Friday, July 5, 2019

Friday Morning Livestock Market Summary - Wide Price Swings Develop

GENERAL COMMENTS

Cattle futures have surged higher with $2 per cwt gains developing in live and feeder cattle trade following the holiday break. Limited trade interest is expected to continue the entire session, leaving the potential for wide market swings in all markets. Hog trade is holding strong pressure as follow through weakness develops. Corn markets are lower in light trade. Stock markets are lower. Dow Jones is 125 points lower with NASDAQ down 41 points. 

LIVE CATTLE:
Open: $1 to $2 higher. Sharp gains have moved through nearby live cattle trade in opening minutes of activity Friday. Nearby contracts are trading at or near $2 per cwt higher as continued technical support is steadily moving into the complex. The recent market support is being viewed with caution as limited volume is expected through the end of the week as many traders remain on the sidelines. But the ability to push October prices above $108 per cwt through the end of the week would break through summer resistance levels set in late May. This has the potential to create additional technical support through the month of July, moving the projected target range near $110 per cwt. Cash cattle activity remains quiet Friday morning with bids unavailable at this point. It appears that most needed trade wrapped up before the end of the day Wednesday. There may be a few cleanup sales developing through the day Friday, but in general market activity is expected to remain very quiet. Cash cattle traded developed at $108 to $110 live in the South, most sales at $109, steady with last week. Dressed trade in the North ranged from $178 to $182 per cwt. Most sales were at $180 per cwt, generally $1 per cwt higher than last week. Cattle left on showlists are priced at $112 and higher live and $183 dressed, although these asking prices will likely be carried over until next week. Open interest Wednesday added 1,055 positions (250,543). Spot month August contracts lost 2,777 positions (131,061) and October contracts added 3,107 positions (106,662). DTN projected slaughter for Friday is 120,000 head. 

FEEDER CATTLE:
Open: $1 to $2 higher. Aggressive buying is moving into feeder cattle trade as traders try to cover short positions seen Wednesday as well as increased focus on the recent rebound in live cattle trade. Corn trade started lower Friday morning with traders slowly but steadily backing away from the midweek rally that sparked aggressive pressure in feeder cattle trade. With only limited trader activity expected most of the Friday session, markets may struggle to find enough volume to establish a market trend before next week, but the limited activity may still cause wide price shifts before the weekend. Cash index for 7/2 is $133.94, unchanged. Open interest Wednesday added 40 positions (49,619). 

LEAN HOGS:
Open: $1 lower. Firm underlying pressure is redeveloping Friday morning as traders continue to back away from early week support. Limited trader activity during the last half of the week is clearly limiting additional market stability and allowing the few traders in the market to take protection. Strong underlying pressure in pork values midweek added to the overall fundamental concerns while technically traders appear to be focusing on a narrow to moderate sideways trend developing during early July. Cash hog trade is called steady to $1 lower, with most bids steady to weak. Open interest added 1,416 positions (298,922). July fell 1,159 positions (18,055) and August lost 105 positions (82,257). Cash lean index for 7/2 is $73.22, down 0.79. DTN projected slaughter for Friday is 450,000 head. Saturday runs are expected at 190,000 head.



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