DTN Midday Livestock Comments

GENERAL COMMENTS:

Widespread losses have quickly developed in both live cattle and feeder cattle markets at midday. The sluggish early morning activity which kept prices contained in a moderate price range, has quickly evaporated. This may lead to even more long term pressure in the cattle complex as front month futures have broken through support levels set in June. The potential that this will bring about even more liquidation is very likely, and is creating some additional concerns both short and long term across the complex. Corn prices are higher in light trade. July corn futures are 1/4 cent higher. Stock markets are mixed in light trade. The Dow Jones is 2 points lower while Nasdaq is up 32 points.

LIVE CATTLE:

Early pressure in live cattle futures remained light, but additional widespread losses quickly developed across the complex as pressure in the feeder cattle market added to softness in live cattle trade. Nearby live cattle futures are holding losses from $1.50 to $2 per cwt as traders not only focus on the overall lack of support in the market, but the potential for additional pressure in cash markets through the week. Cash cattle business through feedlot country remains at a standstill with bids and asking prices still undeveloped. With packers and feeders returning from the holiday, and little activity started Monday, it is likely that trade will be pushed off until later in the week. The Fed Cattle Exchange Auction report today listed a total of 2,093 head, with 429 actually sold, 455 head listed as unsold, and 1,209 head listed as PO. The state by state breakdown looks like this: KS 257 total head, with 92 head sold at $117.75, 165 head listed as PO ($117.75); NE 1,334 total head, with 337 head sold at $117.25, 821 head listed as PO ($117.25); TX 502 total head, with no actual sales, 223 head listed as PO ($117.75); CO no test; IA no test; other states no test. The weighted averages are as listed: 1-9 day delivery: 92 head, $117.75; 17-30 day delivery 337 head, $117.25. Beef cut-outs at midday are mixed, $0.62 lower (select) and up $1.18 per cwt (choice) with light movement of 75 total loads reported (32 loads of choice cuts, 26 loads of select cuts, 11 loads of trimmings, 6 loads of ground beef).

FEEDER CATTLE:

Strong market pressure has continued to develop through the feeder cattle futures with losses now seen from $2 to $2.70 per cwt in all nearby contract months. The combination of follow through pressure seen Monday, as well as concerns that beef fundamentals may continue to remain generally weak over the near future is allowing for traders to quickly and aggressively back away from the complex. Nearby contracts continue to trade at $143 per cwt with the recent losses breaking through support in front month August futures.

LEAN HOGS:

Firm gains have redeveloped through the entire lean hog futures complex. This support is pushing front month July futures $1 per cwt higher during morning trade, although the rest of the complex remains sluggish with gains holding from 10 to 40 cents per cwt. The overall lack of direction outside of front month contracts is allowing for increased market interest during early July. This continues to be based on firming fundamental support. Cash prices are lower on the National Direct morning cash hog report. The weighted average price fell $1.26 at $85.21 per cwt with the range from $82.00 to $87.00 on 3,509 head reported sold. Cash prices are lower on the Iowa/Minnesota Direct morning cash hog report. The weighted average price fell $1.32 at $86.28 per cwt with the range from $82.00 to $87.00 on 854 head reported sold. The National Pork Plant Report reported 178 loads selling with prices gaining $0.25 per cwt. Lean hog index for 6/30 is at $91.71 down $0.01 with a projected two-day index of $91.93 up $0.22.

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

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