Thursday, July 6, 2017

Thursday Midday Livestock Market Summary

GENERAL COMMENTS: 
Firm gains have quickly developed across all cattle markets with front-month live cattle and feeder cattle futures holding strong $1 per cwt gains at midday. This turn around in the cattle market may not bring widespread buying back to the complex, but it is helping to limit concerns of widespread follow-through losses during the rest of the week. Strong pressure is seen in nearby lean hog futures as traders have quickly backed away from aggressive gains over the last couple of weeks. This market correction comes as traders focus on potentially strong pork demand continuing, but the market may need a break from the continued pace higher. Corn prices are higher in light trade. July corn futures are 3 cents higher. Stock markets are lower in light trade. The Dow Jones is 108 points lower while Nasdaq is down 30 points.
LIVE CATTLE:
Moderate to firm futures support is now developing in live cattle trade despite the early pressure, which quickly developed in the complex and continued pressure in beef values. This recent move has pushed August futures $1.05 per cwt higher as traders continue to focus on steady support through the entire complex. Light cash cattle trade is starting to develop in the North at $188 per cwt dressed basis. This is $2 lower than last week's price levels, and although at this point there is still a lot of cattle yet to trade, the general tone of the market is likely to be steady to lower. Bids have been more available Thursday from $117 to $118 per cwt on a live basis. It is likely that additional activity will be seen either later today or Friday, but the overall tone of the market may be set by the end of the day. Beef cut-outs at midday are lower, $1.02 lower (select) and down $1.75 per cwt (choice) with light movement of 83 total loads reported (45 loads of choice cuts, 22 loads of select cuts, no load of trimmings, 16 loads of ground beef).
Feeder Cattle:
Firm gains have developed through the feeder cattle complex with August and September contracts how holding a $1 per cwt gain as traders try to regain not only early-morning losses, but sharp triple digit pressure which developed midweek. The buyer support at this point is not expected to be viewed as a market turnaround, but short covering, although traders will closely focus on ability to close markets higher as well as bring buyers back into the market early Friday morning.
LEAN HOGS:
Moderate pressure is holding across the lean hog futures complex with the most significant pressure seen in July through October contracts as traders have quickly backed away from recent market support. This lack of buyer activity in nearby contracts has not limited buyers from moving back into other deferred contracts as prices are now slightly higher in most 2018 contracts. The potential for additional pressure in nearby contracts is creating position-squaring activity, allowing prices to erode, but traders still focus on fundamentals. Cash prices are lower on the National Direct morning cash hog report. The weighted average price fell $1.30 at $85.68 per cwt with the range from $83.00 to $86.50 on 3,555 head reported sold. Cash prices are unreported due to confidentiality on the Iowa/Minnesota Direct morning cash hog report. The National Pork Plant Report reported 127 loads selling with prices gaining $0.44 per cwt. Lean hog index for 7/3 is at $91.93 up $0.22 with a projected two-day index of $92.40 up $0.47.

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