August futures contract led the complex higher, gaining $2.12 per cwt to close at $105.37 per cwt. This rally continues to move prices away from last week's lows, potentially establishing a seasonal market low as traders look for firming holiday demand and potential late-year support through the beef complex. Beef cut-outs: mixed, off $0.39 (select, $198.56) to up $0.06 (choice, $219.70) with light demand and offerings (71 loads of choice cuts, 41 loads of select cuts, 7 loads of trimmings, 37 loads of coarse grinds).
THURSDAY'S CASH CATTLE CALL: Steady. Trade has remained quiet through the first half of the week. Direction is expected to be limited early Thursday morning, but packers are expected to become slightly more aggressive as the day continues. It is uncertain just how many cattle will be bought through the end of the week with the end of month and quarter limiting interest, in addition to the upcoming holiday-shortened week ahead.
FEEDER CATTLE: Feeder cattle futures closed limit higher Wednesday (up $4.02 to $4.50). Spot August led the market higher with a $4.50-per-cwt rally. All contract months saw gains of over $4 per cwt. With prices bouncing off contract lows, the concern is that this may be an end-of-the-month correction and futures may not be able to hold onto support over the long term. But current demand for beef and expected long-term supplies of feeder cattle are expected to limit the downside potential, despite higher grain and feed prices. CME cash feeder index for 6/25 is $131.46, up $0.05.
LEAN HOGS: Lean hog futures closed mixed ($0.85 lower to $0.17 higher) in limited trade. Firm pressure developed late in the session with July and August futures leading the market lower, down 70 to 85 cents. The pressure was mainly due to traders rolling out of nearby contracts, but weak fundamentals -- including strong production and the ongoing trade war with China -- also make potential gains through the end of the month uncertain. Pork values tumbled following an $18.35-per-cwt loss in rib cuts. Pork cutout values fell $1.61 per cwt, moving to $73.97 per cwt on 282 loads. CME cash lean index for 6/24 is $78.31, down $0.34. DTN Projected lean index for 6/25 is $77.91, down $0.40.
THURSDAY'S CASH HOG CALL: Steady to $2 lower. Despite moderate-to-strong buyer support midweek in hog futures, packers continue to focus on eroding margins and lackluster pork values through the end of June. This is expected to limit spending over the next couple of days, although reduced cash values is not expected to limit procurement levels at this point due to the amount of market-ready hogs available at the end of the month. Most bids are expected steady to weak Thursday morning. Thursday slaughter numbers are expected at 477,000 head. Saturday runs are expected near 57,000 head.
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