DTN Midday Livestock Comments

GENERAL COMMENTS:

Sharp losses in feeder cattle futures have set the tone for the weaker overall cattle market. This may continue to put pressure on the cattle complex through the rest of the week and erode price levels as traders head toward closing bell. Lean hog futures are mixed in light trade. Corn prices are higher in light trade. July corn futures are 3 cents higher. Stock markets are mixed in light trade. The Dow Jones is 20 points lower while Nasdaq is up 2 points.

LIVE CATTLE:

Moderate losses are holding across live cattle futures. The lack of market intensity seen in the complex continues to limit the impact of the downward push seen in feeder cattle trade, although the lack of support across the entire cattle complex is increasingly evident as the week continues. June futures are leading the market lower with a $1.50 per cwt loss with prices at $123.53 per cwt, while the rest of the complex is holding losses of 30 to 90 cent losses based on still firm buyer support in the beef market. Light trade is expected to be seen through the end of the session, although this lack of activity may allow for further price erosion in the closing hour of trade. Cash cattle activity on the Fed Cattle Exchange Auction reported a total of 1,993 head on the auction with 1,287 head actually sold Wednesday. This is a lighter amount of cattle offered on the sale in the last several months. Of the sales, 681 head were offered for spot delivery within the next 1 to 9 days with a weighted average of $138.72 per cwt. This is about $1.50 per cwt under last week's average price. Feedlot bids are seen at $137 in the South and $224 in the North, although it is expected that is may be Friday before active trade unless feedlot managers give into the panic selling activity seen in the futures trade seen during the last two days. Asking prices are still holding at $148 and higher in the South at this point. Beef cut-outs at midday are higher, $0.66 higher (select) and up $2.21 per cwt (choice) with light movement of 80 total loads reported (31 loads of choice cuts, 15 loads of select cuts, 3 loads of trimmings, 31 loads of ground beef).

FEEDER CATTLE:

Sharp losses have quickly developed through the morning with August contracts leading the market lower with a $4 per cwt loss at midday. This pressure continues to lead the entire complex with increased liquidation as prices have fallen below $150 per cwt and traders continue to look for additional potential losses possible through the end of the week if these losses are not contained. May futures are currently holding at $1.62 per cwt, with prices at $142.85 per cwt. But the overall lack of support in all cattle markets and concern that widespread cash market losses will add further pressure to the complex is leaving markets weak during the last couple hours of trade.

LEAN HOGS:

Moderate gains continue to hold in nearby spring and summer lean hog futures trade despite the sharp losses which have quickly developed across cattle futures Wednesday morning. This has sparked a 67 cent per cwt gain in the May contract, moving prices to $70.97 per cwt and is currently holding June and July contacts 10 to 30 cents higher in light buying activity. Deferred contracts remain mixed in a narrow range, as the overall lack of direction seems to be limited by most traders focusing on liquidation in cattle trade and fundamental cash market interest in the hog complex. Cash prices are higher on the National Direct morning cash hog report. The weighted average price added $1.10 at $68.09 per cwt with the range from $63.00 to $70.50 on 7,851 head reported sold. Cash prices are higher on the Iowa Minnesota Direct morning cash hog report. The weighted average price added $1.15 at $69.46 per cwt with the range from $63.00 to $70.50 on 4,641 head reported sold. The National Pork Plant Report reported 184 loads selling with prices fell $1.84 per cwt. Lean hog index for 5/8 is at $65.98 up $1.19 with a projected two-day index of $67.64 down $1.66.

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

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