DTN Midday Livestock Comments 12/05 11:50
Cattle Markets Stabilize Midday Tuesday
Higher prices were a long overdue welcome in cattle trade Tuesday morning,
although the upward shift in prices is doing very little in regaining strong
market support that many had hoped for during early December. Hog futures have
retracted early week gains, but limited volume is keeping prices contained.
Strong early gains in feeder cattle futures has helped reduce the sting of
the sharp losses seen over the past three trading sessions. The underlying
movement of the market in the last several days has left the cattle complex
unsupported, but still fundamentally oversold, allowing for the current
volatility in the market.
After trading at the lowest price levels since last spring in nearby
contracts, prices feeder cattle prices have moved above last week's support
levels. The ability to sustain buyer support through the rest of the week will
be very important in helping to break the negative market cycle which has
pushed prices sharply lower in the last three months.
Live cattle futures remain higher, but the overall lack of support in beef
and cash cattle values may make it hard to stimulate active support in the near
term. Lean hog futures remain moderately lower with traders erasing early week
gains in most contract months. March corn is up 2 at $4.875 and January soybean
meal is up $4.60 at $412.9. The Dow Jones Industrial Average is down 108.63 at
Live cattle trade has sustained early positivity through the morning
Tuesday, although limited overall buyer support has been able or willing to
trickle into the complex at this point. Following the volatile up and down
shifts across the complex over the past few weeks, traders seem to need more
than a one-day price bounce before any significant underlying support develops
across the market.
February live cattle futures are leading the market higher with a 75 cent
per cwt gain, but this is still leaving markets near long-term support levels
in nearby contracts and very vulnerable to additional selling pressure through
the end of the week. The holiday season is quickly approaching, which may also
limit additional market support before the end of the year.
Cash cattle markets are silent with asking prices and bids unavailable at
this point. It is expected that trade will be delayed until midweek or later,
with the potential for a late week movement in cash cattle activity this week.
December live cattle are $0.88 higher at $168.125, February live cattle are
$0.80 higher at $167.875, April live cattle are $0.65 higher at $170.35. Boxed
beef prices are lower: choice down $0.91 ($294.08) and select down $4.19
($258.64) with a movement of 87.81 loads (43.66 loads of choice, 24.00 loads of
select, 10.28 loads of trim and 9.87 loads of ground beef).
Strong, triple-digit gains have aggressively moved into the feeder cattle
futures with spot January contracts holding gains above $4 per cwt at midday.
This is a welcome relief to the sharp losses seen over the past few days, but
just to move prices away from long-term support levels and multi-month lows is
still not able to create the needed confidence to spark further active buying
across the entire complex.
Traders are looking for the potential to bring additional buyer support back
into the market through the rest of the week, potentially distancing market
prices from current levels, and hopefully building technical support across the
January feeders are $3.70 higher at $214.225, March feeders are $3.60 higher
at $217.175 and April feeders are $3.65 higher at $221.075.
Lean hog futures have backed away from early week gains with moderate to
firm price pressure seen at midday. Nerby contracts are holding losses of $1
per cwt, while trades continue to focus on the recent softness in pork values
and erosion of cash hog values. December contracts remain under pressure, but
extremely lightly traded, with most focus on February futures. The ability to
keep February contracts at or near the $70 per cwt price level seems to be the
key to technical support through nearby lean hog futures contracts. Limited
volume is expected to be seen in the near future, which may limit additional
market movement not only the rest of Tuesday, but through much of the week.
December lean hogs are $1.05 lower at $67., February lean hogs are $1.18
lower at $69.625 and April lean hogs are $1.30 lower at $76.25.
Hog Prices are lower on the Daily Direct Morning Hog report, down $2.26 with
a weighted average of $53.96, ranging from $48.00 to $57.00 on 4,398 head with
a five-day rolling average of $57.16. Pork Cutouts totaled 213.54 loads with
189.91 loads of pork cuts and 23.63 loads of trim. Pork cutout values are up
$1.38 at $84.23.
Rick Kment can be reached at email@example.com
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