DTN Early Word Livestock Comments 08/16 06:14
Traders Cautious Ahead of Cash
The cattle complex could not find solid support Monday even though corn
futures were significantly lower. Feeder cattle tried to rally early in trading
but fell back into negative territory, except for the August contract. Hogs
were able to close higher after significant pressure early in the day as
cutouts were looking very promising.
DTN Contributing Analyst
Cattle: Higher Futures: Mixed Live Equiv: $195.16 +$0.57*
Hogs: Higher Futures: Mixed Lean Equiv: $132.09 +$3.08**
*Based on formula estimating live cattle equivalent of gross packer revenue.
(The Live Cattle Equiv. Index has been updated to depict recent changes in live
cattle weights and grading percentages.)
** based on formula estimating lean hog equivalent of gross packer revenue.
China has been a large, consistent buyer of beef from the U.S. and the
announcement Monday that they were going to ban agricultural imports from
Australia and New Zealand rippled through the market. That itself was not the
reason for pressure on the market, but it was their weak economic data that
went along with the announcement. Their retail sales and production were less
than expected, youth unemployment increased, and new home prices fell along
with lower refinery output. Although not directly tied to the beef market, it
could have an impact. It could result in lower beef exports to China, or it
could result in increased exports to the country. This uncertainty rattled the
commodity markets. Boxed beef closed slightly higher Monday with choice up
$0.14 and select up $0.22. Feedlots will be holding for higher cash again this
week. The Commitment of Traders report showed funds as net buyers of 11,068
contracts, bringing their net-long positions to 49,072.
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