GENERAL COMMENTS:
From Friday to Friday, livestock futures scored
the following changes: Aug live cattle (LC) off $0.87 Oct LC off $1.47;
Aug feeder cattle (FC) off $1.63 Sep FC off $2.75; Aug lean hogs (LH) up
$3.22 Oct LH up $5.71.
Strong underlying support moved through the lean
hog complex Friday afternoon with nearby contracts moving to month-long
highs following additional end of the week commercial support. Limited
gains developed in cattle trade ahead of the cattle on feed and cattle
inventory reports. Corn futures posted firm gains. September futures is 6
cents per bushel higher. Dow Jones Index is 68 points lower with Nasdaq
down 60 points.
CASH MARKETS:
Cash cattle trade appears to be done for the
week with a few live bids remaining on the table. National Daily Direct
afternoon hog report is $0.79 higher with a weighted average of $72.48
per cwt. Full range of $60 to $78 per cwt on 6,603 head sold.
LIVE CATTLE:
Narrow to moderate gains developed on Friday
based on underlying support developing at current levels ($0.20 to $0.77
higher). Limited support is seen in nearby live cattle trade with some
concerned about the potential for increased cattle on feed numbers seen
in the Friday afternoon report. Because markets closed before the report
was released, traders will not have a chance to react until Monday
morning. Firm support in grain trade and uncertainty of long-term
supplies helped bring support to deferred futures, moving 50 to 77
cents higher in late trade. Cattle on feed report numbers came in at
102% year ago levels with a total of 11.48 million head in feedlots of
1,000 head or greater. This is not expected to create significant shifts
as pre-report estimates were nearly spot on, at 101.8% year ago levels.
The underlying focus on larger, but manageable supplies through the
summer months is likely to keep traders looking toward long-term demand
rather than overall supply levels over the near future. The hot weather
continues to be a factor for beef production, but with cooler weather
expected next week in many areas, market reaction has been generally
muted.Beef cut-outs: higher, $0.90 higher (select, $189.51) and up $0.08
(choice, $213.42) with good demand and moderate offerings, 90 loads (45
loads of choice cuts, 20 loads of select cuts, no loads of trimmings,
25 loads of coarse grinds).
MONDAY'S CASH CATTLE CALL: Steady. Limited
activity is expected early in the week with show list distribution and
inventory taking the focus in all areas.
FEEDER CATTLE: Limited gains developed Friday
following higher grain and hog markets ($0.30 to $0.55 higher). Limited
direction developed Friday as feeder cattle futures hovered in a tight
grouping at the end of the week with spill over support from grain and
hog markets helping spark underlying buyer interest. The July cattle on
feed report posted limited direction and will keep market reaction
subdued Monday when traders have a chance to trade the report. Actual
report totals posted 98% cattle placed compared to year ago levels. This
report is fractionally higher than early estimates of 97.7%, despite
the wide range of estimates seen through the week. The July cattle
inventory report posted all cows and calves unchanged, with the calf
crop slightly lower, but still statistically unchanged at 100% year ago
levels. This is expected to add stability to feeder cattle supplies
through the next several months. CME cash feeder index for 7/18 is
$138.67, down $1.33.
LEAN HOGS: Active nearby support sparked renewed
interest Friday ($0.25 lower to $2.02 higher). Limited early trade left
markets generally sluggish most of the session, although active buyer
support moved into the complex in the last two hours of trade. This move
higher was centered on October futures trade, moving $2.02 per cwt
Friday and closing at $78.92 per cwt. This shift broke through
short-term resistance levels, moving to one-month highs ahead of the
weekend break. Although there is no confirmation of any changes in trade
talks, or fundamental market direction over the last couple of days,
the underlying support late in the week in grain trade has led to
speculations that China may be in the market to make purchases. Even if
export pork sales are sluggish in the near future, the potential to
build on the technical support seen during early July could bring
additional underlying support to the entire hog market. Pork values
rallied higher following triple digit gains in most primal cuts. Pork
cutout values added $1.93 per cwt, moving to $78.53 per cwt on 256
loads. CME cash lean index for 7/17 is $71.52, up $0.73. DTN Projected
lean index for 7/18 is $72.40, up $0.88.
MONDAY'S CASH HOG CALL: Steady to $1 higher.
Additional firm cash market support is expected Monday with bids steady
to $1 per cwt. Most bids are expected 50 cents to $1 per cwt higher
early in the week. Monday slaughter numbers are expected at 477,000
head.
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