DTN Midday Livestock Comments

GENERAL COMMENTS:

Sharp losses have quickly developed across all trade Tuesday morning with pressure developing through cattle and hog futures. The lack of fundamental support is likely to limit commercial buyer interest through the rest of the trading session. Corn prices are lower in light trade. September corn futures are 2 cents lower. Stock markets are higher in light trade. The Dow Jones is 19 points higher while Nasdaq is up 13 points.

LIVE CATTLE:

Strong losses have developed in live cattle futures with traders focusing on pulling back from early-week gains. The overall lack of support in the complex is causing many traders to question just how firm the buyer interest was that stepped into the market Monday. This will have significant impact to any cash business that moves into the market as well as further meat trade later in the week. Traders will need to create a sense of market stability through the end of the month and through the holiday weekend in order to bring some additional buyer support back into the market in order to bring longer-term support that will have a lasting impact. Cash cattle activity remains quiet Tuesday morning with bids still undeveloped. Asking prices are still hard to find in most areas although it is expected that cattle will start out at $108 to $110 live and $173 and higher dressed. It is expected that trade will be delayed until Wednesday or later, although both sides will likely want to get things wrapped up sooner than later in front of the holiday weekend. Beef cut-outs at midday are higher, $1.77 higher (select) and up $0.04 per cwt (choice) with light movement of 73 total loads reported (35 loads of choice cuts, 17 loads of select cuts, 9 loads of trimmings, 12 loads of ground beef).

FEEDER CATTLE:

Front month August futures remains higher although the overall lack of trade volume in the soon to expire contract is limiting trade activity. The rest of the contract are holding triple-digit losses Tuesday morning with traders quickly backing away from the gains seen early in the week. Even though not all of the gains have been erased, the lack of support in the market is creating some uncertainty in the market as traders are focusing on trader interest as all nearby feeder cattle futures are trading at $144 per cwt. This narrow trading range may limit further market moves in the near future.

LEAN HOGS:

Triple-digit pressure shows the overall lack of support seen in the lean hog complex through the morning as traders remain focused on lack of interest in both cash trade and weakness in pork values through late August. Even though aggressive losses are not seen in deferred contracts, the lack of support in all contracts is concerning to the entire market. Cash prices are lower on the Iowa/Minnesota Direct morning cash hog report. The weighted average price fell $0.11 at $64.94 per cwt with the range from $62.00 to $66.00 on 2,861 head reported sold. The National Pork Plant Report reported 228 loads selling with prices fell $1.28 per cwt. Lean hog index for 8/25 is at $76.76 down $1.47 with a projected two-day index of $75.68, down $1.08.

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

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