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DTN Midday Livestock Comments          10/26 11:51

   Cattle Futures Expand Gains Wednesday Morning 

   Firm gains develop across the cattle complex Wednesday morning as traders 
continue to focus on follow through support moving back into the market. Light 
activity is seen through lean hog markets, allowing prices to erode slightly in 
lean hog futures as traders adjust positions following sharp market shifts in 
the past week. 

By Rick Kment
DTN Analyst


   Firm support continues to quickly develop in nearby live cattle and feeder 
cattle futures. The firm support has broken through short term resistance 
levels and moved above October highs. Lean hog futures have started to erode 
due to light volume with nearby contracts holding light to moderate pressure at 
midday. Corn prices are higher in light trade. December corn futures are 5 
cents higher per bushel. Stock markets are mixed in light trade. The Dow Jones 
is 50 points higher while Nasdaq is down 21 points.


   Firm buyer support has stepped back into nearby live cattle futures late 
Wednesday morning as traders continue to focus on the oversold status of the 
complex. Lack of volume during early trade left markets generally unsupported 
and prices wandering in a narrow range and lower price range, but once initial 
pressure washed through the complex, buyer support quickly immerged, pushing 
prices 60 cents to $1 per cwt higher as traders continue to look at long term 
demand support and the potential that supplies may remain tight over the next 
several months. Cash cattle activity remains quiet although there are a few 
suggestions that cattle may be priced near $105 in the South and $162 and 
higher in the North. It has been hard to pinpoint feedlot managers' willingness 
to put their foot on base at this point given the support in futures trade and 
sliding scale that may be possible through the end of the week. Trade is 
expected to develop sometime Thursday or Friday and it may be quick to develop 
once activity starts. Beef cut-outs at midday are mixed $0.53 lower (select) 
and down $0.41 per cwt (choice) with active movement of 108 total loads 
reported (34 loads of choice cuts, 33 loads of select cuts, 15 load of 
trimmings, 26 loads of ground beef). 


   Strong midday support has stepped back into feeder cattle futures with 
November contracts leading the move higher with triple-digit gains. The ability 
to bring additional buyer support in the November contracts as prices are 
hovering near $124 per cwt is helping to focus on further tightness of supply 
through the end of the calendar year as traders remain focused on the ability 
to put more product into feed yards and the ability to potentially sustain 
demand long term. Volume through the morning Wednesday has remained light, 
although consistency through most of the morning has helped to bring firm buyer 
support back to the complex following price pressure Tuesday and sluggish early 
trade Wednesday morning. 


   Lack of buyer support redeveloping through the morning has allowed prices to 
move from single digit mixed trade early in the session to moderate losses 
through nearby contracts at midday. December through April contracts are 
holding 10 to 45 cent losses as traders are slowly backing away from the 
aggressive triple digit gains that have pushed prices over $3 per cwt higher in 
the last few days. At this point the move is considered nothing more than a 
market correction, but it is being watched closely by traders as it could 
quickly turn into something much more as previous market reversals have taken 
place in the recent past. The ability to stabilize market fundamentals over the 
near future will need to develop in order to sustain buyer support, and bring 
additional commercial interest back into the complex. Cash prices are lower on 
the National Direct morning cash hog report. The weighted average price fell 
$0.72 per cwt to $44.67 per cwt with the range from $43.50 to $46.00 on 5,795 
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 250 loads selling with prices slipping $0.11 per cwt. Lean hog index 
for 10/24 is at $51.67 down $0.18 with a projected two-day index of $51.70 up 

   Rick Kment can be reached at 


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