DTN Midday Livestock Comments 12/15 12:26
Live Futures Turn Sharply Higher at Midday
The cattle complex has turned bullish at midday with triple-digit gains
evident in both live and feeder markets. Generally speaking, lean hog issues
are moderately higher, though deferred are outperforming the front end.
By John Harrington
DTN Livestock Analyst
For the most part, the cash cattle trade is still waiting to be born at
midday. A small handful of deals have been made in parts of the North. Some
buyers have paid $188 here and there on a selective basis (maybe $1 higher than
last week's weighted average basis Nebraska), but not really enough to suggest
a trend. In the South, bids and asking prices remain separated by as much as $5
(i.e., $114 versus $119 or better). Asking prices of $119-$120 and $190-plus
seem firm, possibly delaying decent trade volume until late this afternoon.
According to the midday report, the national hog base is $1.12 higher
($53.50-$57.75, weighted average $57.72). The corn trade is sagging by several
cents, checked by general apathy in the face of the same old bearish news. The
stock market is higher near the top of the noon hour with the Dow up 147 points
and the Nasdaq positive by 72.
Live contracts were rather lackluster through midsession, but buyers seem to
be rewriting the strip at midday. Prices are currently 40 to 152 higher with
the first three contracts holding triple-digit gains. Bulls seem to be smelling
higher packer bids waiting in the wings. Yet chances are CME trading will be
closed before the cash question is definitively answered. Beef cut-outs are
mixed at midday, up $0.75 (choice, $201.79) to off $0.08 (select, $183.61) with
light-to-moderate box movement (59 loads of choice cuts, 11 loads of select
cuts, zero loads of trimmings, 6 loads of coarse grinds).
For the most part, feeder issues in late-morning business are moderately
higher (i.e., up 65 to 90), supported by short-covering, softer corn prices and
the premium status of the cash index. Needless to say, new energy in the live
market is also making a positive difference here.
Lean futures opened lower, but turned moderately higher after the first hour
or so, supported by reports of greater packer spending for barrows and gilts.
Currently, lean contracts are 30 to 52 points in the green. Firmer lean issues
may also be getting some help from spillover friendliness from the cattle
complex. Carcass value at midday is modestly higher with stronger bellies and
ham sales overshadowing softer picnic, butt and rib sales. Pork cut-out:
$77.52, up .21. CME cash lean index for 12/13: $64.64, off $0.22 (DTN Projected
lean index for 12/14: $64.11, off $0.53).
John A. Harrington can be reached at firstname.lastname@example.org
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