DTN Midday Livestock Comments

General Comments

Market softness is seen through most livestock trade with moderate to strong pressure seen in lean hog and feeder cattle trade. Follow through pressure in lean hog markets have added overall market softness to the entire complex Monday. Live cattle markets are mixed to mostly lower while prices are hovering in a narrow range. Corn markets are lower in light trade. March corn futures are 1 cent lower. Stock markets are lower in light trade. Dow Jones is 69 points lower with Nasdaq down 45 points.

LIVE CATTLE:

Limited interest is redeveloping in live cattle trade with prices mixed in a very narrow range through the spring and summer contracts. Light buyer activity is able to hold in front-month February futures, while the rest of the complex is holding limited losses. Traders seem to be overlooking firm pressure in feeder cattle trade, and continued softness in beef values at this point, with single-digit losses seen in April and June futures at this point. Cash market support last week is helping to add stability to the entire complex during early week trade. Cash cattle activity is quiet with show list distribution taking priority through the day. Packers are taking inventory of needed levels through the upcoming week as the assess trade that developed late last week. Active trade is not expected until the tail end of the week, with bids likely undeveloped until Wednesday or later. Boxed Beef cut-outs at midday are lower, $0.91 lower (select) and down $0.51 per cwt (choice) with light movement of 66 total loads reported (45 loads of choice cuts, 9 loads of select cuts, no loads of trimmings, 12 loads of ground beef).

FEEDER CATTLE:

Feeder cattle futures have continued to lead the complex lower Monday as front-month January contracts are holding $1.25 per cwt at midday. The early support in corn trade sparked the initial market softness in feeder cattle trade based on increased production costs of feeding cattle. But following sluggish market activity in the grain market, follow-through pressure continued to develop in feeder cattle futures. This added to increased market softness in all contracts as traders are content with nearby contracts hovering from $144 to $145 per cwt with moderate losses in all contract months.

LEAN HOGS:

Market softeness is seen through all lean hog trade Monday morning as traders continue to focus on general market erosion following the recent market bounce. Even though price ranges are narrower than in previous market swings, contracts have started to establish a sideways trend, which may continue over the next couple weeks. Limited activity is seen through the complex as traders are willing to allow prices to shift higher and lower within the current market range. Growing concern is starting to be seen in deferred futures based on pork demand uncertainty. A lot of this nervousness has to do with trade negotiations and how the overall economy will fare through 2019 with current government shutdown issues. Cash prices are unreported on the National Direct morning cash hog report. Cash prices are unreported on the Iowa/Minnesota Direct morning cash hog report. Pork carcass values unreported at this time due to packer submission issues. Lean hog index for 1/09 is $55.99, up 0.89, with a projected two-day index is $56.69, up 0.70.

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

(CZ)

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