DTN Midday Livestock Comments

GENERAL COMMENTS:

Livestock futures have moved lower in light trade despite the attempt to draw firm buyer support back into the complex. The inability to hold onto gains seen during the morning is likely to create some additional ripple effects across the complex and could spark some underlying market volatility through the end of the week. Corn prices are higher in light trade. March corn futures are 1/2 cent higher. Stock markets are mixed in light trade. The Dow Jones is 46 points lower while Nasdaq is up 2 points.

LIVE CATTLE:

Buyer support has quickly retreated from live cattle futures near midday as front month futures have moved below $120 per cwt and most contracts are holding narrow losses. Trade remains mixed within a very narrow range at midday, as the expectation that some buyer support may attempt to step back into the market through the end of the session. This could bring about additional market support over the near future. Cash cattle on the Fed Cattle Exchange Auction report today listed a total of 4,108 head, with 3,526 actually sold. The state by state breakdown looks like this: KS 357 head at 120.75; NE 2,510 head at 120.00-121.00; TX 564 head, at 120.50-121.25; CO no test; IA no test; other states (OK/SD) 95 head at 118.75-120.50. The weighted average was 120.52, up from last week's weighted average of 119.16. Feedlot trade still remains at a standstill with bids still undeveloped at this point. It is expected that packer bids may develop through the next day. Asking prices are seen at $122 in the South and $195 in the North. Beef cut-outs at midday are higher, $0.93 higher (select) and up $1.39 per cwt (choice) with light movement of 77 total loads reported (40 loads of choice cuts, 15 loads of select cuts, no loads of trimmings, 21 loads of ground beef).

FEEDER CATTLE:

Support seen through most of the morning quickly evaporated at midday as news of firmer cash cattle trade sales in the Fed Cattle Exchange seem to still be disappointing the overall expectations of futures traders. The pull back from firm morning gains continues to drive additional seller pressure into the complex with prices holding losses of 10 to 60 cents per cwt. There may continue to be moderate price swings through the end of the session based on trader participation, rather than the focus on fundamental or technical shifts. Moderate gains of 60 to 80 cents are holding in spring contracts, while fall contracts are holding narrow losses Tuesday morning.

LEAN HOGS:

Trade through the lean hog complex has shifted higher and lower through the morning with mixed trade once again seen at midday. The firmness seen during the morning has evaporated as traders focused on the lack of support holding in cattle trade as well as pressure in pork values and cash hog prices in morning reports. The potential to draw additional pressure back into the complex through the end of the session, may drive additional uncertainty to the complex. Cash prices are lower on the National Direct morning cash hog report. The weighted average price fell $1.58 at $60.80 per cwt with the range from $58.00 to $63.00 on 4,175 head reported sold. Cash prices are unreported due to confidentiality on the Iowa Minnesota Direct morning cash hog report. The National Pork Plant Report reported 211 loads selling with prices falling $2.36 per cwt. Lean hog index for 1/16 is at $64.84 up $0.74 with a projected two-day index of $66.01 up $1.17.

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

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