DTN Midday Livestock Comments 02/22 12:06
Wide Ranging Price Shifts Add Volatility to Livestock Trade
Cash cattle trade has started to develop through the morning with not only
sales seen on the Fed Cattle Exchange, but feedlot trade is reported in both
the North and South. Sharp triple-digit gains seen in live cattle trade is
being offset by sharp triple-digit losses across the lean hog complex.
By Rick Kment
Triple-digit price shifts have quickly overcome the livestock complex
Wednesday morning. Triple-digit gains seen in nearby live cattle futures have
pushed front-month February futures over $2.50 per cwt higher based on
fundamental support. The lean hog futures complex on the other hand is seeing
triple-digit losses in all 2017 contracts as traders are quickly backing away
from previous support that has developed through the month of February. Corn
prices are steady to higher in light trade. March corn futures are 1 1/2 cent
higher. Stock markets are mixed in light trade. The Dow Jones is 16 points
higher while Nasdaq is down 6 points.
Strong commercial support is flooding back into the live cattle complex with
prices in front month February contracts quickly surging to triple-digit gains
during the morning. Currently front month futures are holding a $2.60 per cwt
rally. This support comes as a combination of follow-through support developed
Tuesday as well as firming cash and boxed beef values. April futures are also
holding triple-digit gains, although the significantly larger open interest in
April contracts is limiting the overall price volatility to a degree. February
futures are trading at $121.70 per cwt, with April contracts nearing $117 per
cwt at midday. Cash cattle trade is starting to develop late Wednesday morning
in with both the Fed Cattle Exchange trading and feedlot trade starting to
develop. Feedlot trade is reported at $125 live basis and $195 dressed basis.
Although at this point trade remains extremely light, prices are $5 to $6 per
cwt higher from last week's level giving the indication of continued support
through the upcoming days. The Fed Cattle Exchange Auction report today listed
a total of 3,350 head, with 3,065 actually sold, and 285 head listed as unsold.
The state by state breakdown looks like this: KS 378 head at $122.50-$123.00;
NE 1,890 head at $120.00-$123.25; TX 797 head, at $121.25-$124.50; CO no test;
IA no test; other states no test. The weighted average was $122.10, up from
last week's weighted average of $119.04. Beef cut-outs at midday are higher,
$0.60 higher (select) and up $2.37 per cwt (choice) with moderate movement of
96 total loads reported (64 loads of choice cuts, 16 loads of select cuts, no
loads of trimmings, 16 loads of ground beef).
Light gains are holding across the feeder cattle market at midday despite
the aggressive underlying support seen in live cattle markets. This support
from live cattle trade has pushed prices back to the positive level for the
day, but with overall lack of strong longer-term buyer support and uncertainty
as to how the end-of-week release of the cattle on feed report will affect
placements, most traders remain cautious. Front-month March futures are holding
a 22 cent gain, with the full range of the market seen from 20 to 50 cents per
cwt higher through the morning.
Lean hog futures are holding sharp triple-digit losses as sellers quickly
moved into both nearby and deferred contract months. Front month April futures
are holding the most aggressive pressure, with losses seen at $2.17 per cwt
through late morning. All contracts through February 2018 are now holding
triple digit losses with traders not only concerned about further liquidation
through the futures trade, but also recent weakness seen in cash and wholesale
pork values. Cash prices are lower on the National Direct morning cash hog
report. The weighted average price fell $1.11 at $71.63 per cwt with the range
from $66.00 to $74.00 on 3,919 head reported sold. Cash prices are lower on the
Iowa Minnesota Direct morning cash hog report. The weighted average price fell
$0.64 at $72.91 per cwt with the range from $66.00 to $74.00 on 1,079 head
reported sold. The National Pork Plant Report reported 225 loads selling with
prices down $1.48 per cwt. Lean hog index for 2/20 is at $77.24 up $0.17 with a
projected two-day index of $77.64 up $0.40.
Rick Kment can be reached at firstname.lastname@example.org
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