DTN Midday Livestock Comments 09/23 12:08
Cattle Futures Implode at Midday
Live and feeder futures are sharply lower near the top of the noon hour,
unexpectedly hammered by aggressive long liquidation and technical selling. For
the most part, lean hog contacts are moderately lower, though nearby issues are
holding up better than deferred.
By John Harrington
Shocked by the crashing board, cattle buyers and sellers seem almost
paralyzed at midday, even though WTD trade volume totals are virtually zero. We
have seen a few cautious bids are $106-107 in the South and $166-168 in the
North. Late-week asking prices are equally tentative with a few cattle priced
around $112-plus in the South and $172-plus in the North. We have seen a few
scattered dressed deals in Nebraska marked at $168, roughly $2 lower than last
week. The cash trade may not fully develop until late this afternoon, sometime
after the close of futures and the release of the on feed report. According to
the midday report, the national hog base is $1.33 lower compared with the Prior
Day settlement ($47.00-51.00, weighted average $49.94). The corn market is
several cents lower just before the noon hour, pressured by harvest activity
and sharply lower bean prices. U.S. stocks are tracking lower, checked by
sharply lower oil prices. Near midday the Dow is 65 points in the red with the
Nasdaq off 13.
Anyone who thought the cattle board would put in a quiet session before the
development of cash news and the release of the on feed report were sadly
mistaken. Prices have been collapsing this morning and remain 225 to 272 points
lower at midday. Spot October are back challenging the bullish gap created on
September 10. A weekly close below 104.40 would be very troubling. The
late-week crash seems to be fueled by technical selling and nervousness about
total meat supplies through the fourth quarter. Beef cut-outs are lower at
midday, off 0.20 (choice, $187.17) to 0.31 (select, $179.31) with light to
moderate box movement (40 loads of choice cuts, 22 loads of select cuts, 16
loads of trimmings, 12 loads of coarse grinds).
Feeders are plunging lower at midday along with their live counterparts.
Prices are currently off 160 to 390. As feedlot profit potential looks more and
more remote, feeder issues simply look more and more overpriced by commercials.
Lean hog issues are moderately lower in late morning business with prices
off mostly 20 to 75 lower. We suspect that some late-week short covering/profit
taking is working to minimize losses as of this writing. Spillover selling from
the cattle complex could take more prisoners here as we move toward the close.
The carcass value is under pressure at midday with all primals struggling
except the ham and picnic. Pork cut-out: $77.27, off 0.80. CME cash lean index
for 09/21: 60.48, off 0.48 (DTN Projected lean index for 09/22: 59.88, off
John A. Harrington
Copyright 2016 DTN/The Progressive Farmer. All rights reserved.
No other Daily email offers as much useful Ag information as DTN Snapshot – Sign up