DTN Midday Livestock Comments          07/19 11:52

   Hog Futures Regain Momentum Friday Morning 

   Active support returned to lean hog trade Friday morning following 
lackluster interest during early trade. The focus on breaking out of recent 
sideways trends sparked renewed interest.

By Rick Kment
DTN Analyst

General Comments

   Wide market shifts in lean hog trade stole the spotlight Friday morning as 
buyers quickly and aggressively moved into nearby contracts. Firming cash 
values through the week and potential underlying fundamental support is helping 
to spark longer-term support. Cattle trade broke away from mixed early trade 
with light to moderate support holding. Corn futures are higher in light trade. 
September corn futures are 6 cents higher. Stock markets are higher in light 
trade. Dow Jones is 55 points higher with NASDAQ up 2 points. 

   LIVE CATTLE:

   Moderate buying support moved into deferred contracts as traders posted 60 
to 70 cent gains in 2020 contract months. Traders seem to expect neutral to 
slightly bullish numbers coming out of the cattle on feed and cattle inventory 
report. Although traditionally the July cattle inventory report tends to not 
affects markets significantly, the expectation that this report will show a 
pullback in breeding herd numbers is creating price support in deferred futures 
trade. This would indicate a change in long-term beef supplies over the next 
couple of years. Cattle on feed numbers are expected to remain nearly 2% above 
year-ago levels, with limited market impact expected at this point. Cash cattle 
markets are untraded Friday morning, leaving most to feel that needed cattle 
have already been bought for the week. A surprise in cattle on feed report 
numbers could bring about additional late-afternoon trade, but the tone is 
likely set for the week. Live bids of $111 in the South and $113 in the North 
remain on the table late morning. Boxed Beef cut-outs at midday are higher, 
$0.63 higher (select) and up $0.08 per cwt (choice) with light movement of 61 
total loads reported (30 loads of choice cuts, 11 loads of select cuts, no 
loads of trimmings, 20 loads of ground beef).

   FEEDER CATTLE:

   Limited but firm support is developing in feeder cattle trade. The strong 
push higher in corn trade is being overlooked at this point, as moderate gains 
of 55 to 85 cents per cwt are holding at midday. Given the weekend break ahead 
and potential that hot weather may hold through part of the weekend, there is 
starting to be some support based on weather conditions and the potential 
impact on cattle production. Although at this point, weather related buying is 
likely to be minimal, the ability to firm prices ahead of the weekend break is 
cautionary in nature. Traders also look for a reduction in cattle placed in 
feedyards during June. This is sparking some additional pre-report buying.

   LEAN HOGS: 

   Active gains have swiftly moved through nearby lean hog trade Friday 
morning. October futures continue to led the complex with a $2 rally late 
morning as with prices breaking through short-term resistance levels of $77.45 
set one month ago. The ability to hold above these prices levels at the end of 
the week is expected to spark renewed underlying support early next week, as 
technical support continues to develop. Firming fundamentals continue to 
develop late in the week, solidifying overall support through the complex. Cash 
prices are higher on the National Direct morning cash hog report. The weighted 
average price is up $0.22 at $71.91 per cwt with the range from $60 to $77.50 
on 4,750 head reported sold. Pork values bounced higher with firm support in 
most primals. Pork cutouts gained $0.78 per cwt at $77.38 per cwt with 153 
loads traded. Lean hog index for 7/17 is $71.52, up 0.73, with a projected 
two-day index is $72.40, up 0.88.

   Rick Kment can be reached at [email protected] 


(CZ)

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