DTN Midday Livestock Comments 10/20 11:48

DTN Midday Livestock Comments 10/20 11:48 Limit Gains Flood into Live Cattle Futures Thursday Morning Buying activity quickly and aggressively reacted to the sharp midweek losses seen through the cattle complex, buys pushed October and December live cattle contracts to limit gains of $3 per cwt at midday. The building support is holding through the session, creating additional market support across the entire complex. By Rick Kment DTN Analyst GENERAL COMMENTS: Limit gains have quickly developed in nearby live cattle futures with October and December contracts posting $3 per cwt gains near midday. The ability to close contracts at this level would allow for expanded trading limits Friday, adding to the market volatility already building in the complex. Hog futures remain mostly higher, although trade activity remains sluggish and gains narrow in most contract months. Corn prices are lower in light trade. December corn futures are 5 cents lower per bushel. Stock markets are mixed in light trade. The Dow Jones is 4 points higher while Nasdaq is down 8 points. LIVE CATTLE: Buyers quickly reacted to market pressure that developed Wednesday, as prices moved to triple-digit gains within minutes of opening bell, and pushed October and December contracts to limit gains near midday. The widespread support in all live cattle markets is focusing on the ability to draw buyers back to the complex following the midweek sell-off. The latest move higher reestablishes the upward market trend that started last week, and may draw additional support at the end of the week. Cash cattle trade is starting to develop with a few sales reported in the North at $154 per cwt. This is fully steady with last week's average, as the surge in futures prices has sparked additional interest through the complex. Bids are seen in all areas of the market at $98 live basis and $154 dressed basis. Asking prices remain at $100 to $102 in the South and $160 in the North. It is uncertain if this latest round of activity will spark the full line of trade to develop, or if activity will trickle into the market over the next couple of days. Beef cut-outs at midday are lower $1.38 (select) and down $0.16 per cwt (choice) with active movement of 100 total loads reported (36 loads of choice cuts, 28 loads of select cuts, 16 loads of trimmings, 21 loads of ground beef). FEEDER CATTLE: Buyer support Thursday morning has been reactionary to the sharp losses midweek which quickly and aggressively pushed contracts to new contract lows and triple digit losses. The ability to wipe out midweek losses in a matter of a couple hours after trade opened Thursday morning indicated not only how volatile the market has become, but how little underlying depth selling pressure had. The concern is that the wild price swings will spark additional wide market shifts through the end of the week, especially in front of the monthly cattle on feed report which is expected to post a 103% placement level compared to year-ago levels. LEAN HOGS: Firm to moderate buyer support has slowly trickled into lean hog futures trade Thursday morning with December contracts leading the market higher with a 40-cent gain. The ability to spark additional buyer support through the last half of the week is partially based on spillover support from the cattle complex. Trade volume remains light, although traders continue to focus on the potential to draw long term support into pork cutout values as support is starting to form in summer 2017 contracts, despite current spot month conditions. Cash prices are lower on the National Direct morning cash hog report. The weighted average price fell $0.16 per cwt to $45.64 per cwt with the range from $42.50 to $47.00 on 6,515 head reported sold. Cash prices are unreported due to confidentiality on the Iowa Minnesota Direct morning cash hog report. The National Pork Plant Report reported 151 loads selling with prices falling $0.19 per cwt. Lean hog index for 10/18 is at $52.57 up 0.21 with a projected two-day index of $52.66 up 0.09. Rick Kment can be reached at rick.kment@dtn.com (ES) Copyright 2016 DTN/The Progressive Farmer. All rights reserved.