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DTN Livestock Midday: Futures Remain Mixed in Narrow Range

Ernst Undesser
By Rick Kment DTN Analyst October 12, 2017

DTN Livestock Midday: Futures Remain Mixed in Narrow Range

Sluggish trade Thursday has brought livestock futures back from wide early price shifts seen during initial trade, to very sluggish early market support. Trade is expected to coast into closing bell with very little market direction expected to be seen within the next hour of trade.

GENERAL COMMENTS:

Light trade continues to develop through the complex with traders focusing on narrowly mixed trade activity across the complex. There remains very little direction through both cattle and hog markets which could bring additional market shifts through the rest of the trading session.

Corn prices are higher in light trade. December corn futures are 6 cents higher. Stock markets are mixed in light trade. The Dow Jones is 7 points lower while Nasdaq is up 2 points.

LIVE CATTLE:

Mixed trade has developed in live cattle futures with prices stuck in a narrow range following a pull back from early pressure Thursday morning. The ability to hold firm beef values as traders are moving back into the market continues to limit prices from 15 cents lower to 15 cents higher.

There is likely to be increased volume seen through the last hour of trade, although prices may not be able to break out of the narrow range before closing range.

Cash bids are improving significantly through the morning Thursday but at this point, sales have not yet developed. Bids are seen in the same range as they have been earlier in the week with prices at $108 live basis and $172 dressed basis.

Asking prices remain at $113 and higher live basis and $175 and higher dressed. It is likely that most trade will be pushed off until sometime Friday, but it is possible that some feeders may give in through the day Thursday afternoon if futures end up breaking before closing bell.

Beef cut-outs at midday are higher, $0.51 higher (select) and up $0.63 per cwt (choice) with light movement of 55 total loads reported (31 loads of choice cuts, 17 loads of select cuts, 0 loads of trimmings, 7 loads of ground beef).

FEEDER CATTLE:

Feeder cattle futures traded lower through most of the morning with pressure developing in live cattle trade, limiting overall buyer support. But the bullish USDA crop report has helped to draw soybean prices quickly higher.

This quickly sparked buying activity in nearby feeder cattle futures with October and November feeder cattle futures holding 60 to 70 cent per cwt gains. There continues to be additional commercial interest seen through the entire complex.

LEAN HOGS:

Narrow trading ranges are seen through the lean hog futures complex with prices hovering between 32 losses and 12 cent gains. The early strong support which developed during the first few minutes of trade was based on follow through cash market support moving into the complex.

Even though cash trade has continued to develop, the pressure seen in the rest of the livestock complex has eroded commercial buying activity, and traders have quickly backed away from gains. This could leave prices stable through the rest of the session in a narrow range.

Cash prices are higher on the National Direct morning cash hog report. The weighted average price gained $0.41 at $56.24 per cwt with the range from $52.00 to $58.00 on 4,825 head reported sold.

Cash prices higher on the Iowa/Minnesota Direct morning cash hog report. The weighted average price added $1.13 at $57.36 per cwt with the range from $52.00 to $58.00 on 2,705 head reported sold.

The National Pork Plant Report reported 149 loads selling with prices adding $0.47 per cwt. Lean hog index for 10/10 is at $58.32 up $1.21 with a projected two-day index of $59.12, up 0.80.

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Ernst Undesser
By Rick Kment DTN Analyst October 12, 2017