DTN Midday Livestock Comments 07/16 12:17
Cattle Under Pressure
Live cattle futures may have hit a plateau, which may be threatening the
uptrend. August futures opened slightly higher than Monday, then turned lower
and have not looked back. Selling may stem from the overbought status of the
market. There was hope for higher cash trade this week, but softening futures
could jeopardize that idea.
By Robin Schmahl
DTN Contributing Analyst
Spread trading continues to take place between the August and later hog
futures contracts. The action today could solidify the idea that the bottom
could be in for hog futures. Corn futures are again under pressure with
September down 9 cents. The Dow is down 31 points while the NASDAQ is down 22
Futures are under pressure, but seem to be holding well. The market seems to
be at a threshold for the time being likely waiting to see if higher cash
trading will develop and cut-outs will trend higher. There may not be too much
to push the market one way for the other prior to cash trading and the cattle
on feed report on Friday. Cash cattle is still in the early stages of seeing
who will blink first. Bids remain steady to higher at $112 to $113 with dressed
bids at $184 to $186. Offers are $114 with dressed at $188. Boxed beef cut-outs
were higher with choice up $0.64 per cwt and select up $1.09 per cwt. There
were a total of 66 loads reported (32 loads of choice cuts, 19 loads of select
cuts, 6 loads of trimmings, and 9 loads of ground beef.
Feeder cattle have been under pressure after a higher opening, however
August has climbed back near unchanged. The inability of live cattle to move
higher keeps some pressure on feeders. The feeder cattle index today is $140.46
compared to $141.08 yesterday.
Spread trading continues between August and later contracts. August is down
about $0.70 while October is up nearly $1.00 with later contracts posting
higher gains. There is renewed hope China will purchase U.S. pork soon due to
significantly higher prices in the country. U.S. pork production seems to be
decreasing and expected to be 2-3 percent above last year declining from the
previous pace of 6-8 percent. Cash prices are lower on the National Dairy
Direct morning report. Cash is reported $1.10 lower with a weighted average
price of $67.51 and a range of $57.00 to $71.00. The National Pork Plant report
posted 234 loads selling 221 loads of cuts and 13 loads of trim/process.
Carcass value increased $1.86 per cwt at $74.76 per cwt. The lean hog index for
7/12 at 70.73, unchanged from the previous day with a projected 2-day index of
$70.62, down $0.11.
Robin Schmahl can be reached at: firstname.lastname@example.org
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