DTN Midday Livestock Comments

GENERAL COMMENTS:

Widespread market pressure is seen across livestock trade Tuesday morning with cattle markets posting follow through losses. Feeder cattle markets continue to add to the aggressive triple digit weakness seen early in the week as commercial traders focus on widespread liquidation during mid-June. This pressure in feeder cattle trade and concern that these moves will heavily impact cash cattle trade is affecting live cattle markets. Lean hog futures are mixed to mostly lower as early buyer support has quickly faded. Corn prices are lower in light trade. July corn futures are 3 cents lower. Stock markets are lower in light trade. The Dow Jones is 37 points lower while Nasdaq is down 30 points.

LIVE CATTLE:

Moderate pressure is holding in live cattle futures at midday with front month June contracts trading at $119 per cwt following a $1 per cwt loss. Even though contracts have moved off of contract lows, there is little to no evidence that additional buyer support will move back into the complex before the end of the session. Live cattle futures are currently trading in a tight trading range from $1 to $1.40 per cwt lower with the pressure in feeder cattle market one of the main factors in the complex. Cash cattle markets are starting to become slight more active with bids becoming more available through the morning. Bids are seen at $122 per cwt in the South and a few bids listed at $195 in dressed basis in the North. Asking prices are still not fully formed, but the numbers that are seen have been listed at $125 to $127 in the South. It is likely that active trade will be pushed off until the last half of the week. Given the sluggish movement last week, packers are likely going to need to get access to cattle through the week. But the defensiveness of futures trade is not giving much leverage to feedlot managers to hang onto higher asking prices over the long term. Beef cut-outs at midday are lower, $1.06 lower (select) and down $1.63 per cwt (choice) with light movement of 64 total loads reported (28 loads of choice cuts, 17 loads of select cuts, 13 load of trimmings, 7 loads of ground beef).

Triple-digit losses remain well rooted in feeder cattle markets Tuesday morning with losses hovering between $2 and $2.50 per cwt at midday. The overall lack of support in all cattle trade combined with overall lack of support in most other commodity markets Tuesday morning is allowing for feeder cattle traders to lead the cattle market lower. Concerns of widespread liquidation to develop through the next several weeks continue to keep many traders extremely nervous as the market is focusing on traders backing away from the market following prices that have fallen nearly $20 per cwt in the last three weeks. Even though nearby futures have pulled back from session lows, the lack of support in the market will likely keep traders bearish.

LEAN HOGS:

Lean hog futures remain mostly lower with July and August futures the only contracts holding gains at midday. Strong commercial support is moving into front month July futures based on the aggressive cash market support seen through the last couple of weeks. But aggressive pressure in outside markets and the cattle complex has put pressure on the rest of the hog market. Early gains which quickly eroded in lean hog markets were unable to redevelop even though fundamental support continues to remain extremely strong in both cash and pork cutout values. Cash prices are higher on the National Direct morning cash hog report. The weighted average price added $1.00 at $86.50 per cwt with the range from $80.00 to $88.00 on 9,512 head reported sold. Cash prices are higher on the Iowa/Minnesota Direct morning cash hog report. The weighted average price added $0.80 at $87.40 per cwt with the range from $80.00 to $88.00 on 4,060 head reported sold. The National Pork Plant Report reported 194 loads selling with prices gaining $2.96 per cwt. Lean hog index for 6/16 is at $85.32 up $1.26 with a projected two-day index of $86.55 up $1.23.

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

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