Wednesday, September 27, 2017

Wednesday Midday Livestock Market Update - Cattle Futures Rally Higher on Short-Covering Activity

GENERAL COMMENTS: 

Strong triple-digit gains have quickly developed through the cattle and hog complex with gains in cattle futures leading the way. This has posted gains of $1 to $2 per cwt in live cattle markets while gains in feeder cattle have moved as high as $3 per cwt higher midday. Corn prices are mixed in light trade. December corn futures are 1/4 cent lower. Stock markets are higher in light trade. The Dow Jones is 16 points higher while Nasdaq is up 42 points.
LIVE CATTLE:
Strong buyer support has moved into all cattle trade as short covering is being focused on following pressure early in the week. October futures remain sluggish with a 33 cent per cwt gain, while the rest of nearby contracts have surged higher with triple-digit gains. As December futures have moved back above $115 per cwt, commercial traders are starting to step back into the market, as they shrug off the pressure seen early in the week. Cash cattle activity still remains generally sluggish with just a few scattered bids seen in the South through the morning. Bids of $104 per cwt are seen in both Kansas and Texas through the morning, but this is limiting the ability to draw feeder's interest into the market given the support in futures trade. Asking prices are seen around $110 to $111 in the South and $172 to $174 in the North. The Fed Cattle Exchange Auction report today listed a total of 1,342 head, with zero actually sold, 394 head listed as unsold, and 948 head listed as PO. The state by state breakdown looks like this: KS 706 total head, with zero head sold, and 706 head listed as PO ($106.25-107.50); NE no cattle reported; TX 636 total head, with zero head sold, 394 head unsold, and 242 head listed as PO ($107.50); CO no cattle reported; IA no cattle reported; other states no cattle reported. The delivery date/weighted averages breakdown is as listed: 1-9 day delivery: 841 head total, zero head sold; 1-17 day delivery 501 head total, zero head sold; 10-17 day delivery none reported; 17-30 day delivery none reported. Beef cut-outs at midday are lower, $2.02 lower (select) and down $1.29 per cwt (choice) with moderate movement of 91 total loads reported (46 loads of choice cuts, 22 loads of select cuts, 4 loads of trimmings, 20 loads of ground beef).
FEEDER CATTLE:
Strong triple digit-gains have quickly developed across the feeder cattle futures complex. This is adding to increased overall market support and gains of $1.50 to $3 per cwt. The focus on firming underlying support ant the potential that additional commercial buyer interest will continue to move back into the market is helping to draw buyer interest to both nearby and deferred contracts.
LEAN HOGS:
Despite the narrowly mixed trade early in the trading session, buyer support stepped into the market at midday. This has pushed December contracts to triple-digit gains, leaving markets focusing on renewed buyer support and the potential to draw additional longer-term support back into the market. October futures, which held light to moderate losses through the entire morning, has not moved higher, holding a 22 cent gain, even though trade volume remains sluggish in front month futures. Cash prices are lower on the National Direct morning cash hog report. The weighted average price fell $0.30 at $47.33 per cwt with the range from $43.00 to $48.50 on 14,848 head reported sold. Cash prices are higher on the Iowa/Minnesota Direct morning cash hog report. The weighted average price added $0.16 at $47.96 per cwt with the range from $43.00 to $48.50 on 5,587 head reported sold. The National Pork Plant Report reported 231 loads selling with prices gaining $1.10 per cwt. Lean hog index for 9/25 is at $56.98 down $0.68 with a projected two-day index of $56.25, down 0.73.

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