GENERAL COMMENTS
Cash cattle trade is starting to develop across most areas of cattle country with live trade seen at $111 per cwt developing and prices for dressed cattle paid of $175 per cwt. These markets are generally $2 per cwt higher than last week's market levels. Overall trade at this point remains light to moderate, and it is not determined if additional trade will develop at this point yet late afternoon Thursday, or if traders will wait until Friday and return to the market. According to the closing report, the national hog base is $0.75 higher compared with the Prior Day settlement ($52.00-$58.50) weighted average $54.89. The corn futures moved higher in light activity. December futures were 3 cents higher Thursday. The Dow Jones Index is 32 points lower with the Nasdaq down 12 points.
LIVE CATTLE
Moderate to firm pressure developed across the live cattle futures Thursday afternoon ($0.62 to $1.42 Lower) as traders quickly pulled back from previous market support and adjusted to the firm gains seen in grain prices following the release of the USDA crop report. October and December live cattle futures led the shift lower, falling $1.42 per cwt lower in spot month October futures. This move pushed front month futures to $112.35 per cwt and created uncertainty through the complex. There is additional market activity seen in nearby contracts although the sharp pressure in feeder cattle futures has added additional softness to the complex. Beef cut-outs: higher, $0.69 higher (select, $189.45) and up $1.12 (choice, $197.44) with moderate to good demand and moderate offerings (65 loads of choice cuts, 29 loads of select cuts, 10 loads of trimmings, 17 loads of coarse grinds).
FRIDAY'S CASH CATTLE CALL:
Steady with Thursday. Light to moderate trade started to develop late Thursday afternoon at $111 live basis and $175 dressed basis. This is $2 per cwt higher from last week's level. It is expected that some additional trade may continue to be seen through the end of the week, but prices may have been established at this price range.
FEEDER CATTLE:
Triple-digit losses quickly developed across most of the feeder cattle complex Thursday afternoon ($0.37 to $2.42 Lower) as prices moved in a wide trading range through the trading session as outside markets had a significant impact on the overall direction of the complex. October futures remained generally stable, falling 60 cents per cwt, while other contracts posted triple-digit losses. Strong gains in grain trade quickly changed the overall shift in cattle market attitudes as well as the overall market activity in nearby live cattle futures. CME cash feeder index for 10/11 is $155.14 down $0.08.
LEAN HOGS:
Pressure developed across the lean hog complex as prices pulled back from early market support ($0.10 to $0.95 lower). The strong pressure in cattle contracts quickly eroded market support in the lean hog complex, despite follow through support in the cash markets, as traders remain focused on fundamental support. Traders seem to be unwilling to be able to push through recent resistance levels in any nearby contracts. This could create additional pressure through the end of the week. Carcass values moved slightly higher with strong gains in bellies pressured by weakness in other primals. Pork cut-out: $73.82 up $0.15. CME cash lean index for 10/10: $58.32, up $1.21. DTN Projected lean index for 10/11 $59.12 up $0.80.
FRIDAY'S CASH HOG CALL:
Steady to $1 higher. Activity at the end of the week is expected to remain similar to the market direction seen through the rest of the week with prices generally steady to $1 per cwt higher with bids scattered through the market range. Packers remain generally aggressive to gain access to hogs, but market ready hogs continue to be readily available. Friday's slaughter is expected at 460,000 head with Saturday runs likely near 201,000 head.
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