DTN Midday Livestock Comments 12/01 11:47
Cattle Futures Follow Feeder Cattle Prices Lower
Active pressure Friday in all feeder cattle futures has created a weaker
tone through the livestock market. Early month trade has taken a negative tone
with $3 to $4 per cwt losses holding across the feeder cattle complex.
The month of December is starting where November left off, with cattle
futures shifting lower as limited end of the week activity is further eroding
the gains seen earlier in the week. Live cattle and feeder cattle futures
remain above multi-month lows seen Monday, but the quick and aggressive
pullback from midweek gains is creating some additional concerns about the
ability for current support levels to hold over the next few trading sessions.
Hog futures are mixed a moderate trading range with nearby futures holding
losses of nearly $1 per cwt at midday, although slight gains are still able to
hold in deferred contracts.
Very limited market direction is likely to be seen through the end of the
week in most lean hog trade, as traders look for additional pre-holiday market
shifts possible over the next couple of weeks. March corn is up 3 at $4.858 and
January soybean meal is down $8.80 at $415.2. The Dow Jones Industrial Average
is up 227.44 at 36,178.33.
Live cattle futures have posted additional firm losses Friday morning. The
fact that calendars rolled to the month of December did not change the overall
tone of market direction seen at the end of November. February futures, which
are the most actively traded contract in the live cattle complex, has fallen
nearly $3 per cwt over the past two trading sessions.
Although prices are still hovering above support levels and multi-month lows
set earlier in the week, concerns that limited renewed support in both
fundamental buying interest and technical trade could revert to additional
follow through losses during early December.
Feeder cattle futures continue to be a significant driver in the live cattle
complex at the end of the week, as traders remain concerned of the extreme
volatility in nearby feeder cattle contracts. Cash cattle markets remain quiet
Friday morning. Although some additional trade is likely to be seen before the
end of the week, it is uncertain just how much additional price movements will
develop during the day Friday. Trade trickled in through most of the week with
light and scattered trade seen in most areas over the past four days. Southern
trade posted prices from $171 to $175 per cwt, mostly $174 to $175 per cwt,
which is generally $2 to $3 per cwt lower than last week's average. Northern
dressed trade developed at $275 per cwt, $4 per cwt under last week's weighted
average. Some minor price shifts may develop, but the tone of the market is
expected to remain weak.
At this point, feeders are hoping for some stability heading into the first
couple weeks of December. December live cattle are $0.80 lower at $170.075,
February live cattle are $1.38 lower at $170.45, April live cattle are $1.60
lower at $172.825. Boxed beef prices are mixed: choice down $1.00 ($298.02) and
select up $1.16 ($265.91) with a movement of 115.24 loads (78.08 loads of
choice, 9.60 loads of select, zero loads of trim and 27.56 loads of ground
Feeder cattle are sharply lower once again Friday morning with $3 to $4 per
cwt losses holding at midday. The aggressive early month pressure in the
complex is creating additional concerns that early week support levels set
Monday may not be able to hold unless renewed buyer interest develops over the
upcoming days. Very little has changed in market fundamentals over the last
week, but the concern that current cattle on feed and additional cattle still
need to be placed may limit long-term support if overall beef demand does not
meet or exceed expectations. This could keep feeder cattle futures moving in a
volatile but weaker pattern through the near future and add to market
uncertainty in all cattle markets.
January feeders are $3.38 lower at $216.575, March feeders are $3.75 lower
at $218.825 and April feeders are $3.95 lower at $222.725.
Lean hog futures have remained mixed during morning trade with moderate
pressure in nearby contracts offset by fractional gains in lightly traded
deferred contracts. The weakness sweeping through cattle markets is having an
impact on nearby lean hog futures due to overall trader activity. Traders are
also focusing on potential moves in both cash hog values and pork prices up to
and through the holidays, as this may have a longer-term direction on trade
interest, especially in spot month contracts. December lean hogs closed steady,
February lean hogs are $0.78 lower at $70.70 and April lean hogs are $0.43
lower at $76.925.
Hog Prices are lower on the Daily Direct Morning Hog report, down $2.97 with
a weighted average of $56.79, ranging from $52.00 to $62.00 on 2,259 head with
a five-day rolling average of $59.81. Pork Cutouts totaled 198.99 loads with
179.53 loads of pork cuts and 19.46 loads of trim. Pork cutout values are down
$3.13 at $81.15.
Rick Kment can be reached at firstname.lastname@example.org
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