DTN Midday Livestock Comments

GENERAL COMMENTS:

Strong losses have quickly developed in cattle futures following the 11 a.m. (CT) release of the Cattle on Feed report. This has added uncertainty to the entire market and puts additional bearishness on the entire market. Some additional pressure is likely in the last minutes of the abbreviated trading session. Hog futures remain firm following light trade and moderate gains on the hogs and pigs report. Corn prices are higher in light trade. March corn futures are 1 cent per bushel higher. Stock markets are lower in light trade. The Dow Jones is 37 points lower while Nasdaq is down 14 points.

LIVE CATTLE:

There is additional pressure in live cattle futures late Friday morning. The Cattle on Feed report released early from the normal afternoon timeslot due to the upcoming holiday weekend has posted a total on feed result of 108%. This is viewed as bearish for the market due to increased overall placements during the month of November. Front-month December futures are still holding a 7-cent per cwt gain while the rest of the market is firmly lower with triple-digit losses in most nearby contracts. Cash cattle markets remain dead quiet without one bid or asking price redeveloping Friday morning. Both sides are content with the business done before the Christmas break and willing to wait until next week before additional interest is shown. It is likely that next week's trade will remain sluggish also given the holiday schedules the first week of January. Beef cutouts at midday are higher, $0.97 higher (select) and up $0.98 per cwt (choice) with light movement of 49 total loads reported (25 loads of choice cuts, 12 loads of select cuts, two loads of trimmings, nine loads of ground beef).

FEEDER CATTLE:

Despite sluggish market activity early Friday, markets turned sharply lower following the early release of the Cattle on Feed report. This posted overall placements at 114% in the 12-state category. This is likely to keep markets under pressure over the rest of the trading session. Triple-digit losses are holding in all nearby contracts with prices seen from $1 to $1.50 per cwt lower midday. The fact that trade will not reopen until Tuesday is likely to create additional uncertainty in the market.

LEAN HOGS:

Lean hog futures continue to hold light to moderate buyer support due to limited trade activity on the holiday shortened trading session. The quarterly Hogs and Pigs report was released early Friday due to the holiday and abbreviated trading schedule. This posted moderate gains in all categories. At this point, the report is having a muted effect on the market with prices still 30 cents to 50 cents per cwt higher in late-day trade. Cash prices are higher on the National Direct morning cash hog report. The weighted average price is up $0.70 at $56.31 per cwt with the range from $50.00 to $57.20 on 3,198 head reported sold. Cash prices are unreported due to confidentiality on the Iowa/Minnesota Direct morning cash hog report. The National Pork Plant Report posted 131 loads selling with carcass values falling $0.04 per cwt. Lean hog index for Dec. 20 is at $62.00 down $0.38 with a projected two-day index of $61.76, down $0.24.

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

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