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DTN Livestock Midday: Triple-Digit Gains in Cattle Futures

Mike Christensen
By Rick Kment, DTN Analyst June 12, 2014

Strong triple-digit gains have surfaced in both live cattle and feeder cattle markets with nearby contracts holding gains over $2 per cwt. The activity in the complex is focused on supply concerns through the rest of the year.


Aggressive gains are quickly developing in cattle futures with both live cattle and feeder cattle futures holding gains over $2 per cwt in nearby contracts. The availability of buyer support and lack of additional market activity could push prices to or near the daily limit of $3 per cwt before closing bell.


Lean hog futures are mixed with deferred contract gains being tempered by light nearby losses. Corn futures are higher at midday. July corn futures are 3 cents per bushel higher. Stock markets are lower in light trade. The Dow Jones is 76 points lower while Nasdaq is down 24 points.


Light early gains Thursday morning have given way to an aggressive round of buyer support which is pushing June and August futures $2.40 per cwt higher. The lack of aggressive support in beef values Thursday morning and lack of direction in cash cattle activity is allowing most of the buyer support to be based on tight market fears and outside market direction. Cash cattle markets remain quiet although bids are becoming more evident. Major packers are offering prices of $230 in the north, although there are reports that some regional buyers are offering as much as $235 per cwt. It could easily be Friday before active trade develops. Asking prices remain at $147 in the South and $235 and higher in the North. Beef cut-outs at midday are mixed, $0.90 per cwt higher (select) and down $0.60 per cwt (choice) with active movement of 100 total loads reported (40 loads of choice cuts, 36 loads of select cuts, six loads of trimmings, 19 loads of ground beef).


Strong triple-digit gains have redeveloped following the market pullback that developed Wednesday. August feeder cattle futures are leading the market higher with a $2.30 per cwt gain while other nearby contracts are also holding gains over $2 per cwt. The focus on tight cattle supplies still is drawing additional market traction, but very little new information is available to the market. This may cause traders to get tired of the fear tactics focusing on lack of cattle numbers, but for now traders seem to be still on board with aggressively priced markets.


Mixed trade seen through most of the morning is holding at midday with narrow losses seen in nearby contracts being replaced by moderate to strong gains in late 2014 contract months. Although there continues to be concern about supplying the market with enough hogs through the third quarter, traders seem to be getting tired of the fear tactics for now. But that may quickly change in the days to come as prices continue to bounce back and forth. Cash prices are lower on the National Direct morning cash hog report. The weighted average price lost $0.81 per cwt to $112.08 per cwt with the range from $103.00 to $116.50 per cwt on 3,040 head reported sold. Cash prices are unreported due to confidentiality on the Iowa Minnesota Direct morning cash hog report. The National Pork Plant Report is reported 156 loads selling as prices added $2.19 per cwt. Lean hog index for 6/10 is at $112.46 up 0.92, with a projected two-day index of $113.69 up 1.23.


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Mike Christensen
By Rick Kment, DTN Analyst June 12, 2014