GENERAL COMMENTS: Hog futures reacted Monday morning to an indication by President Trump that China is ready to move the trade talk process forward following Friday's announcement by both sides that tariff levels would be increased. This pushed October futures limit higher with triple-digit gains in most livestock contracts. Corn futures trickled higher in mixed trade through the day. December corn futures are 1/2 cents higher. Stock markets are higher in moderate trade. Dow Jones is 206 points higher with NASDAQ up 84 points.
CASH MARKETS: Cash cattle markets remain typically quiet for a Monday. Showlist distribution focused on mixed cattle availability as larger numbers are seen in Kansas, while most other areas are steady to lower. A few token starter bids have slowly developed in Nebraska with asking prices of $110 live in the North and $178 to $180 dressed. Most trade is expected to be delayed until the second half of the week, although all parties are looking to establish trade before late Friday and the upcoming holiday weekend. National Daily Direct afternoon hog report is $1.21 lower with a weighted average of $63.26 per cwt. Full range of $55 to $69.50 per cwt on 8,957 head sold.
LIVE CATTLE: Trade deals and trade talk rekindled buyer interest ($0.85 to $1.60 higher). Strong gains redeveloped in live cattle trade Monday, although prices were unable to retract all of Friday's losses in most contracts. October futures rallied $1.60 per cwt higher as traders turned their focus to lower than expected cattle on feed in July, the late weekend announcement that a trade deal with Japan is nearing its final stages and indications from President Trump that China is willing to restart trade talks following last week's tariffs. The latter seems too good to be true given the unchanging movement China has had so far, but with uncertainty in the market and the yuan moving to 11-year lows in relation to the dollar, it is possible that both sides are willing to make an agreement. It is important to remember, though, that the fundamental factors behind the trade issues are well rooted and not just financial; making the process tricky and much more complicated than willing to meet for talks. Beef cut-outs: mixed, $1.05 lower (select, $211.66) and up $0.54 (choice, $238.06) with moderate to good demand and moderate offerings, 87 loads (39 loads of choice cuts, 29 loads of select cuts, 12 loads of trimmings, seven loads of coarse grinds).
TUESDAY'S CASH CATTLE CALL: Steady. Limited activity is expected Tuesday with bids likely to remain generally quiet until near midday. Asking prices are likely to redevelop in the North at $178 to $180 dressed, and likely to become more evident through the South -- around $108 to $110 per cwt. However, active trade is not expected until midweek or later.
FEEDER CATTLE: Buyers quickly reassemble following improved trade expectations ($$1.30 to $2.75 higher). Following the aggressive losses late last week, feeder cattle traders have reset with a much more robust mentality. The combination of a bullish cattle on feed report that posted cattle placements falling 2% from year ago levels, expectations that a trade deal with Japan are in the final states and the impression that trade talks with China may be back on has pushed gains to triple-digit levels in all feeder cattle trade. August futures posted a $1.20 per cwt rally, while September futures led the complex with gains of $2.75 per cwt based on the potential that follow through support may quickly develop through the end of the week.CME cash feeder index for 8/23 is unavailable at this time.
LEAN HOGS: Limit gains move back into hog futures ($1.97 to $4.50 higher). Lean hog futures rallied higher following aggressive buying that moved back into all livestock trade Monday morning. The pressure seen late last week following the announcement by China of added tariff levels, as well as generally weak market structures, was more than offset by expanded trading limits Monday. President Trump stated that China wanted to go back to trade talks following the weekend after accelerated tariff levels were exchanged. However, there is still little evidence that both sides will proceed with talks or that either side is willing to give up previous concessions that broke down the process in the past. Most of the market rally is based on hopes and potential that an agreement will be reached quickly. However, this emotional turmoil in the market may continue to create market volatility for some time to come. Pork cutouts continued lower as strong gains in rib primals was overshadowed by more aggressive losses in belly cuts. Pork cutout values fell $0.66 per cwt, moving to $78.99 per cwt on 281 loads. CME cash lean index for 8/22 is $75.94, down 1.10. DTN Projected lean index for 8/23 is $74.49, down 1.45.
TUESDAY'S CASH HOG CALL: Steady to $2 lower. Follow through pressure is still expected to be seen in cash hog markets as packers are not likely to get caught up in the wide market swings seen through the week. Most bids are expected to be steady to $1 per cwt lower. Tuesday slaughter numbers are expected at 480,000 head.
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