DTN Midday Livestock Comments 05/17 11:38
Cattle Futures Extend Weekly Gains
Strong buyer support has quickly moved through live cattle trade with triple
digit gains in both live cattle and feeder cattle holding markets higher.
By Rick Kment
Strong underlying support has redeveloped through the live cattle and feeder
cattle complex with end-of-week support moving into the complex. Limited volume
is seen, which will create uncertainty about the ability to sustain follow
through gains early next week. Hog futures are hovering in a narrowly mixed
trade range through the morning, as traders cover positions late Friday. Corn
futures are higher in active trade. July corn futures are 3 1/2 cents higher.
Stock markets are lower in light trade. Dow Jones is 12 points lower with
Nasdaq down 30 points.
Live cattle futures have bounced off early pressure as prices are mixed
within a narrow range. Traders are moving away from strong pressure in feeder
cattle with the focus moving more toward moderate to strong upcoming demand.
The fact that hog futures have bounced back from sharp losses early in the
session has helped bring spillover buying back to the live cattle trade. Even
though prices are not expected to show significant support over the near
future, the ability to remain steady to higher will be a significant moral
victory to the complex. Cash cattle trade appears to be finished through the
South, although some additional live and dressed trade may develop in the
North. It is likely that price levels have already been set by the amount of
trade seen over the last two days. Dressed trade developed at $184 to $186,
mostly $185 per cwt, $7 per cwt lower than last week. Live trade was seen
mostly $117, $3 per cwt lower than last week. A few dressed bids are seen in
Nebraska at $186 per cwt, which may spark limited end of the week trade. Boxed
Beef cut-outs at midday are unreported due to delayed reporting.
Strong follow-through buyer support is quickly and aggressively moving into
the oversold cattle complex as traders continue to move prices off of long-term
contract lows. Even though corn prices have continued to move higher, traders
are focusing on current feeder cattle market support levels as $142.25 per cwt
in August contacts as potential long-term support levels due to still strong
demand expectations. Triple-digit gains are seen in all but lightly traded May
contracts, allowing for increased overall buyer momentum to develop through the
Lack of trade volume in the complex has continued to spark additional market
softness Friday morning with traders slowly covering gains earlier in the week.
Mixed trade within a narrow range that was seen through most of the morning has
now shifted lower with prices steady to 60 cents lower. Most contracts are
holding losses of 20 to 30 cents per cwt. The recent gains have sparked
moderate to solid buyer support through the entire complex, allowing for
expectations of follow-through support in the coming days. Even though the
trade war with China continues to heighten, the focus on supplying pork to
global markets will continue to underpin world and domestic price levels. Cash
prices are unavailable due to report delays. Pork values inched higher as rib
cuts slowly regained a portion of Thursday's losses. Pork cutouts added $0.14
per cwt at $86.27 per cwt with 108 loads traded. Lean hog index for 5/15 is
$84.20 up 0.53, with a projected two-day index is unreported due to report
Rick Kment can be reached at firstname.lastname@example.org
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