DTN Closing Livestock Comment 01/17 15:29
Feeder Cattle Weaken
Sharp losses developed in nearby feeder cattle trade, sparking additional
softness through the entire cattle complex. This could lead to additional
liquidation through the next couple of weeks.
By Rick Kment
GENERAL COMMENTS: A bearish market tone swept through feeder cattle futures
trade Thursday, which have been struggling to keep up with the strong moves in
the live cattle complex all week. January feeder cattle futures posted
aggressive triple-digit losses, sparking underlying pressure in all cattle
trade. Hog markets tried to stabilize Thursday, although most contracts eroded
late in the trading session. Cash cattle activity remains in slow gear with
just a few bids redeveloping at $197 dressed basis in Nebraska. Asking prices
are more evident, but getting little to no attention at this point. Cattle are
prices at $128 and higher live, and $200 to $203 dressed. Trade is expected to
hold off until Friday at this point. According to the closing report, the
national hog base is $0.33 lower ($46-$53, weighted average of $51.44). Corn
futures are higher in light activity. March futures were 6 cents higher. Dow
Jones Index is 142 points higher with Nasdaq up 44 points.
LIVE CATTLE: Pressure developed in live cattle trade following sharp
triple-digit losses in feeder cattle markets. Futures closed $0.40 to $0.82
lower. The turnaround from sharp gains early in the week was swift and
aggressive as futures posted moderate-to-strong losses. Fundamentally and
technically, the live cattle complex remains firm, although traders took this
opportunity to square positions and post a market correction due to the
aggressive downward shift in feeder cattle trade. Without renewed support in
feeder cattle over the next couple of weeks, it is going to be extremely hard
to build regain buyer support through the live cattle complex, even though beef
values and cash markets may remain firm. Beef cut-outs: higher, up $0.70
(select, $207.64) to up $0.57 (choice, $212.50) with good demand and light
offerings, 129 loads (55 loads of choice cuts, 25 loads of select cuts, 8 load
of trimmings, 41 loads of coarse grinds).
FRIDAY'S CASH CATTLE CALL: Steady. It appears that late-week trade will once
again be in store for traders on Friday. Limited interest earlier in the week
may leave activity sluggish for the week. Asking prices are expected to
redevelop at $128 to $130 live and $200 and higher dressed.
FEEDER CATTLE: Sharp losses flooded into feeder cattle trade, setting the
tone for weakness through the entire cattle complex (0.72 to $2.35 lower).
Triple-digit losses developed across the entire complex most of the session
with front-month January futures leading the complex lower, and holding losses
near $2.50 per cwt through most of the session. Even though losses eased at the
end of the trading day, a bearish tone seen in feeder cattle futures as
spot-month contract moved through support levels is adding to the softness in
all cattle trade. CME cash feeder index for 1/16 is $143.09, down $1.10.
LEAN HOGS: Mixed trade developed in lean hog complex, allowing for firm
pressure in most contracts. Futures closed mixed, $0.45 lower to $0.80 higher.
Mixed trade developed Thursday as a combination of follow-through selling
pressure and short-covering seemed to occupy traders' activities Thursday.
Following the aggressive market shift lower Wednesday in nearby contracts that
broke through short-term support levels, limited buyer interest stepped back
into February futures. Spring and summer contracts continue to show
follow-through market weakness as traders are trying to account for potential
demand softness through the summer months. Based on current hog supplies and
uncertainty when it comes to economic growth and trade agreements, traders are
becoming very cautious. Pork carcass values firmed on strong gains in picnic
and ham cuts, while light-to-moderate pressure was seen through other primal
cuts. Pork cutout values added $0.46 per cwt, moving to $70.10 per cwt on 350
loads. CME cash lean index for 1/15 is $58.18, up $0.16. DTN Projected lean
index for 1/16: $58.02 up $0.37.
FRIDAY'S CASH HOG CALL: Steady to $1 lower. Sluggish market direction is
seen at the end of the week with traders focusing on increased underlying
pressure likely to follow the lack of support in futures trade. Packers will
continue to try to beat weekend storms, which is likely to keep most bids
steady Friday morning. Friday plant runs are expected at 462,000 head. Saturday
runs are scheduled for 150,000 head, but are dependent on weather conditions.
Rick Kment can be reached at firstname.lastname@example.org
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