GENERAL COMMENTS:
Limited activity across lean hog futures late Monday had prices hovering in a mixed but tight trading range. Early week losses in August futures were offset by light to moderate support across the rest of the complex. Feeder cattle futures led the complex higher with triple-digit gains. Cash cattle trade was undeveloped Monday. Showlists appear mixed, priced higher in Texas and steady to lower in other areas. It may be midweek or later before active bidding or any trade develops. National Daily Direct afternoon hog report is $3.78 higher with a weighted average of $76.02 per cwt. Full range of $62 to $80 per cwt on 12,304 head sold. Corn futures moved sharply lower Monday. September futures are 8 1/2 cents per bushel lower. The Dow Jones Index is 2 points higher with the NASDAQ up 51 points.
LIVE CATTLE: Firm gains in futures Monday on wide support ($0.20 to $0.85 higher). Spill-over strength from feeder cattle futures, which posted triple-digit gains, quickly boosted live cattle futures. Live cattle futures were mixed to start the session, but once the uncertainty surrounding last week's cattle reports moved through the system and selling interest evaporated, traders turned their focus to expected demand growth and the potential to rebuild short- and long-term support. Nearby contracts continue to test July highs set last week. Moves above these levels over the next couple of days would likely instill additional longer-term support through the entire complex, allowing for prices to move to summer highs. Beef cut-outs: mixed, $0.08 higher (select, $189.59) and down $0.10 (choice, $213.32) with light demand and heavy offerings, 109 loads (42 loads of choice cuts, 21 loads of select cuts, 26 loads of trimmings, 20 loads of coarse grinds).
TUESDAY'S CASH CATTLE CALL: Steady. Limited direction expected Tuesday morning with bids and asking prices yet to be established. It may be midweek or later before any significant interest develops.
FEEDER CATTLE: Feeder cattle gains flooded the complex Monday ($1.92 to $2.62 higher) on continued grain pressure. Declines in corn futures lent strong support to feeder cattle futures as the day continued. This brought increased gains with September and October futures leading the complex higher, up $2.62 per cwt. The lack of resistance in the complex was obvious as traders retracted most of last week's losses based on the overall limited cattle placements in June. Although placements only fell 2% from year ago levels, this indicates supply levels may start to slow through the end of the year, putting more emphasis on growing demand and less on needing to clear additional product based on supply gluts. CME cash feeder index for 7/19 is $138.16, down 0.49.
LEAN HOGS: Limited volume allowed for position taking following recent market support ($0.65 lower to $0.40 higher). August futures slipped lower as strong, triple-digit rallies seen late last week left the entire complex ripe for a market correction as traders squared positions. Underlying firmness in the complex continued to limit downside movement as all other contracts held onto late-day support of 20 to 40 cent gains. Traders are looking for increased buyer activity as the week continues, but the sharp $9 to $11 per cwt rally seen over the last two weeks still leaves the entire complex vulnerable for an active price pullback. Pork values rallied higher on active support in several primal cuts. Pork cutout values added $2.08 per cwt, moving to $80.61 per cwt on 194 loads. CME cash lean index for 7/18 is $72.40, up 0.88. DTN Projected lean index for 7/19 is $73.27, up 0.83.
TUESDAY'S CASH HOG CALL: Steady to $1 higher. Cash hog trade is starting to establish a trend of steady to moderately higher as increased underlying support develops. Most bids are expected 50 cents to $1 per cwt higher as the focus is on keeping plants full. Tuesday slaughter is expected at 477,000 head.
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