GENERAL COMMENTS:
Feeder cattle futures rebounded nicely following a lackluster morning for trade Tuesday. The ability to spark consecutive gains in nearby feeder cattle futures appears to be gaining traction through the complex. Despite closing lower, live cattle futures showed little interest in retracing Monday's gains, potently sparking renewed support through the rest of the week. Cash prices are higher on the National Direct Afternoon Hog Report, up $0.54 with a weighted average of $53.39 with 8,272 head selling. Market range of $45 to $55 per cwt. March corn is up 3 1/2 cents per bushel and March soybean meal is down $1.30. The Dow Jones Industrial Average is up 407.83 points and NASDAQ is up 194.57 points.
LIVE CATTLE:
Live cattle futures trickled lower through the last half of trade Tuesday. Strong initial support was unable to hold as traders seemed uncertain of the ability to follow Monday's gains with continued support. The mixed movement in outside markets left traders more than willing to hover on the sidelines until the dust settles in lean hog trade. Contracts closed $0.40 lower to $0.05 higher throughout the complex. February live cattle are down $0.05 at $121.62, April live cattle are down $0.075 at $120.65 and June live cattle are down $0.25 at $111.75. Cash cattle markets remain quiet with little direction from feedlot managers as asking prices are generally undeveloped. It is expected that more interest will develop from feeders and packers Wednesday, but it could easily be the tail end of the week before active cash market trade develops.
Boxed beef prices are mixed: choice down $0.63 ($210.93) and select up $0.09 ($207.51) with a movement of 97 loads (55.24 loads of choice, 16.11 loads of select, 7.10 loads of trim and 18.82 loads of ground beef). Tuesday's slaughter is estimated at 122,000 head, 5,000 head more than a week ago and 3,000 head more than a year ago.
WEDNESDAY'S CASH CATTLE CALL: Steady. Both sides remain absent from the market going into midweek. With cattle still unwilling to be priced by feedlot managers as they focus on the ability to stabilize or push futures, and higher wholesale beef values will keep markets sluggish for the time being. Packers may not show significant interest until late in the week.
FEEDER CATTLE:
Feeder cattle futures battled back from midday pressure as renewed long-term support trickled into the complex. The focus on the cattle market remaining oversold over the last week is creating limited downside market pressure, allowing buyers to push the line higher without significant resistance.March feeders are up $0.85 at $137.50, April feeders are up $0.57 at $138.92 and May feeders are up $0.50 at $141.30. The two-day shift higher in feeder cattle could help to bring additional technical support through the end of the week as traders focus on the $2.50 per cwt rebound during early February.The CME feeder cattle index 2/3/2020: are unavailable at this time.
LEAN HOGS:
Lean hog futures posted strong early gains, but the follow-through buying from Monday was not enough to spark higher prices in all contracts at the end of the session. February lean hogs closed $0.45 higher at $56.75, April lean hogs closed $0.40 lower at $62.32 and May lean hogs closed $0.35 lower at $70.90. Growing uncertainty surrounding coronavirus in China will continue to be a major factor in hog market movements through early February. If China does need to delay or scale back expected trade deal purchases based on lack of economic security or changes in demand in the country, this will continue to have a bearish impact on lean hog prices for the foreseeable future. Tuesday's slaughter is estimated at 496,000 head - 2,000 head less than a week ago and 22,000 head more than a year ago. Pork cutouts totaled 391.54 loads with 361.86 loads of pork cuts and 29.68 loads of trim. Pork cutout values: down $1.71, $68.13. The CME lean hog index 1/31/2020: down $0.95, $61.41. Projected CME lean hog index 2/03/2020: down $0.31, $61.10.
WEDNESDAY'S CASH HOG CALL: Steady. Limited direction is expected in cash hog trade midweek as packers continue to gain access to needed end of the week procurement numbers. The wide market range expected early in the day may be unable to create much change in prices over the next couple of days.
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