DTN Midday Livestock Comments

GENERAL COMMENTS:

Strong buyer support flooded into cattle markets late Wednesday morning. This offset the sharp triple digit losses which were seen early in the trading day as buyers are quickly moving back into the complex following the aggressive market pressure over the last couple of sessions.

Sharp losses have quickly developed through cattle trade Thursday morning with traders adjusting positions following the strong move higher midweek. Even though losses remain significant, losses at midday have pulled back from session lows as buyers are stepping back into the complex. Corn prices are higher in light trade. September corn futures are 9 cents higher. Stock markets are higher in light trade. The Dow Jones is 14 points lower while Nasdaq is up 7 points.

LIVE CATTLE:

Firm pressure is holding in live cattle futures with traders focusing on the triple-digit losses in feeder cattle markets. Aggressive gains once again developing in the grain complex has allowed for increased market volatility through the entire cattle market. This may spark some additional trade volume through the end of the week, but the pullback from the sharp highs seen Wednesday is causing many traders to square positions. If markets can curb losses to $1 per cwt through the end of the week, and rebuild additional buyer support early next week, follow through support is likely to develop across all markets. Cash cattle markets are generally quiet Thursday morning following the light trade in the North on Wednesday. Bids redeveloped in the South at $115 to $117 live basis and are seen in the North at $187 to $190 dressed. It is expected that trade will be delayed until sometime Friday following the latest pullback in futures trade. Asking prices remain unchanged, at $120 to $122 live basis and $192 and higher dressed. Beef cut-outs at midday are higher, $0.37 higher (select) and up $0.36 per cwt (choice) with active movement of 104 total loads reported (52 loads of choice cuts, 39 loads of select cuts, no loads of trimmings, 13 loads of ground beef).

FEEDER CATTLE:

Strong triple-digit losses have quickly developed across the feeder cattle complex with traders focusing on the overall lack of support from commercial traders and lack of market activity Thursday morning. Even though feeder cattle trade is currently $1 to $1.50 per cwt lower, markets have pulled back from session lows which were well above $2 per cwt earlier in the morning. The widespread pressure in the market is likely to have very little long-term impact in the market due to the volatility in the complex. This may spark additional concerns about further buyer activity, but may bring some needed support later in the session.

LEAN HOGS:

Lean hog futures remain mixed but prices have moved in a much wider trading range through the morning with nearby contracts quickly eroding based in underlying pressure seen in cash markets as well as the sharp losses developing in the cattle trade. Gains continue to hold across deferred lean hog futures trade with buyers slowly stepping back into the complex and gains of 10 to 30 cents per cwt seen through the complex. There is expected to be some additional market shifts seen through the end of the session, but outside markets will continue to play a significant role in lean hog market direction during the end of the week. Cash prices are lower on the National Direct morning cash hog report. The weighted average price fell $0.93 at $83.86 per cwt with the range from $79.00 to $85.25 on 3,931 head reported sold. Cash prices are lower on the Iowa/Minnesota Direct morning cash hog report. The weighted average price fell $0.42 at $84.84 per cwt with the range from $83.75 to $85.25 on 413 head reported sold. The National Pork Plant Report reported 176 loads selling with prices falling $0.86 per cwt. Lean hog index for 7/18 is at $92.40 down $0.06 with a projected two-day index of $92.00, down $0.40.

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

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