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DTN Livestock Midday: Swift Selling Developing in Cattle Futures

Ernst Undesser
By Rick Kment DTN Analyst September 14, 2017

DTN Livestock Midday: Swift Selling Developing in Cattle Futures

©Debra L Ferguson Stock Photography

Triple-digit losses have quickly developed through the cattle complex at midday with moderate to strong pressure seen in live cattle and feeder cattle markets. The inability to hold early gains is creating widespread market pressure through the entire complex.

GENERAL COMMENTS:

Active pressure quickly developed through cattle future late Thursday morning with traders focusing on triple-digit pressure quickly shifting into live cattle and feeder cattle markets. Mixed market direction is seen in lean hog trade as markets have been focused on continued pressure in front month futures, while traders try to focus on stability in the rest of the complex.

Corn prices are higher in light trade. December corn futures are 3 cents higher. Stock markets are mixed in light trade. The Dow Jones is 51 points higher while Nasdaq is down 18 points.

LIVE CATTLE:

Moderate to firm pressure is quickly developing across the live cattle futures contracts as traders have moved from early gains to strong late morning losses even though very little has changed either fundamentally or technically on the complex.

With buyer interest quickly drying up, liquidation stepped back into the market, moving into the market. This added to the market pressure, with December contracts leading the market lower with a $1.20 per cwt loss at midday.

Cash cattle markets are showing light to moderate bid activity through the morning with live bids once again seen at $102 to $105 in the North and South regions. Northern areas are posting dressed bids of $164 to $165 per cwt, but unable to gain anyone willing to participate at this point.

Asking prices remain at $108 live $170 to $172 per cwt dressed. At this point, it is likely that most of the trade will be delayed until sometime Friday. Activity on the Fed Cattle Exchange Auction was light with a total of 1,063 head offered while 128 head were sold. This accounted for one lot of heifers in Kansas sold for 1-9 day delivery at $104.75 per cwt.

Beef cut-outs at midday are mixed, $0.95 lower (select) and up $1.01 per cwt (choice) with active movement of 111 total loads reported (70 loads of choice cuts, 21 loads of select cuts, no loads of trimmings, 20 loads of ground beef).

FEEDER CATTLE:

Feeder cattle futures have quickly moved from moderate midmorning gains, to strong triple-digit losses in most contract months. September contracts are holding moderate pressure of 80 cents per cwt at midday, while the rest of the complex is holding losses of $1 to $1.30 per cwt.

There continues to be spillover selling pressure developing through the complex moving back into the complex, which may add to the softness through the end of the trading session.

LEAN HOGS:

Light mixed trade is holding across lean hog futures through the complex Thursday with traders focusing on the additional pressure in cash hog prices and eroding pork values in morning reports. October lean hog futures continue to be the main concern through the complex with traders attempting to find a sense of stability, but that has become a challenge over the last week.

Outside of front-month futures, the complex is stuck in a narrowly mixed range with prices 25 cents lower to 20 cents higher as traders are expected to keep markets within the current trading range over the rest of the session.

Cash prices are lower on the National Direct morning cash hog report. The weighted average price fell $0.90 at $53.65 per cwt with the range from $49.00 to $54.75 on 11,215 head reported sold.

Cash prices are lower on the Iowa/Minnesota Direct morning cash hog report. The weighted average price fell $0.62 at $53.68 per cwt with the range from $49.00 to $54.75 on 8,745 head reported sold.

The National Pork Plant Report reported 150 loads selling with prices falling $0.74 per cwt. Lean hog index for 9/12 is at $66.37 down $1.00 with a projected two-day index of $65.15, down 1.22.

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Ernst Undesser
By Rick Kment DTN Analyst September 14, 2017