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DTN Livestock Midday: Hog Futures Give Back Early Gains

Ernst Undesser
By Rick Kment DTN Analyst November 17, 2017

DTN Livestock Midday: Hog Futures Give Back Early Gains

The aggressive early support seen across lean hog futures has allowed for increased market uncertainty through the complex. Mixed trade is holding in narrow ranges across hog futures. Cattle markets continue to remain sharply lower in feeder cattle, limiting any interest from developing in live cattle trade.

GENERAL COMMENTS:

Aggressive pressure continues to hold across feeder cattle trade. This may spark additional buyer interest in the market, late in the session, but buyers seem to be willing to hold out until next week at this point. Lean hog futures are mixed at midday after giving back early gains which gave increased promise to the market. The overall light trade volume in the market is a major draw for the hog complex.

Corn prices are higher in light trade. December corn futures are 4 cents per bushel higher. Stock markets are mixed in light trade. The Dow Jones is 87 points lower while Nasdaq is up 2 points.

LIVE CATTLE:

Losses in live cattle futures have remained sluggish with traders focusing on the sharp triple-digit losses in the feeder cattle market. This is due mostly to the overall lack of trade activity at the end of the week. With no significant direction detected in cash markets late in the week, traders are focusing on outside market shifts. This could spark additional long-term market direction through the complex.

Cash cattle trade appears to be done for the week with no active bids developing through the morning. The moderate to active trade seen earlier in the week $2 to $4 per cwt lower than last week’s levels has met most packer’s needs for now. It is still possible that a few cleanup sales may develop late in the day, but with the downward pressure in prices, most feeders are expected to hold off until next week.

Beef cut-outs at midday are mixed, $1.04 higher (select) and down $1.68 per cwt (choice) with moderate movement of 76 total loads reported (34 loads of choice cuts, 22 loads of select cuts, 9 loads of trimmings, 11 loads of ground beef).

FEEDER CATTLE:

Sharp losses have quickly flooded into the market Friday morning with triple-digit pressure developing just after opening bell. This has sparked additional long term pressure to develop through the complex. Traders are holding $1.50 to $1.70 per cwt losses as traders continue to shift lower and liquidate positions at the end of the week. The overall concern that strong pressure may continue through the Thanksgiving season is bringing additional sellers to the market.

LEAN HOGS:

Light trade has continued to be seen through the morning Friday. This is limiting overall market direction following a pull back from sharp triple digit gains seen early in the trading day.

Nearby contracts continue to hold a narrow gain of 10 to 30 cents per cwt while deferred futures are trading lower in the same price ranges. Sluggish market activity is expected to be seen through the end of the session, although the inability to hold early support is going to be viewed as generally bearish for the market.

Cash prices on the direct morning reports are unavailable at this time.

The National Pork Plant Report posted 133 loads selling with cutout values falling $0.07 per cwt. Lean hog index for 11/15 is at $69.97 down $0.40 with a projected two-day index of $65.42, down $0.55.

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Ernst Undesser
By Rick Kment DTN Analyst November 17, 2017