DTN Midday Livestock Comments 11/28 11:36
Livestock Futures Surge Higher
Sharp gains flooded into all livestock trade Tuesday morning as traders
react and offset early week losses. Triple-digit gains are seen in all nearby
contracts with feeder cattle futures leading the upward shift.
With traders apparently fully back from the holiday break, buyers stepped
back into the market with significant force as strong triple-digit gains are
holding in all cattle trade and lean hog futures able to trade $1 to $2 per cwt
higher in nearby contracts through much of Tuesday morning. The combination of
losses last week and Monday in cattle and hog trade has moved price levels to
or below support levels. This upward shift has stimulated many traders who have
been waiting on the sidelines for buy signals to step back into the market. It
is uncertain just how much additional buyer activity is still left to uncover
as market direction remains unsettled at best. December corn is down 2 3/4 at
$4.528 and January soybean meal is up $0.50 at $437.1. The Dow Jones Industrial
Average is up 175.80 at 35,509.27.
Following strong losses over the last several days, February live cattle
futures prices started the morning at the lowest price since February. The
inability for the cattle complex to hold the market rebound seen in late
October is creating both fundamental and technical concerns to the entire
Tuesday morning buyer support flooded into all cattle trade with feeder
cattle and live cattle futures holding strong triple-digit gains. The ability
to retract some of the recent losses, which developed due in part to limited
trade seems to be creating additional market momentum across the entire
complex. February live cattle futures are holding a $4 per cwt rally at midday,
although the market structure remains extremely weak and follow-through buying
will be needed in order to confirm any change in market direction over the next
couple of days.
Cash cattle activity remains quiet with bids and asking prices still
unavailable at this point. The wild market swings over the past two days in
futures trade could cause both sides to go back to the drawing board. Even
though limited interest was seen Monday, mandatory reporting reported light
trade in several areas $2 per cwt lower than last week's average. The wild
swings in futures prices could create significant cash market shifts, and very
easily delay trade activity until the last half of the week. December live
cattle are $3.55 higher at $172.325, February live cattle are $4.50 higher at
$173.325, April live cattle are $4.50 higher at $175.175. Boxed beef prices are
lower: choice down $0.35 ($296.90) and select down $0.08 ($267.72) with a
movement of 87.59 loads (47.79 loads of choice, 23.45 loads of select, 3.87
loads of trim and 12.48 loads of ground beef).
Sharp gains flooded the feeder cattle markets Tuesday morning as traders
retracted Monday's losses. Spot January futures are trading over $7 per cwt
higher during morning trade as the wide market shifts has created increased
market volatility. Even with these strong gains, most of last week's losses are
still holding, creating a negative overall impact on the entire complex.
Current prices are holding above contract lows in the January futures, but
following recent pressure are still significantly oversold with traders looking
for additional hints of fundamental and technical support to move back into the
market. The concern with the wide market swings is that the volatility can
easily lead to additional volatility and wide market shifts. The ability to
string together several days of upward price shifts would add significant
confidence to the entire complex.
January feeders are $7.23 higher at $220.025, March feeders are $6.38 higher
at $222.675 and April feeders are $6.23 higher at $226.45.
Lean hog futures have moved higher Tuesday morning following residual buying
support spilling over from the cattle complex. But with lean hog futures still
fundamentally and technically weak following active pressure over the last
couple of weeks, this buyer support seems to be fading at midday. Although
prices remain higher in all contracts, initial early gains have been cut
significantly in most contract months. There remains uncertainty about the
ability to spark additional volume in the market in order to stabilize the
complex and rebuild on recent market pressure. Increased volume in cash hog
trade and pork cutout values later in the week could help to bring some of the
stability needed to the entire lean hog complex.
December lean hogs are $0.85 higher at $68.725, February lean hogs are $1.08
higher at $68.00. and April lean hogs are $0.50 higher at $74.125.
Hog Prices are lower on the Daily Direct Morning Hog report, down $1.52 with
a weighted average of $59.4, ranging from $54.50 to $62.00 on 3,515 head with a
five-day rolling average of $59.91. Pork Cutouts totaled 203.76 loads with
184.64 loads of pork cuts and 19.12 loads of trim. Pork cutout values are up
$5.59 at $88.74.
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