Strong gains have quickly moved into all livestock futures with nearby cattle and hog futures holding triple-digit gains. Previous market pressure is starting to slowly crack as consistent buying is moving past the fear of last week's losses and traders focus more on long-term market potential. Corn futures are lower in light morning trade with September down 4 1/2 cents. Stock markets are lower in light trade with the Dow Jones 50 points lower and the NASDAQ down 11 points.
LIVE CATTLE:
Strong triple-digit gains have quickly moved into the complex with August and October futures trading $1.50 per cwt higher at midday. Although traders have backed away from morning highs through the last hour, the underlying support in the complex is still developing as traders remain focused on rebuilding the oversold market structure through the complex. October futures continue to trade just under the $100 per cwt level. A close below this threshold would limit follow-through support later in the week. Cash market interest remains quiet with bids unavailable in all areas at this point. This is not unexpected for a Tuesday morning, and likely packer interest will not become active until sometime Wednesday. Asking prices are still trickling into the market at $109 live basis in the South and $178 in the North dressed basis. Active trade is likely to be pushed off until the last half of the week. Boxed beef cut-outs at midday are higher, up $0.45 (select) to up $3.50 (choice) with moderate to light offerings of 45 total loads reported (16 loads of choice cuts, 19 loads of select cuts, 5 loads of trimmings, 5 loads of ground beef).
FEEDER CATTLE:
Feeder cattle futures have slowly pulled away from morning highs as buyer interest seems to be stabilizing. Although strong triple-digit gains continue to hold across the complex, the concern is that late-day market erosion will develop, as has been seen in previous days. Fundamentally, little has changed in the cattle complex or feeder cattle market over the last two days. But sharp gains in beef cutout values over the last week and lower feed costs are starting to slowly work through the entire complex. This will not fully offset pressure last week, but as the market builds momentum, additional commercial and noncommercial interest is slowly moving back into the complex. This is expected to solidify market support over the near future.
LEAN HOGS:
Active follow-through support has quickly swept through lean hog trade Tuesday morning with the December contract leading the complex higher. Although the market remains under significant pressure with uncertainty about trade relationships and future sales to China and growing pork supplies still looming over the market, the ability of traders to move prices away from long-term lows is helping to bring renewed stability to the complex. There is growing uncertainty about additional price support over the near future given the weak fundamental outlook for pork that still continues. Cash prices are lower on the National Direct morning cash hog report. The weighted average price is down $1.64 at $68.14 per cwt with the range from $58 to $72.50 on 5,620 head reported sold. Pork values eroded following triple-digit losses in most primal cuts. Pork cutouts fell $0.87 per cwt at $84.11 per cwt with 235 loads traded. Lean hog index for 8/16 is $78.55, down $0.47, with a projected two-day index is $77.99, down $0.56.
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