DTN Midday Livestock Comments

GENERAL COMMENTS:

Limit losses have developed throughout the livestock trade and are holding in nearby lean hog futures over concerns about eroding export markets due to the news Monday that China is imposing tariffs on U.S. products. Corn prices are higher in light trade with May futures up 1/4 cent. Stock markets are lower in light trade. The Dow Jones is 488 points lower, while the Nasdaq is down 178 points.

LIVE CATTLE:

Early gains in live cattle trade Monday morning slowly but steadily eroded. Traders are looking for additional market activity and the potential to bring some stability into either the cash or beef markets in early April. But that seems to be an uphill battle as traders are taking a defensive stance. Although nearby contracts are still $1 to $2 per above the $100-per-cwt threshold, a break below triple-digit prices would likely be a significant blow to the entire complex, resulting in additional active liquidation. Cash cattle activity is quiet, as expected, due to showlist distribution and inventory-taking the main focus of both sides. With lighter procurement schedules continuing Monday, the focus on active interest and cash market trade will likely be postponed until the second half of the week. The bearish tone of the market is likely to add even more pressure to the cash market during early April. Boxed Beef cut-outs at midday are mixed, $1.88 higher (select) and down $1.40 per cwt (choice) with light movement of 54 total loads reported (37 loads of choice cuts, 7 loads of select cuts, 4 loads of trimmings, 6 loads of ground beef).

FEEDER CATTLE:

Any sense of market support has quickly evaporated with triple-digit losses developing in nearby contracts. April and May contracts continue to lead the market lower with losses of $1.60 to $1.85 per cwt at midday. Given that markets closed late last week with limit losses, there is a sense that some traders are looking for market stability to develop over the coming days.

LEAN HOGS:

Lean hogs saw a reactionary shift Monday following the announcement that pork products were added to China's list of retaliatory tariffs on U.S. products. These tariffs, which went into effect Monday, were confirmation of what many had already been expecting over the past couple of weeks. Nearby lean hog futures are at or near limit losses with May and June futures holding limit $3-per-cwt losses. The rest of the nearby contracts are holding losses of $2.50 per cwt or greater at midday. Continued pressure is expected to be seen through the early part of the week, as markets are pressured by fundamental and technical factors early in the month. Cash prices are lower on the National Direct morning cash hog report. The weighted average price is down $0.74 at $47.62 per cwt with the range from $45 to $48 on 4,075 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 96 loads selling with carcass values slipping $0.19 per cwt. Lean hog index for 3/29 is at $58.04, down $1.02 with a projected two-day index of $56.72, down $1.32.

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

(BE)

Copyright 2018 DTN/The Progressive Farmer. All rights reserved.