DTN Livestock Midday: Cattle Futures Rally Higher

©Debra L Ferguson Stock Photography

Grain market weakness has quickly adjusted trader activity through the cattle market with buyers moving back into the market as prices are holding firm support. Hog futures have pulled off of session lows, but still remain weaker late Thursday morning.

General Comments

Firm gains have developed in live cattle trade midday Thursday. Traders are closely focusing on outside market direction and the recent moves lower in grain trade. Hog futures are still under pressure following a pullback from midweek gains.

Corn markets are lower following the USDA report. December corn futures are 4 cents lower. Stock markets are mixed in light trade. The Dow Jones is 48 points higher while Nasdaq is down 28 points.

LIVE CATTLE:

Light gains quickly developed midday in live cattle futures following moderate to strong pressure in grain trade following the morning release of the USDA supply and demand report. This has helped to build additional commercial buyer support through late morning with December through April contracts trading 40 to 55 cents per cwt higher.

Other markets are stuck in a narrow gain, although the shift from early losses is a positive move across the entire complex. Limited activity is expected to be seen over the next couple hours, which may limit price support.

Cash cattle markets are still quiet, although bids are redeveloping in the same range as seen midweek. Live bids at $112 are seen in Texas, while dressed bids of $180 have developed in Nebraska and Iowa. Asking prices remain firm at $118 live and $185 dressed, with feeders likely not to deviate from these levels until late in the week.

Boxed Beef cut-outs at midday are lower, $0.75 lower (select) and down $0.62 per cwt (choice) with light movement of 72 total loads reported (19 loads of choice cuts, 38 loads of select cuts, 4 loads of trimmings, 11 loads of ground beef).

FEEDER CATTLE:

Cattle futures have bounced back from early losses with gains now holding in most contract months. The bearish market response to the USDA supply and demand report has sparked some renewed buyer activity in all cattle trade. Moderate to strong losses are seen in the grain complex, which traders are taking as a slightly positive move to the livestock market based on overall lower production costs from feed prices.

January and March futures are leading the complex higher with 80 cent gains. This may help to solidify additional commercial buying over the next couple of days, although little is changing in overall beef fundamentals.

LEAN HOGS:

Moderate to firm pressure has continued to be seen through the entire lean hog complex as traders seem to be moving back and forth on a daily basis between active selling and buying. The firm pressure has offset most of the gains seen Wednesday, but given the tumble earlier in the week, the overall tone of the market remains weak.

December contracts remain 70 cents lower, although February futures are leading the complex lower with a $1.17 per cwt loss. This could allow for additional late day weakness to be seen through the entire complex.

Cash prices are lower on the National Direct morning cash hog report. The weighted average price is $1.06 lower at $54.43 per cwt with the range from $49.00 to $55.50 on 5,980 head reported sold.

Cash prices are lower on the Iowa/Minnesota Direct morning cash hog report. The weighted average price is $1.34 lower at $53.55 per cwt with the range from $49.00 to $55.50 on 375 head reported sold.

The National Pork Plant Report posted 197 loads selling on the morning report. Pork carcass values fell $1.21 per cwt at $71.54 per cwt. Lean hog index for 11/6 is at $63.72 down 0.28 with a projected two-day index of 63.38, down 0.34.

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