GENERAL COMMENTS:
Firm gains early in the session sparked additional market momentum and underlying support through the entire complex. Lean hog futures closed with triple-digit gains. Even though nearby cattle futures closed higher, late-day pressure swept into deferred contracts, eroding early gains and causing many traders to back away. Corn futures adjusted lower, backing away from gains late last week. September corn futures are 6 cents lower. Stock markets are higher in light trade. Dow Jones is 261 points higher with NASDAQ up 106 points. Cash cattle markets remained quiet Monday following showlist distribution through the morning. Showlists appear to be larger in all areas, which is not surprising given the light trade over the last couple of weeks. Feeders are looking for increased stability during the week, with the hope packers will have more of an appetite. A few scattered asking prices in the North at $178 dressed, and $109 to $110 live. But at this point bids are undeveloped in all areas. Cash trade is expected to be delayed until midweek or later. National Daily Direct afternoon hog report is $0.11 lower with a weighted average of $69.71 per cwt. Full range of $59 to $72.50 per cwt on 10,744 head sold.
LIVE CATTLE: Narrowly mixed trade replaced early optimism ($0.10 lower to $0.27 higher). Triple-digit gains, which flooded the market early Monday morning, quickly eroded as buyer depth was limited. Although the complex remains generally oversold, continued concerns surrounding packers' ability to aggressively source cattle due to lower plant capacity is causing traders to become extremely cautious. Narrow nearby gains may allow for slow, but steady support to develop as the week continues, but prices will need to move significantly higher in order to break out of the bearish market trend of the last week. Beef cut-outs: higher, $1.26 higher (select, $214.52) and up $0.44 (choice, $239.13) with light demand and light offerings, 60 loads (30 loads of choice cuts, 17 loads of select cuts, 6 loads of trimmings, 7 loads of coarse grinds).
TUESDAY'S CASH CATTLE CALL: Steady to higher. Feedlot managers hope market support will redevelop through the week. Active trade may not be seen until later in the week, but the focus on moving prices away from the sharply lower levels seen last week appears the main focus.
FEEDER CATTLE: Mixed trade limited initial market rally ($0.05 lower to $1.10 higher). Fueled by an early morning pullback in corn and soybean prices, active buying moved into feeder cattle futures. The firm support helped solidify triple-digit gains through most of the session, although late-day market adjustments limited overall optimism. Lightly traded August contracts led the complex higher with a $1.10 per cwt rally, while the rest of the complex became stuck in a narrowly mixed trading range. The inability for consistent buying interest to hold through the end of the session is likely to keep most traders generally bearish following last week's pressure. CME cash feeder index for 8/16 is $136.33, down 1.27.
LEAN HOGS: Firm interest quickly redeveloped Monday morning, helping to move prices higher ($0.32 to $2.07 higher). Active support moved back into lean hog futures following selling Friday which broke through technical levels. The fact that prices did not continue lower early in the week has helped temporarily bring some needed stability to the complex. The entire lean hog complex remains generally weak, although follow-through gains over the next couple of trading sessions will go a long way in redeveloping buyer support and sparking trader confidence in all contract months. Pork cutouts posted triple-digit losses following sharp drops in ham and belly cuts. Pork cutout values fell $1.28 per cwt, moving to $84.98 per cwt on 298 loads. CME cash lean index for 8/15 is $79.02, down 0.32. DTN Projected lean index for 8/16 is $78.55, down 0.47.
TUESDAY'S CASH HOG CALL: Steady to $2 lower. Limited direction is expected early in the week in cash hog trade. Most bids are expected steady to $1 per cwt lower, although the futures market firmness could limit downside market direction during the week. Tuesday slaughter numbers are expected at 478,000 head.
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