DTN Midday Livestock Comments 02/23 11:58
Strong Live Cattle Gains Redevelop in February Contracts
February live cattle futures have posted sharp triple-digit gains Thursday
morning. The cash market gains Wednesday is bringing additional buyer interest
in front-month futures. Lean hog futures remain under pressure as traders are
looking for the potential to bring a sense of stability to the weakened
By Rick Kment
Market shifts in both cattle and hog futures continue to create wide ranging
market shifts through the complex. February live cattle trade remains sharply
higher following steady buyer support in front month contracts. Triple-digit
losses have developed in all but one lean hog contract, leaving additional
pressure to develop through the complex. Corn prices are lower in light trade.
March corn futures are 4 cents lower. Stock markets are mixed in light trade.
The Dow Jones is 56 points higher while Nasdaq is down 26 points.
Sharp gains continue to hold in front-month February futures which has
pushed contract prices to $122.75 per cwt at midday. February contracts are the
only contract month to hold a triple-digit rally at this point, with buyer
support quickly evaporating through the rest of the market. Even though April
and June contracts are holding firm gains, trade in deferred contracts is mixed
from 2 cents lower to 25 cents higher, creating longer-term market uncertainty
in the complex. February futures expire next week, but the volatility in the
front-month contract continues to spark additional market interest for the time
being. Cash cattle activity is quiet through the morning and likely done for
the week in most areas. There is the potential for some clean up trade to
develop, especially in the North through the end of the week, but prices are
expected to have already been set, with very little market development expected
from here on out. With prices $5 to $6 per cwt higher than last week's levels,
and active trade seen in all areas Wednesday, any movement in market shifts are
likely to be minimal. Beef cut-outs at midday are higher, $1.73 higher (select)
and up $1.58 per cwt (choice) with moderate movement of 86 total loads reported
(52 loads of choice cuts, 7 loads of select cuts, 10 loads of trimmings, 17
loads of ground beef).
Feeder cattle futures have been surprisingly unaffected by the aggressive
market surge in live cattle futures over the last couple of trading sessions.
Feeder cattle futures remain mixed in a narrow trading range from 10 cents
lower to 22 cents higher. The overall lack of direction and recent stability in
the feeder cattle market is focusing more on the lack of market shifts in
deferred live cattle trade and the ability to bring additional trader volume to
the complex through the next several months.
Strong triple-digit losses have redeveloped across the lean hog futures
complex. The aggressive pressure in the market has been most evident in front
month April futures with losses seen at $1.40 per cwt. This has pushed prices
to $66.32 per cwt as traders continue to remain concerned about the underlying
support in the pork market. All contracts except February futures have posted
losses over $1 per cwt at midday, which may spark additional liquidation
through the end of the week. Cash prices are lower on the National Direct
morning cash hog report. The weighted average price fell $1.25 at $71.14 per
cwt with the range from $65.00 to $72.00 on 3,793 head reported sold. Cash
prices are unreported due to confidentiality on the Iowa Minnesota Direct
morning cash hog report. The National Pork Plant Report reported 166 loads
selling with prices up $2.19 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 email@example.com
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