DTN Midday Livestock Comments

Sharp Losses Hold Across Livestock Trade Monday

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

Strong triple-digit losses have quickly moved into all livestock markets with pressure limiting most traders on the sidelines through much of the morning. Cattle markets are taking the brunt of the selling pressure as aggressive losses have quickly developed across the complex, weakening market support in all markets. Corn prices are lower in light trade. July corn futures are 10 cents lower. Stock markets are lower in light trade. The Dow Jones is 78 points lower while Nasdaq is down 60 points.

LIVE CATTLE:

Live cattle futures have backed away from limit losses in front-month June futures with traders focusing on the pressure in feeder cattle markets early in the week. The concern that additional long-term pressure may quickly develop in both cash and futures trade is quickly sweeping through the nearby complex and affecting June and August contracts most heavily. June futures have posted the most aggressive losses, trading at $128.70 per cwt at midday, adding softness to the complex. Cash cattle markets remain quiet with show list distribution the main focus of the morning. Show lists are larger for the week, which is no surprise given the light trade seen last week. The inventory needs of packers are still unknown but given the lack of overall numbers expected to be seen at the end of the week, it is likely that packers will be going into the week short-bought. But packers will likely be able to make it through and push active trade until midweek or later. Bids and asking prices are still undeveloped. Beef cut-outs at midday are higher, $0.99 higher (select) and up $$1.36 per cwt (choice) with light movement of 63 total loads reported (31 loads of choice cuts, 14 loads of select cuts, 11 load of trimmings, 8 loads of ground beef).

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FEEDER CATTLE:

Feeder cattle futures have pulled back from early losses as contracts are now trading $1.80 to $2 per cwt lower. The overall pressure in the complex remains significant, but with losses nearly half of original losses, traders seem to be focused on the ability to draw additional support back into the market later in the trading session. This move has pushed prices back above $150 per cwt and could spark additional buyer activity later in the day and through the rest of the week. But the light volume in the market is also creating concerns that a late-day market shift could allow for liquidation near closing bell.

LEAN HOGS:

Strong pressure has held through most hog future contracts with May 2018 contracts the only market holding a gain at midday. June futures remain under light pressure while the rest of 2017 contracts are holding triple-digit losses with concerns that widespread liquidation will follow the aggressive losses seen in the cattle market. This pressure seen in the market will continue to develop across the complex and as July and August futures are leading the market lower with $1.90 to $2.10 per cwt losses. This could quickly lead to follow through pressure across the rest of the complex during the rest of the week. Cash prices are lower on the National Direct morning cash hog report. The weighted average price fell $0.82 at $75.78 per cwt with the range from $72.00 to $78.25 on 3,807 head reported sold. Cash prices are lower on the Iowa/Minnesota Direct morning cash hog report. The weighted average price fell $0.35 at $77.30 per cwt with the range from $72.00 to $78.25 on 382 head reported sold. The National Pork Plant Report reported 107 loads selling with prices falling $0.03 per cwt. Lean hog index for 6/8 is at $80.02 up $0.61 with a projected two-day index of $80.59 up $0.59.

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

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Rick Kment