DTN Midday Livestock Comments 06/19 11:55
Hog Post Gains on Trade Hopes
Lean hog futures remain firmly higher Wednesday morning as traders place
renewed hope on the expected trade talks with China next week. Cattle markets
remain sluggish as pressure developed within a narrow to moderate range.
By Rick Kment
Mixed trade continues Wednesday morning in livestock trade as futures have
deviated from early narrow moves. Moderate to firm support has slowly moved
into lean hog trade based on hopes and expectations of renewed trade talks next
week between the U.S. and China. Cattle markets have eroded on previous
fundamental softness, while lower corn prices have had a minimal impact on
feeder cattle trade Wednesday morning. Corn futures are lower in moderate
trade. July corn futures are 8 cents lower. Stock markets are mixed in light
trade. Dow Jones is 13 points higher with NASDAQ down 4 points.
Firm late-morning pressure is seen in live cattle trade with futures holding
20 to 50 cent losses at midday. The softness in grain trade is limiting overall
market activity, but pressure quickly developed, based on concerns that beef
values may continue to erode through the week. Even though June futures remain
lightly traded, the softness in spot trade is creating spillover weakness in
most contracts. Traders are also taking advantage of limited volume, in order
to square positions following moderate gains seen early in the week. Live
cattle futures continue to remain stuck within a $5 per cwt trading range.
There seems little interest or outside market influences developing which would
spark a wide move in live cattle futures in order to break prices out of the
current market range. Cash cattle bids have redeveloped through the morning at
$109 live and $81 per cwt dressed. Even though these bids remain well below
asking prices, dressed bids have improved significantly from levels seen
Tuesday. Asking prices remain firm at $112 to $115 live and $185 and higher
dressed. At this point there seems very little urgency in getting deals done,
which will likely push actual trade off until Wednesday or later. Boxed Beef
cut-outs at midday are higher, $1.69 higher (select) and up $1.39 per cwt
(choice) with active movement of 106 total loads reported (61 loads of choice
cuts, 19 loads of select cuts, 7 loads of trimmings, 18 loads of ground beef).
Narrow price shifts have developed Wednesday morning was prices have shifted
higher and lower at different points through the morning. Currently prices are
mixed from 40 cents lower to 45 cents higher as pressure in nearby contracts is
being directed by softness in live cattle trade. The softness in grain trade
and potential that traders may now have a good handle on the amount of grain
production lost this year due to wet weather and late planting is helping to
bring buyers back into fall and winter contract months. Narrow trading ranges
are seen nearby futures, although the recent moves is starting to slightly
expand price premiums for fall contracts, which was essentially not existent
over the last week.
Strong gains have developed Wednesday morning in nearby lean hog trade as
traders continue to focus on potential support surrounding the announcement
that trade talks may develop with China at the G-20 Summit next week. This is
helping to bring additional short term support, based more on the hope that
progress is achieved in trade talks rather than any actual developments seen.
August futures are leading the complex with $1.10 per cwt gains as traders
continue to move prices away from long term lows set last week. Cash prices are
lower on the National Direct morning cash hog report. The weighted average
price is down $1.04 at $74.66 per cwt with the range from $67 to $75.14 on
2,843 head reported sold. Cash prices are unreported due to confidentiality on
the Iowa/Minnesota Direct morning cash hog report. Pork values slipped lower
following mixed triple digit swings in most primals. Pork cutouts fell $0.80
per cwt at $80.35 per cwt with 147 loads traded. Lean hog index for 6/17 is
$79.26, down 0.01, with a projected two-day index is unavailable due to delays.
Rick Kment can be reached at firstname.lastname@example.org
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