DTN Midday Livestock Comments

GENERAL COMMENTS:

The focus across livestock futures is placed squarely on sharp triple-digit losses in cattle markets. The surprise in just how large overall placements at the end of the year were in the December report is still keeping traders aggressively lower. Triple-digit losses are likely to remain until closing bell, leaving uncertainty for the rest of the week. Corn prices are lower in light trade. March corn futures are 5 cents lower. Stock markets are lower in light trade. The Dow Jones is 180 points lower while Nasdaq is down 62 points.

LIVE CATTLE:

Sharp losses are seen in live cattle futures Monday morning with the focus on the pressure in feeder cattle markets and the overall impact that the larger than expected placement levels will have on the not only nearby but deferred futures trade. Front month February futures posted a $2.40 per cwt loss at midday, with other nearby contracts holding $2.50 to $2.70 per cwt losses in light to moderate trade. Cash cattle markets are quiet with little development seen through the morning. It is expected to be midweek or later before active bids develop, pushing the potential for cash trade to be delayed until Friday. Beef cut-outs at midday are higher, $0.88 higher (select) and up $0.50 per cwt (choice) with light movement of 49 total loads reported (22 loads of choice cuts, 10 loads of select cuts, 4 loads of trimmings, 13 loads of ground beef).

FEEDER CATTLE:

Sharp losses are holding across feeder cattle futures. The aggressively weak tone of the market and concern that the increased placements will significantly impact long-term market trends is allowing for nearby contracts to hold losses of $3 to $4 per cwt across the market. There is slightly less aggressive pressure in deferred contracts, but the overall tone of the market has quickly turned bearish, given expected supplies available on the market.

LEAN HOGS:

Lean hog futures remain mixed in a narrow trading range Monday morning. The sharp pressure in cattle markets are taking most of the attention off of all other livestock markets, allowing nearby lean hog futures to gain narrow support based on potential short term moves in fundamentals and potential cash market support. Deferred futures remain moderately lower, but still remain in a tight trading range, as most traders are unwilling to step back into the complex given the active triple-digit pressure in cattle trade. Cash prices are unreported at this time on the National Direct morning cash hog report. Cash prices are unreported on the Iowa Minnesota Direct morning cash hog report. The National Pork Plant Report reported 139 loads selling with prices gaining $1.17 per cwt. Lean hog index for 1/26 is at $68.30 up $0.19 with a projected two-day index of $68.44 up $0.14.

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

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