DTN Midday Livestock Comments 10/30 11:49
Sharp Losses Develop in Hog Futures
Lean hog futures have tumbled lower Thursday morning as continued
fundamental market weakness is creating concerns about just how much additional
support will be seen in the overall hog complex through the end of the year.
Cattle markets remain mixed in a narrow range at midday.
By Rick Kment
DTN Livestock Analyst
Sharp losses have developed through lean hog futures trade through the
morning Thursday. Strong triple-digit losses are seen in nearly all nearby
contracts, as weaker cash hog and pork values once again raise questions about
how much additional support can be developed given growing supplies. Cattle
futures are mixed in a generally narrow range as traders continue to focus on
the ability to maintain overall demand at current price levels. Corn prices are
lower in light trade. December corn futures are 1/2 cent per bushel lower.
Stock markets are higher in light trade. The Dow Jones is 155 points higher
while Nasdaq is up 2 points.
Movement in live cattle trade has been all over the place through the
morning Thursday. This is creating both a sense of stability given that prices
are unable to move significantly in any direction, but it is also creating a
lot of nervousness as traders are waiting for the "next big market break" to
develop. At midday, contracts are trading slightly higher in nearby contracts,
while deferred pressure is creating concerns about future market softness. This
back and forth through the complex could continue to be seen through the end of
the session. Cash cattle trade is still at a standstill, although there are a
few bids developing in Kansas at $165 to $167 per cwt. But given the support
last week in the market, it is unlikely that anything less than steady will get
a second look before midday on Friday. Asking prices continue to hold at $172
and higher in the South and $270 and higher in the North. But given the latest
market surges, it is uncertain just how aggressively to price cattle at this
point. Beef cut-outs at midday are lower, $0.03 per cwt lower (select) and down
$0.02 per cwt (choice) with moderate movement of 95 total loads reported (41
loads of choice cuts, 24 loads of select cuts, 21 load of trimmings, eight
loads of ground beef).
Initial support in the feeder cattle market and cattle complex in general
was short lived Thursday morning. Front month October contracts are still able
to hold a strong gain of 75 cents per cwt, based on initial support and lack of
additional volume seen through the complex. But the rest of the complex remains
under significant pressure as momentum seems to be fading quickly. Even with
this latest round of pressure it is still premature to dig the cattle market a
grave, as we have seen the market come back from what was thought to be a
certain demise several times over the last few months, only to draw more
attention and push prices even higher.
Strong pressure is redeveloping across lean hog futures trade Thursday
morning as any stability seen in nearby prices has quickly eroded. December
contracts are leading the plunge lower with losses hovering around the $2 per
cwt loss at midday. The additional weakness in both the cash and pork cutout
markets should be no surprise to futures traders, but there is little long-term
support expected to redevelop over the near future which could help to give
support to both nearby and deferred price levels. Cash prices are unreported
due to confidentiality on the Iowa Minnesota Direct morning cash hog report.
The National Pork Plant Report is reported 208 loads selling as prices falling
$1.45 per cwt. Lean hog index for 10/28 is at $94.61 down 1.98, with a
projected two-day index of $93.03 down 1.58.
Rick Kment can be reached at firstname.lastname@example.org
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