Strong midday losses are developing in lean hog futures as traders slowly back away from previous gains. The early morning support in cattle futures is holding prices higher, but prices have backed away from morning highs based on limited buyer activity moving back into the complex. Corn futures are steady to higher in light morning trade. September corn futures are 1 cent higher. Stock markets are higher in light trade. Dow Jones is 269 points higher with NASDAQ up 74 points.
LIVE CATTLE:
Additional buying activity is moving back into the complex with nearby contracts holding moderate gains of 30 to 70 cents per cwt as traders remain focused on underlying support through the entire complex. Although prices have slowly worked back from initial price support, seen early Wednesday, the underlying firmness in the complex continues. This is creating additional optimism that recent gains may hold through the end of the week. October futures are currently trading at $100.17 per cwt, with the target point of $100 per cwt the main focus of many traders. If spot-month October futures break below the $100 per cwt threshold at or before closing bell, this could spark additional market weakness later in the week. Cash market activity still remains at a standstill with packer bids still unavailable. Although it is expected that packer interest will start to show some life through the end of the day, the expected wide gap between any asking prices and potential bids is likely to limit either side from finding common ground until later in the week. Cash trade is likely to be pushed off until sometime Thursday or Friday, and quite possibly after the release of the cattle on feed report Friday afternoon. Boxed Beef cut-outs at midday are higher, $1.56 higher (select) and up $0.46 (choice) with moderate light of 65 total loads reported (44 loads of choice cuts, 9 loads of select cuts, 4 loads of trimmings, 8 loads of ground beef).
FEEDER CATTLE:
Active support moved back into feeder cattle trade with September futures holding a $1.02 per cwt gain at midday. Although prices have slowly eroded from morning highs, the underlying short-term support is helping to create a combination of technical and fundamental support midweek. Limited attention is being given to early estimated for the upcoming cattle on feed report, but with analyst's estimates expected even with last year's placement levels in July, traders are expecting any major surprises in the late-week report.
LEAN HOGS:
Lean hog futures have turned lower following the inability to sustain early-market gains as increased volume moved into the complex. The continued pressure in cash hog prices is not a surprise to the market, although the inability to find any sense of strong fundamental support on which to build a market base is once again causing nearby futures to erode. October futures are holding $1.15 per cwt losses, trading at $63.82 per cwt while other nearby contracts are holding 40 to 75 cent losses at midday despite limited volume. The concern that follow-through pressure may once again test long-term lows has many traders nervous and unwilling to actively step back into the complex. Cash prices are lower on the National Direct morning cash hog report. The weighted average price is down $2.18 at $66.89 per cwt with the range from $58 to $71.50 on 4,322 head reported sold. Pork values posted limited gains based on triple-digit price increases in ham and belly cuts. Pork cutouts added $0.72 per cwt at $84.63 per cwt with 165 loads traded. Lean hog index for 8/17 is $77.99, down 0.56, with a projected two-day index is $77.40, down 0.59.
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