Hog futures are showing significant pressure
midday Friday as strong initial gains quickly evaporated as technical
reversal triggers have developed. Nearby futures are holding losses more
than $2 per cwt. Cattle trade remains firm, but well off morning highs.
Corn futures are steady to lower in limited trade volume. September
corn futures are higher. Stock markets are higher in light trade. Dow
Jones is 282 points higher with NASDAQ up 127 points.
LIVE CATTLE:
Limited futures activity is seen Friday morning
with traders holding onto moderate gains which developed early in the
session. The wide price swings seen earlier in the week seem to have
subsided, as traders try to find market support at current levels. With
August futures hovering just above $100 per cwt, while October futures
remain near long term and contract lows under $99 per cwt, the focus is
moving toward the weakness in cash cattle trade. Strong underlying
support in beef values over the last couple of days has done very little
to spark interest in cash spot month futures activity. Cash cattle
trade remains quiet following sharply lower prices earlier in the week.
Live trade developed in the South at $105 per cwt Wednesday, roughly $5
per cwt lower than last week. Dressed trade seen at $172 once the dust
settled in the North was $10 per cwt lower. There are a few bids at $106
live in Nebraska still on the table, but it appears that both sides may
call it a week and hope for better results next week. Boxed Beef
cut-outs at midday are higher, $2.00 higher (select) and up 1.73
(choice) with moderate light of 57 total loads reported (37 loads of
choice cuts, 6 loads of select cuts, 4 loads of trimmings, 9 loads of
ground beef).
FEEDER CATTLE:
Feeder cattle futures have been unable to hold
morning highs as limited support is seen at midday. The inability not
only to bring additional strong buying back into the complex, but to
flirt with lower prices through the last couple hours of trade is
weakening the potential of the recent market rally in the last couple of
days. August and September contracts are holding gains of 35 to 37
cents per cwt. There still remains a lot of uncertainty as to how much
follow-through pressure will develop over the next few weeks as packers
struggle with reduced plant capacity, even though production is being
shifted around the country over the last few days.
LEAN HOGS:
Lean hog futures tumbled lower midday as a
combination of renewed technical selling and fundamental pressure
quickly eroded morning optimism. The swift shift lower in morning cash
hog prices combined with additional softness in pork values left traders
unwilling to hang onto early gains as increased widespread weakness is
developing. October lean hog futures posted a strong market reversal
Friday morning, as triple-digit losses have moved to $63.20 per cwt at
midday. This moves through long-term support levels of $63.25 per cwt
seen exactly one year ago on August 16, 2018. The inability for front
month futures to hold above these price levels at the end of the session
would likely spark additional technical triggers early next week. Cash
prices are lower on the National Direct morning cash hog report. The
weighted average price is down $1.23 at $68.91 per cwt with the range
from $59 to $74 on 5,588 head reported sold. Pork values continue to
steadily erode and moderate pressure developed in all but rib cuts
Friday. Pork cutouts fell $0.41 per cwt at $87.82 per cwt with 210 loads
traded. Lean hog index for 8/14 is $79.34, down 0.52, with a projected
two-day index is $79.02, down 0.32.
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