Live cattle and feeder cattle futures are limit lower as markets opened Monday in reaction to the packing plant fire in Garden City and uncertainty of how this will affect short- and long-term production. Hog futures started firmly higher, but surrounding market weakness eroded early support. Corn futures lower in active trade following the USDA report. September corn futures are 25 cents lower. Stock markets are lower in light trade. Dow Jones is 224 points lower with NASDAQ down 42 points.
LIVE CATTLE:
Live cattle futures are locked in limit losses of $3 per cwt Monday morning as traders take protection due to the uncertainty that lower packer capacity will have on overall cattle prices. Following the fire at the Garden City beef packing plant owned by Tyson on Friday night, the entire cattle market turned bearish. Given that the plant capacity of an estimated 6,000 head per day is out of the system, even though Tyson says it will rebuild, will tighten the pressure on cash and formulated prices, at least short term. Tyson and other meat packers are expected to increase production at other plants in order to keep up with beef supplies, but this will likely create increased uncertainty of short- and long-term slaughter numbers, and what this will do with the already large supply of cattle in the pipeline. Cash cattle markets remain quiet with show list distribution and inventory taking being done. The aggressive price adjustments will likely keep bids and asking prices from actively developing until midweek or later. Boxed Beef cut-outs at midday are higher, $2.92 higher (select) and up $0.55 (choice) with light movement of 82 total loads reported (43 loads of choice cuts, 16 loads of select cuts, 11 loads of trimmings, 12 loads of ground beef).
FEEDER CATTLE:
Limit losses of $4.50 per cwt that flooded the market at opening bell have held through the entire morning. It is expected that prices are not going to move from these limit losses as overall industry uncertainty remains high. The limit pressure in live cattle trade and overall uncertainty of what daily and weekly cattle processing rates will be short and long term is causing even more market anxiety through the entire complex. This could lead additional aggressive pressure through the complex as expanded limits will be seen if markets continue locked in limit losses Monday.
LEAN HOGS:
Nearby lean hog futures continue to hold onto light to moderate gains following underlying support seen in October futures. Nearby lean hog futures appear to be about the only market holding any gains given the overall bearishness across the complex. The pressure in grain trade and limit losses in cattle futures has quickly eroded any underlying support seen early Monday in deferred futures with prices not steady to 40 cents lower in most 2020 hog contracts. Increased pressure is likely to develop through the rest of the session, limiting long-term support across the market. Cash prices lower on the National Direct morning cash hog report. The weighted average price is down $1.87 at $69.00 per cwt with the range from $62 to $72 on 6,622 head reported sold. Pork values rallied higher following gains of nearly $18 per cwt in belly cuts. Pork cutouts added $2.93 per cwt at $93.37 per cwt with 137 loads traded. Lean hog index for 8/8 is $82.33, down 0.52, with a projected two-day index is $81.75, down 0.58.
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