DTN Midday Livestock Comments

GENERAL COMMENTS:

Aggressive triple-digit losses which have developed in cattle trade is the main focus across all livestock markets Wednesday morning. Even though trade has backed away from session lows at midday, the focus on continued liquidation through the end of the session and potentially the rest of the week is likely to create additional market uncertainty in live cattle and feeder cattle markets. Corn prices are lower in light trade. July corn futures are 2 cents lower. Stock markets are higher in light trade. The Dow Jones is 18 points higher while Nasdaq is up 4 points.

LIVE CATTLE:

Triple-digit losses continue to hold in live cattle trade with liquidation remaining the major objective of the trading session. But June futures have backed away from daily trading limits of $3 per cwt with current losses of $2.50 per cwt as traders remain $1.80 to $2.50 per cwt at midday. The concern that additional pressure will continue to be seen in cash markets has been temporarily limited by firmer boxed beef values in the morning report. But the overall tone of the market remains weak as buyers are going to have a hard time stepping back into the market at this point given the strong pressure seen over the last couple of trading sessions. Cash cattle activity has picked up through the morning following the aggressive selling pressure in futures trade. But bids have been lower in most areas. A few sales have been reported on a live basis in Nebraska at $130 during the morning, although bids are now backed away from these levels with most bids at $128 live basis and $210 dressed basis. Asking prices are at $132 live basis and $213 and higher dressed. Although light trade was seen Tuesday at $132 to $134 live basis and $215 to $217, which is $2 to $5 per cwt lower than last week. These prices may be irrelevant at this point for the rest of the week given the pressure in futures trade and bearish tone through the complex. Trade on the Fed Cattle Exchange Auction is once again delayed by technical difficulties at the time of midday comments. Beef cut-outs at midday are higher, $0.65 higher (select) and up $0.51 per cwt (choice) with light movement of 59 total loads reported (30 loads of choice cuts, 17 loads of select cuts, 3 load of trimmings, 9 loads of ground beef).

FEEDER CATTLE:

Feeder cattle futures continue to trade sharply lower midday Wednesday, but losses have backed away from session lows with losses now hovering around $3 per cwt losses. The fact that early trade held trade at or near daily limit losses for most of the morning makes this market shift significant. It is still uncertain if there is enough support in the market to hold prices at this level or bring additional buyer activity into the complex to keep prices from closing off of limit lows and reduce overall market liquidation. But traders seem to be concerned about long term market pressure through the middle of the week, and feeder cattle futures appear to be leading the move lower.

LEAN HOGS:

Wide price ranges are seen across lean hog futures as the aggressive market losses are having a varied impact on the hog complex. Nearby buyer support is still stepping back into the complex with June through August futures continue to move higher with July futures setting the tone for higher gains as prices are holding a $1 per cwt gain and moving to contract highs of $83.30 per cwt. Deferred contracts are maintaining light pressure based on the aggressive market pressure at midday in the cattle complex. But the overall fundamental support in the cash hog market is limiting the overall selling activity and overall price pressure in the market. This will likely keep prices from moving significantly lower before closing bell. Cash prices are higher on the National Direct morning cash hog report. The weighted average price added $1.18 at $81.00 per cwt with the range from $78.81 to $84.00 on 5,625 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 200 loads selling with prices falling $0.04 per cwt. Lean hog index for 6/12 is at $81.16 up $0.57 with a projected two-day index of $82.10 up $0.94.

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

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