DTN Midday Livestock Comments

Triple-Digit Losses Develop in Hog Trade

Rick Kment
By  Rick Kment , DTN Analyst
(DTN photo by Russ Quinn)
GENERAL COMMENTS:

Sharp losses have developed through lean hog futures trade Friday morning. The early pressure and inability for firm buyer support to redevelop through the last half of the week has sparked nearby liquidation from commercial traders. Cattle futures are trading mixed to mostly higher. Buyer support is focusing on short covering opportunities following Thursday's market slide. Corn prices are higher in light trade. March corn futures are 1 cent higher. Stock markets are lower in light trade. The Dow Jones is 13 points lower while Nasdaq is down 3 points.

LIVE CATTLE:

Mixed trade is seen midday Friday in live cattle futures. This is limiting additional market shifts across the entire complex. April futures are holding a 5 cent loss, while the rest of the market is trading 10 to 30 cents higher. Firm support developing in feeder cattle markets at the end of the week is helping to solidify the deferred contract gains. Trade volume has remained extremely light and is likely to remain that way through most of the afternoon. Cash cattle activity remains quiet Friday morning with the expectation that most of the needed business has already been done earlier in the week. There are some bids redeveloping in the North with prices offered steady with trade earlier in the week. This would give the opportunity for some clean up trade to develop through the end of the week. It is not expected that packers will chase prices higher at this point. Beef cut-outs at midday are higher, $0.14 higher (select) and up $0.44 per cwt (choice) with light movement of 52 total loads reported (33 loads of choice cuts, 11 loads of select cuts, no loads of trimmings, 7 loads of ground beef).

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FEEDER CATTLE:

Early losses Friday morning in feeder cattle futures have remained limited, allowing for renewed buyer support to step back into the complex through the last half of the session. Nearby contracts are holding gains of 17 to 45 cents per cwt with traders seeing very little fundamental market shifts through the trading session. The main focus of buyer support is coming from end-of-week short covering activity as traders try to bring some stability back into the complex. March futures are holding gains of 45 cents per cwt, although the overall tone of the market remains extremely sluggish.

LEAN HOGS:

Lean hog futures continue to erode through the morning with prices in nearby contracts holding triple-digit losses. The uncertainty in the complex remains focused on the lack of cash and pork market support at the end of the week. Deferred contracts remain under pressure also, although the lack of trade volume in these contracts is limiting overall trade pressure midday Friday. Cash prices are lower on the National Direct morning cash hog report. The weighted average price fell $1.76 at $66.16 per cwt with the range from $61.00 to $68.50 on 3,015 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 142 loads selling with prices falling $0.72 per cwt. Lean hog index for 3/1 is at $74.01 down $0.76 with a projected two-day index of $73.38 down $0.63.

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

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Rick Kment