GENERAL COMMENTS:
Strong underlying support moved into feeder cattle and lean hog futures Tuesday with triple-digit gains. October lean hog futures closed limit higher, so expanded trading limits will be available Wednesday in all lean hog futures. Corn futures tumbled lower in limited activity. December corn futures were 8 3/4 cent lower. Stock markets were lower in moderate trade. The Dow Jones was 285 points lower with NASDAQ down 88 points. Cash cattle markets were quiet Tuesday morning after the long holiday weekend. This is causing some uncertainty given the early week rally in futures trade, which is expected to firm asking prices from feedlot managers. Bids are not expected until Wednesday or later, but even then a wide gap between asking prices and bids is likely. It could be late in the week before active cash cattle trade develops. National Daily Direct afternoon hog report is unreported at this time due to packer submission delays.
LIVE CATTLE: Narrow gains developed Tuesday as traders backed away from previous losses ($0.2 lower to $0.65 higher). Underlying support from the rest of livestock futures appeared to slowly get the attention of live cattle traders. The ability to move away from previous market lows, starting the month of September off on a positive note, is expected to bring additional stability to the complex. With Labor Day in the rearview mirror, traders are looking for additional short-term support, which may help stimulate demand such as upcoming football season parties and such. But concerns remain that overall cattle supplies will continue to grow over the next couple of months with limited processing schedules more evident this week due to the holiday break; thus aggressive price support may be uncertain at best. Beef cut-outs: lower $0.65 higher (select, $211.62) and down $1.11 (choice, $230.66) with good demand and light offerings, 77 loads (38 loads of choice cuts, 26 loads of select cuts, 6 loads of trimmings, 8 loads of coarse grinds).
WEDNESDAY'S CASH CATTLE CALL: Steady. Bids and asking prices are still undeveloped late Tuesday afternoon, leaving the indication that any cash market activity will be delayed until midweek or later. Showlists remain mixed Tuesday morning with higher offerings in Texas, Nebraska and Colorado, while Kansas offerings were reduced.
FEEDER CATTLE: Active gains developed Tuesday morning following grain losses and underlying commercial buyer support ($0.35 to $1.75 higher). Commercial buyers quickly stepped back into the market leading to triple-digit gains in September and October futures. Although the underlying tone of the market remains weak, momentum appears to be shifting following what remains as an oversold market structure through the month of August. Fundamental concerns still remain, which may limit strong follow-through gains over the near future, but prices continue to put distance from recent support levels. CME cash feeder index for 9/2 is $139.09, down 0.09.
LEAN HOGS: Limit gains rekindle hopes of potential market rally ($0.15 lower to $3.00 higher). Lean hog futures saw increased momentum as triple-digit gains early in the session quickly grew to limit gains in spot October. The potential to spark additional long-term commercial support during early September comes as concerns continue concern over trade issues with China and new tariff levels going into place at the first of the month. Nearby futures continue to distance themselves from recent market lows. The ability to establish Aug. 23 price levels as season lows is expected to quickly bring additional commercial and noncommercial buying interest back into the complex. Pork values rallied higher following moderate early week trade volume. Pork cutout values added $2.29 per cwt, moving to $74.60 per cwt on 334 loads. CME cash lean index for 8/29 is $69.45, down 1.74. DTN Projected lean index for 8/30 is $69.97, up 0.52.
WEDNESDAY'S CASH HOG CALL: Steady to $2 lower. Despite strong underlying futures support during early September, cash hog prices are likely to be much slower to react with positive moves. Most bids are expected to be steady to $1 per cwt lower Wednesday morning. Wednesday slaughter numbers are expected at 481,000 head.
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