DTN Midday Livestock Comments

GENERAL COMMENTS:

Sharp losses have quickly developed through the morning as aggressive market liquidation is seen across the complex. Feeder cattle futures continue to lead the cattle complex lower with triple-digit losses from $1 to $2.50 per cwt lower. The concern that current supplies may continue to outpace beef demand has caused pressure through the entire market. Hog futures are mixed in light trade with traders trying to find some stability as prices are near or at long term support levels. Corn prices are lower in light trade. May corn futures are 1 cent lower Thursday. Stock markets are higher in light trade. The Dow Jones is 225 points higher while Nasdaq is up 3 points.

LIVE CATTLE:

Triple-digit losses have quickly grown out of the narrow market pressure seen earlier in the session. This has allowed most contracts to hold losses of $1.20 to $1.60 per cwt losses at midday as traders unsuccessfully search the rest of the cattle market for support. There is growing uncertainty that additional buyer support will develop in the near future. This is not only adding pressure to front month April contracts which are holding at $121.50 per cwt. But summer contracts that are trading at a significant discount to the spot contract are also gaining more attention. This has pushed August futures below $110 per cwt for the first time since January. Cash cattle activity remain quiet Thursday morning with just a few scattered bids developing at $127 to $128 live basis and $204 to $205 dressed. It is likely that most of the cattle needed to be sold in the South have already been put on the books following earlier week trade, but some additional Northern cattle may need to still be moved. Asking prices are seen at $128 to $129 per cwt live basis, and $207 and higher dressed. It is quite possible that any additional trade may be delayed until sometime Friday given the lackluster feel of the market Thursday. Boxed Beef cut-outs at midday are mixed, $0.61 lower (select) and up $1.06 per cwt (choice) with light movement of 78 total loads reported (40 loads of choice cuts, 18 loads of select cuts, 12 loads of trimmings, 9 loads of ground beef).

FEEDER CATTLE:

Light pressure early Thursday morning has continued to balloon through the morning. This has allowed losses to move to triple-digit levels as feeder cattle futures are holding $1.50 to $2.20 per cwt losses. The widespread and aggressive pressure that is seen in the market midday has caused some underlying weakness to redevelop as traders continue to move to the lowest price levels of 2018. There is growing concern that this will have compounding effects on not only feeder cattle markets, but the entire beef complex over the coming weeks and months.

LEAN HOGS:

Sluggish trade was seen through the entire lean hog futures complex. The focus on pressure in spot month April contracts has drawn additional weakness to the market, with April futures holding a 55 cent per cwt loss midday. But the rest of the 2018 contracts have posted light to moderate gains as traders continue to look for buyers willing to build on the recent market lows and rebuild price levels through the spring and summer months. Demand continues to be strong, but more and more focus is being placed on export uncertainty given the trade talks that are going on throughout the world. This is creating nervousness that goes well beyond our borders. Cash prices are lower on the National Direct morning cash hog report. The weighted average price is down $0.41 at $58.71 per cwt with the range from $54.00 to $60.50 on 3,905 head reported sold. Cash prices are unreported due to confidentiality on the Iowa/Minnesota Direct morning cash hog report. The National Pork Plant Report posted 141 loads selling with carcass values gaining $1.09 per cwt. Lean hog index for 3/13 is at $66.38, down 0.29 with a projected two-day index of $65.93, down 0.45.

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

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