Wide market shifts in lean hog trade stole the
spotlight Friday morning as buyers quickly and aggressively moved into
nearby contracts. Firming cash values through the week and potential
underlying fundamental support is helping to spark longer-term support.
Cattle trade broke away from mixed early trade with light to moderate
support holding. Corn futures are higher in light trade. September corn
futures are 6 cents higher. Stock markets are higher in light trade. Dow
Jones is 55 points higher with NASDAQ up 2 points.
LIVE CATTLE:
Moderate buying support moved into deferred
contracts as traders posted 60 to 70 cent gains in 2020 contract months.
Traders seem to expect neutral to slightly bullish numbers coming out
of the cattle on feed and cattle inventory report. Although
traditionally the July cattle inventory report tends to not affects
markets significantly, the expectation that this report will show a
pullback in breeding herd numbers is creating price support in deferred
futures trade. This would indicate a change in long-term beef supplies
over the next couple of years. Cattle on feed numbers are expected to
remain nearly 2% above year-ago levels, with limited market impact
expected at this point. Cash cattle markets are untraded Friday morning,
leaving most to feel that needed cattle have already been bought for
the week. A surprise in cattle on feed report numbers could bring about
additional late-afternoon trade, but the tone is likely set for the
week. Live bids of $111 in the South and $113 in the North remain on the
table late morning. Boxed Beef cut-outs at midday are higher, $0.63
higher (select) and up $0.08 per cwt (choice) with light movement of 61
total loads reported (30 loads of choice cuts, 11 loads of select cuts,
no loads of trimmings, 20 loads of ground beef).
FEEDER CATTLE:
Limited but firm support is developing in feeder
cattle trade. The strong push higher in corn trade is being overlooked
at this point, as moderate gains of 55 to 85 cents per cwt are holding
at midday. Given the weekend break ahead and potential that hot weather
may hold through part of the weekend, there is starting to be some
support based on weather conditions and the potential impact on cattle
production. Although at this point, weather related buying is likely to
be minimal, the ability to firm prices ahead of the weekend break is
cautionary in nature. Traders also look for a reduction in cattle placed
in feedyards during June. This is sparking some additional pre-report
buying.
LEAN HOGS:
Active gains have swiftly moved through nearby
lean hog trade Friday morning. October futures continue to led the
complex with a $2 rally late morning as with prices breaking through
short-term resistance levels of $77.45 set one month ago. The ability to
hold above these prices levels at the end of the week is expected to
spark renewed underlying support early next week, as technical support
continues to develop. Firming fundamentals continue to develop late in
the week, solidifying overall support through the complex. Cash prices
are higher on the National Direct morning cash hog report. The weighted
average price is up $0.22 at $71.91 per cwt with the range from $60 to
$77.50 on 4,750 head reported sold. Pork values bounced higher with firm
support in most primals. Pork cutouts gained $0.78 per cwt at $77.38
per cwt with 153 loads traded. Lean hog index for 7/17 is $71.52, up
0.73, with a projected two-day index is $72.40, up 0.88.
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