Hog trade has found short-term stability after
falling over $14 per cwt in just over a week. This created an oversold
market structure despite the continued weak market trend. Cattle futures
are under moderate-to-strong pressure at midday with traders focusing
on triple-digit losses in feeder cattle. Renewed late-week gains in corn
prices sparked cattle market liquidation. Corn futures are higher in
light trade with September up 3 3/4 cents. Stock markets are lower in
light trade with the Dow down 186 points and the NASDAQ down 108 points.
LIVE CATTLE:
Live cattle futures have suffered significant
losses late morning with deferred contracts leading the complex lower.
Losses of $3 per cwt or more in feeder cattle have quickly weakened any
buyer support that trickled into the live cattle trade over the last
couple of days. Although moderate gains in corn prices at the end of the
week will not significantly increase feed costs, especially following
the grain market pressure during the week, traders remain extremely
concerned about any wide market shifts in the complex. Some widespread
market swings could be seen early next week as traders grapple with
longer-term market direction. Cash sales are being reported in several
areas of the North at $114.50 per cwt live basis. This is generally
steady with last week's average. Bids are seen in all other areas
consistent with trade earlier in the week. This could allow
light-to-moderate cash trade to develop through the end of the day. But,
at this point, prices are not likely to deviate significantly from
earlier trade levels. Asking prices remain at $112 to $113 live basis in
the South and $185 and higher dressed. Boxed beef cutouts at midday are
higher, up $1.58 (select) to up $0.72 per cwt (choice) with light
movement of 59 total loads reported (20 loads of choice cuts, 30 loads
of select cuts, no loads of trimmings, 9 loads of ground beef).
FEEDER CATTLE:
Pressure was seen in feeder cattle futures
Friday morning following gains in the corn trade. The inability of
buyers to move into feeder cattle futures through early August has
created pressure through the entire complex. The Spot September futures
contract has tumbled nearly $6 per cwt in the last three trading
sessions. This is not only creating increased volatility, but has
quickly changed the direction of market trend as prices hovered at
summer highs early in the week, but are now testing July lows.
LEAN HOGS:
Lean hog futures have gyrated higher and lower
in a moderate-to-wide range Friday as uncertainty surrounding support in
the complex and recent losses sparked a combination of late-week
short-covering and follow-through pressure. The lack of direction is
expected to continue in the lean hog trade through the rest of the
session, but this is not expected to break futures out of the bearish
slide they have seen over the past week. Cash prices are lower on the
National Direct morning cash hog report. The weighted average price is
$1.04 lower at $76.95 per cwt with the range from $68 to $84.50 on 4,976
head reported sold. Pork values weakened following triple-digit losses
in ham and belly cuts in active trade. Pork cutouts fell $0.98 per cwt
at $86.81 per cwt with 238 loads traded. Lean hog index for 7/31 is
$84.11, up $0.71, with a projected two-day index is $84.64, up $0.53.
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