DTN Midday Livestock Comments

GENERAL COMMENTS:

Moderate to strong losses have quickly developed through the entire livestock complex. This is holding feeder cattle and lean hog futures triple digits lower as traders remain concerned about follow through buyer interest through the next few days. Corn prices are higher in light trade. March corn futures are 1/4 cent higher Thursday. Stock markets are higher in light trade. The Dow Jones is 125 points higher while Nasdaq is up 29 points.

LIVE CATTLE:

Narrow losses are seen across the live cattle market with very little market direction developing Thursday morning. With cash cattle markets already in the books thanks to the unusual Monday and Tuesday trade that took place, traders seem to be willing to try to find some market stability late in the week. Nearby contracts are holding losses of 17 to 40 cents per cwt as very little volume is expected to be seen through the end of the session. Even though triple-digit losses are seen in feeder cattle markets, the concern that traders in live cattle trade are willing to wait until sometime next week before reentering the market may keep prices under pressure. Cash cattle business is essentially done for the week. Even though a few more clean up deals may develop over the next couple of days, it is likely that prices will not move significantly over the near future. Cash trade which developed Monday and Tuesday was seen at $120 live and $192 dressed basis. The cattle that are left on show lists are reported to be priced at $122 live and $122 dressed. Boxed Beef cut-outs at midday are mixed, $0.57 higher (select) and down $1.17 per cwt (choice) with light movement of 59 total loads reported (41 loads of choice cuts, 10 loads of select cuts, no loads of trimmings, 8 loads of ground beef).

FEEDER CATTLE:

Triple-digit losses have held through the morning with active pressure seen across the entire livestock market. Nearby futures are holding losses from $1 to $1.50 per cwt in moderate liquidation keeping traders concerned about follow through activity over the near future. Deferred futures are holding moderate losses which may spark some additional longer term pressure in not only the cattle trade, but all livestock futures.

LEAN HOGS:

Sharp losses have quickly swept through lean hog trade early Thursday morning. This has helped to confirm the weaker tone across the market and brought additional market pressure to the entire complex. Nearby futures are holding losses of $1.50 to $2 per cwt lower in most nearby contracts as the concern surrounding the inability to bring additional buyers back to the market is not only affecting futures trade, but starting to erode cash hog and pork values. This weakness is likely to continue through the rest of the session, leaving concern of follow-through liquidation at the end of the week. Cash prices are lower on the National Direct morning cash hog report. The weighted average price is down $0.13 at $69.38 per cwt with the range from $63.00 to $71.00 on 4,536 head reported sold. Cash prices are higher on the Iowa/Minnesota Direct morning cash hog report. The weighted average price is up 0.21 at $70.23 per cwt with the range from $63.00 to $71.00 on 3,710 head reported sold. The National Pork Plant Report posted 151 loads selling with carcass values falling $1.12 per cwt. Lean hog index for 1/09 is at $67.28 up $0.91 with a projected two-day index of $68.46, up $1.18.

Rick Kment can be reached at rick.kment@dtn.com

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