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DTN Midday Livestock Comments 02/15 12:00
Sharp Losses Sweep Through Feeder Cattle
Limited buying is slowly stepping into live cattle and feeder cattle trade
midday Thursday. This is creating additional market support through the entire
complex.
By Rick Kment
DTN Analyst
General Comments
Strong market pressure has quickly flooded into feeder cattle markets, which
is affecting the movement and direction of live cattle trade. Hog futures are
firming based on short covering at the end of the week. Corn markets are lower
in light trade. March corn futures are 1 3/4 cents lower. Stock markets are
higher in light trade. Dow Jones is 347 points higher with Nasdaq up 26 points.
LIVE CATTLE:
Firm pressure developed Friday morning through the complex with traders
looking for increased underlying pressure in feeder cattle trade. The strength
in beef values at the end of the week is being overlooked by traders attention
to triple-digit losses in these feeder cattle futures. Limited direction is
expected through the rest of the complex with traders looking for additional
outside market shifts. Cash cattle trade still remains quiet although bids are
becoming more evident through the morning. Bids are holding at $122 live in the
North and South, while dressed bids are developing at $198 to $199 per cwt.
This is still a long ways from asking prices, and unlikely to gain interested
sellers at this point. Asking prices remain at $126 to $127 live and $202 to
$204 dressed. It may be late afternoon before deals are made. Cattle are priced
at $126 to $127 per cwt, while dressed prices are listed at $203 to $205 per
cwt. Boxed Beef cut-outs at midday are higher, $1.09 higher (select) and up
$0.87 per cwt (choice) with light movement of 58 total loads reported (35 loads
of choice cuts, 5 loads of select cuts, 4 loads of trimmings, 14 loads of
ground beef).
FEEDER CATTLE:
Triple-digit losses have quickly expanded Friday morning as traders focus on
uncertainty in the grain markets and the growing expectations that a deal will
develop with China. Any grain market deal with China will be bearish for feeder
cattle on a short-term basis at least, as this will likely increase production
costs in the entire cattle complex. Even though nearby futures have backed away
from session lows, the potential to break below February lows is adding
weakness to the complex.
LEAN HOGS:
End-of-week short covering has been the main agenda of traders which
continue to focus on bearish fundamentals, but are covering positions at the
end of the week. With trade closed Monday for Presidents day, the focus on
maintaining recent support levels is sparking renewed buyer interest in nearby
trade. Nearby futures are holding 30 to 60 cent gains, while narrowly mixed
moves in deferred trade is keeping additional volume on the sidelines. Cash
prices are unreported on the National Direct morning cash hog report. Cash
prices unreported on the Iowa/Minnesota Direct morning cash hog report. Pork
carcass values rallied higher on the morning report with prices adding $2.08
per cwt at $64.84 per cwt with 177 loads traded. Lean hog index for 2/13 is
$55.24, down $0.31, with a projected two-day index is delayed due to packer
submission problems.
Rick Kment can be reached at rick.kment@dtn.com
(CZ)
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