DTN Closing Livestock Comment 08/31 15:51
Lean Hog Futures Bolt Significantly Higher
Hog contracts settled sharply higher thanks to aggressive short covering and
bull spreading. Conversely, live and feeder futures closed lower as specs and
commercial recoiled from last week's late rally.
By John Harrington
DTN Livestock Analyst
Buying energy in feedlot country Monday was limited to the collection of new
showlists. For the most part, the pre-Labor Day offering looks generally
smaller than last week with only Colorado offering more ready steers and
heifers. Some initial asking prices were posted around $150 in the South and
$232-plus in the North. According to the closing report, the Iowa hog base is
$0.56 lower compared with the Prior Day settlement ($65.00-$72.00, weighted
average $71.56). Corn futures finished fractionally mixed with neither side
displaying much trading interest. The stock market closed lower as investors
digested a volatile month amid continued uncertainty about China and the Fed.
The Dow closed 114 points lower with the Nasdaq off 51.
While live futures spent some time on both sides of unchanged through the
day, final settlements were posted 62 to 122 lower. Those hoping that
recovery-minded buyers would pick up right where they left off on Friday were
disappointed. October and December quickly attracted selling interest near
Friday's high. It seems safe to say that cash prospects immediately before the
Labor Day break remain guarded. Spot August expired at Beef cut-outs:
significantly lower, off $0.91 (select, $232.04) to $0.98 (choice, $242.24)
with light demand and light-to-moderate offerings (62 loads of choice cuts, 20
loads of select cuts, 9 loads of trimmings, 21 loads of coarse grinds).
TUESDAY'S CASH CATTLE CALL:
Steady. The combination of last week's relatively short buy and the pending
holiday makes it tough to predict the timing of this week's cash business.
While trade volume could surface sooner than expected, action on Tuesday will
probably be slow.
At the conclusion of a fairly choppy session, feeder contracts closed 57 to
222 lower, pressured by spillover selling from the live market and negative
vibes stemming from the plummeting behavior of the cash index. On estimated
receipts of 6,500 head (down from 7,637 last week and not comparable with last
year's holiday). Oklahoma City sold steers and heifers mostly firm to $2
higher. CME cash feeder index: 08/28: $206.35, off $3.50.
Lean issue opened the week with a good head of steam, generally settling 35
to 160 higher. Nearby contracts gained significantly on deferreds thanks to
bull spreading and the unwinding of bear spreads. Oct and Dec were well
supported on ideas that the board had already traded a fall bottom. Spot
October closed just above its 100-day moving average and at its highest peak
since June 11. Carcass value jumped higher, supported by better demand for all
primals except the rib. Particular strength was noted in belly and picnic cuts.
Pork cut-out: $85.84, up $1.31. CME cash lean 08/27: $78.28, off $0.40 (DTN
Projected lean index for 08/28: $77.70, off $0.58)
TUESDAY'S CASH HOG CALL:
Steady. The cash hog trade should hold about steady in the morning,
supported somewhat by Monday's fairly light run and stronger carcass value.
John A. Harrington can be reached at firstname.lastname@example.org
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