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DTN Livestock Midday: Cattle Futures Surge Higher

Ernst Undesser
By Rick Kment DTN Analyst September 20, 2017

DTN Livestock Midday: Cattle Futures Surge Higher

Photo: MSU Extension

Strong triple-digit gains have quickly flooded into the cattle market. This buying momentum has quickly moved through feeder cattle and live cattle contracts with nearby live cattle futures flirting with limit higher trade.

GENERAL COMMENTS:

Sharp gains have quickly developed in all cattle futures with nearby live cattle futures holding gains over $2 per cwt. Feeder cattle futures continue to be the driving force in the cattle market as aggressive buyer interest is moving into the market with little seller resistance. This has pushed nearby contracts above $155 per cwt with traders focused on potential follow-through support moving into the market.

Corn prices are higher in light trade. December corn futures are 2 cents higher. Stock markets are mixed in light trade. The Dow Jones is 23 points higher while Nasdaq is down 3 points.

LIVE CATTLE:

Has quickly broken out of the narrow trading range seen over the last couple of days as aggressive buying in feeder cattle futures has sparked aggressive long-term support across nearby live cattle futures.

October and December contracts are holding gains of $2 per cwt at midday as long term support continues to move into all nearby contracts. Deferred futures have posted limited gains, but the support has grown significantly from midmorning with current price gains of 70 to 90 cents per cwt.

Cash bids are starting to develop in all areas Wednesday morning although the overall tone of the market remains sluggish given that current bids are not likely to gain much attention over the next couple of days. Bids are seen at $104 live basis and $165 dressed. Asking prices remain firm at $108 to $109 live basis while dressed asking prices are seen from $170 to $172 per cwt given the support in futures trade.

The Fed Cattle Exchange Auction report today listed a total of 1,450 head, with 636 actually sold, 440 head listed as unsold, and 374 head listed as PO. The state by state breakdown looks like this:

  • KS 608 total head, with 382 head sold at $106.50-$106.75, 0 head unsold, 226 head listed as PO ($106.00);
  • NE 300 total head, with 0 head sold, 300 head unsold, and 0 head listed as PO;
  • TX 542 total head, with 254 head sold at $106.75, 140 head unsold, and 148 head listed as PO ($106.50);
  • CO no cattle listed;
  • IA no cattle listed;
  • other states no cattle listed.

The delivery date/weighted averages breakdown is as listed:

  • 1-9 day delivery: 1,150 head total, 636 head sold, with a weighted average price of $106.67;
  • 1-17 day delivery 97 head total, no sales;
  • 10-17 day delivery 0 head total;
  • 17-30 day delivery 203 head total, no sales.

Beef cut-outs at midday are lower, $0.20 lower (select) and down $0.13 per cwt (choice) with active movement of 124 total loads reported (48 loads of choice cuts, 14 loads of select cuts, 29 loads of trimmings, 33 loads of ground beef).

FEEDER CATTLE:

Sharp midday gains have flooded back into the feeder cattle futures complex with October and November contracts leading the market higher with gains of $2.50 to $3 per cwt higher. This has helped to break through additional short term resistance levels as active buyer support floods back into the market uninhibited by what is still considered to be strong supply levels over the next several months.

There continues to be increased long-term buyer focus as nearby contracts have moved above $155 per cwt and attempts to find even more support through the end of September.

LEAN HOGS:

Strong early losses have been replaced by mixed market direction late morning as initial selling pressure has quickly slowed in nearby contracts. Front month October continue to hold firm market pressure with prices $1 per cwt lower based on generally light trade in the spot month contract.

But moderate buyer support has quickly moved into other nearby contracts with prices steady to 40 cents per cwt higher at midday. This could help to draw additional trade volume back into the market over the near future.

Cash prices are lower on the National Direct morning cash hog report. The weighted average price fell $0.67 at $50.40 per cwt with the range from $46.00 to $52.00 on 7,726 head reported sold.

Cash prices are lower on the Iowa/Minnesota Direct morning cash hog report. The weighted average price fell $0.35 at $50.75 per cwt with the range from $46.00 to $52.50 on 4,077 head reported sold.

The National Pork Plant Report reported 287 loads selling with prices gaining $0.85 per cwt. Lean hog index for 9/18 is at $61.88 down $0.94 with a projected two-day index of $60.92, down 0.96.

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Ernst Undesser
By Rick Kment DTN Analyst September 20, 2017