DTN Midday Livestock Comments

Sharp Losses Redevelop in Nearby Feeder Cattle Futures

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

Very light trade is seen across livestock futures with triple-digit losses holding in nearby feeder cattle futures. The limit losses that developed Tuesday is creating additional liquidation pressure, but there continues to be some support in live cattle markets which is limiting the overall pressure in the entire complex. Corn prices are higher in light trade. July corn futures are 8 cents higher. Stock markets are higher in light trade. The Dow Jones is 2 points higher while Nasdaq is up 2 points.

LIVE CATTLE:

Light gains are holding in live cattle futures, although pressure continues to develop in feeder cattle markets. Live cattle trade has now moved back from the morning highs, but the ability to focus on fundamental support and expected seasonal support could bring some additional buyer support back into the market over the next hour. Cash cattle markets untraded Wednesday morning. The normal Fed Cattle Exchange Auction that takes place on Wednesday morning has been postponed until Thursday morning at 10 am because of technical difficulties. Bids have become more evident in feedlot areas with $134 per cwt bids seen on a live basis and $214 to $216 per cwt bids reestablished on a dressed basis. Asking prices are slow to develop, but around $140 to $142 in the South and $220 in the North. Beef cut-outs at midday are higher, $0.35 higher (select) and up $0.34 per cwt (choice) with light movement of 91 total loads reported (36 loads of choice cuts, 26 loads of select cuts, 12 loads of trimmings, 16 loads of ground beef).

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FEEDER CATTLE:

Additional pressure has once again moved into the feeder cattle futures complex at midday on follow through liquidation. August and September contracts are leading the market dip with prices falling $1.20 to $1.30 per cwt lower as traders continue to ship lower with market weakness likely to continue to be seen through the rest of the trading session. There is likely to be some additional shifts developing through the rest of the week, but it may be hard to regain the previous market losses over the near future.

LEAN HOGS:

Lean hog futures remain sluggish midweek with light volume and very little volume available for either commercial or investment traders to take interest during the first three hours of trade. The lack of direction through market activity is expected to bring about additional support through the complex although June futures are able to hold a narrow 22 cent gain at midday. Cash prices are higher on the National Direct morning cash hog report. The weighted average price gained $0.29 at $76.18 per cwt with the range from $72.00 to $78.00 on 10,236 head reported sold. Cash prices are higher on the Iowa/Minnesota Direct morning cash hog report. The weighted average price gained $0.80 at $77.35 per cwt with the range from $72.00 to $78.00 on 3,816 head reported sold. The National Pork Plant Report reported 255 loads selling with prices gaining $1.26 per cwt. Lean hog index for 6/5 is at $78.90 up $0.30 with a projected two-day index of $79.10 up $0.20.

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

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Rick Kment