DTN Midday Livestock Comments 10/31 11:59
Live Cattle Contracts Shift Lower
Aggressive triple digit-losses have quickly flooded into the live cattle
futures market as traders focus on end-of-month positioning while beef values
and cash cattle prices are disappointing at the end of the week.
By Rick Kment
DTN Livestock Analyst
Sharp losses have developed in live cattle futures through midmorning
Friday. The lack of follow-through buyer support after hitting new record highs
late in the month is creating moderate to active pressure through the rest of
the complex. Weakness in nearby live cattle futures has put additional pressure
on feeder cattle contracts. Corn prices are lower in light trade. December corn
futures are 3 cents per bushel lower. Stock markets are higher in light trade.
The Dow Jones is 165 points higher while Nasdaq is up 56 points.
Triple-digit losses are holding in the December and February live cattle
futures at midday following a sharp turnaround seen through the morning. The
lack of early support in cash cattle trade quickly created a change of thinking
in nearby and deferred live cattle futures. End-of-month positioning is also
taking place at the end of the session Friday following traders backing away
from record high prices. Cash cattle trade is starting to develop through the
South Friday morning with light trade seen in Kansas at $168 per cwt. This
would be generally $1 per cwt lower than last week, but could be based on
positive basis opportunities for hedged cattle. Bids are developing from $167
to $168 per cwt in the South and $263 to $265 in the North. It may be after
markets close before active trade develops in other areas. Asking prices
continue to hold at $172 and higher in the South and $270 and higher in the
North. Beef cut-outs at midday are lower, $0.24 per cwt lower (select) and down
$1.58 per cwt (choice) with light movement of 74 total loads reported (40 loads
of choice cuts, 14 loads of select cuts, nine loads of trimmings, 11 loads of
Feeder cattle futures have fallen sharply since early-morning trade as
weakness in live cattle futures created a significant pullback in nearby feeder
cattle futures. After setting session highs well above $236 per cwt, it appears
that a November close above $234 per cwt may be optimistic for the overall
complex. The feeder cattle market continues to be in an internal battle between
tight supplies and uncertain beef support through the end of the year. This
could keep prices moving in a wide range over the near future.
Lean hog futures prices remain mixed in a narrow trading range with front
month December and February contracts able to hold narrow gains of 20 to 35
cents per cwt. The lack of support through deferred contracts has created
narrow losses in 2015 contract months. Light trade is evident through the
entire complex, as traders seem to be willing to carry current price levels
into November. Cash prices are unreported due to confidentiality on the Iowa
Minnesota Direct morning cash hog report. The National Pork Plant Report is
reported 152 loads selling as prices falling $0.91 per cwt. Lean hog index for
10/28 is at $94.61 down 1.98, with a projected two-day index of $93.03 down
Rick Kment can be reached at email@example.com
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