DTN Midday Livestock Comments

GENERAL COMMENTS:

Wide price shifts are seen in the livestock market with traders focusing on the sharp gains developing in the cattle market based on follow-through support at the end of the week. Lean hog futures remain under pressure with more aggressive losses through summer contracts. Lack of active trade across the complex continues to be the main driver of widespread market activity at the end of the week. Corn prices are lower in light trade. March corn futures are 2 cents lower. Stock markets are higher in light trade. The Dow Jones is 20 points higher while Nasdaq is up 15 points.

LIVE CATTLE:

Strong buyer support is expected to be seen in the cattle complex through the end of the session based on active support developing in feeder cattle trade. Front-month live cattle futures have surged $1.12 per cwt higher as traders have focused on the triple-digit gains in the feeder complex. Cash cattle activity remains dead quiet following trade which developed Wednesday in all areas. The tone of the market is set with essentially all needed trade likely to have been accomplished. There is still the possibility of some light clean up trade toward the end of the day, but undeveloped bids indicate most packers are not aggressive at this point. Beef cut-outs at midday are higher, $2.43 higher (select) and up $4.06 per cwt (choice) with light movement of 49 total loads reported (25 loads of choice cuts, 7 loads of select cuts, 5 loads of trimmings, 12 loads of ground beef).

FEEDER CATTLE:

Triple-digit gains have developed in April through August feeder cattle futures. The overall support in the market has continued to draw buyer support back into the complex. Firming support is seen in live cattle trade through late morning, although the overall volume in the complex remains moderate at best. Spot month March futures are holding a 70-cent-per-cwt gain with traders looking at additional support narrowing summer discounts across the market. Light activity and trade volume is expected through the end of the session with traders looking to next week's market shifts for additional direction.

LEAN HOGS:

Pressure has developed through the lean hog futures trade at midday with prices falling 60 cents to $1 per cwt lower through the end of the session. April futures are holding losses of 85 cents per cwt at midday, which could bring additional late-day pressure into the market. The most aggressive late-morning pressure is developing in late-summer contracts with August futures holding a $1-per-cwt loss. The concern that additional supplies moving into the market will further erode summer premiums is sparking additional market losses. Cash prices are lower on the National Direct morning cash hog report. The weighted average price fell $1.39 at $65.85 per cwt with the range from $61.50 to $68.50 on 3,229 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 107 loads selling with prices falling $0.36 per cwt. Lean hog index for 3/6 is at $72.69 down $0.23 with a projected two-day index of $72.60 down $0.09.

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

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