DTN Midday Livestock Comments

GENERAL COMMENTS:

Sharp losses have quickly flooded into cattle trade with losses of $1-to-$2.50 per cwt through early morning trade. This may continue to draw further liquidation into the market as traders remain concerned about the potential to draw buyers back. At midday there is some buyer support attempting to move back into the feeder cattle market, but the depth of buyer interest is still uncertain. Hog markets are holding narrow gains in most contracts with prices mixed to mostly higher. Corn prices are lower in light trade. May corn futures are 6 cents lower. Stock markets are lower in light trade. The Dow Jones is 147 points lower, while Nasdaq is down 13 points.

LIVE CATTLE:

Moderate pressure continues to hold across the live cattle complex midday Wednesday. Even though prices have pulled back from sharp session lows, the overall tone of the market remains extremely weak. Combined with previous selling pressure over the last week, there is concern that additional weakness may develop based on proposed tariffs by China. At this point, there is little solid evidence to go on as the most recent tariff proposals are laid out to dive into deeper discussions. However, if "discussions" don't work, it is uncertain what will be next, and how this will impact all commodity markets. Nearby futures are 40-to-60 cents lower at midday, but summer contracts remain under the $100 per cwt price point. This is limiting support over the near future. Cash cattle trade is starting to redevelop Wednesday morning with a few cattle sold at $117 per cwt live basis in the North. This is steady to weak with trade seen Tuesday, but $4 per cwt lower than last week. Bids in other areas are seen at $116 live basis and $185-to-$188 per cwt. The sharp continued losses in cattle futures is likely to spark some cash market pressure over the next couple of days. The Fed Cattle Exchange Auction Wednesday listed a total of 373 head, with 156 actually sold, 121 head listed as unsold and 96 head listed as PO (Passed Offer). The state by state breakdown looks like this: KS 252 total head, with 156 head sold at $117.00, 0 head unsold, 96 head listed as PO ($116.00); NE -- no cattle reported; TX 121 total head, with 0 head sold, 121 head unsold, and 0 head listed as PO; CO -- no cattle reported; IA -- no cattle reported; other states (OK, SD, MN) -- no cattle reported. The delivery date/weighted averages breakdown is as listed: 1-to-9-day delivery: 373 head total, 156 head sold, with a weighted average price of $117.00; 1-17 day delivery -- no cattle reported; 10-17 day delivery -- no cattle reported; 17-30 day delivery -- no cattle reported. Boxed Beef cut-outs at midday are lower, $1.66 lower (select) and down $0.50 per cwt (choice) with light movement of 89 total loads reported (47 loads of choice cuts, 22 loads of select cuts, seven loads of trimmings, 13 loads of ground beef).

FEEDER CATTLE:

Wide trading ranges have been seen across feeder cattle Wednesday morning. Sharp triple-digit losses created widespread follow through pressure during most of the morning. Although buyers have stepped back into the market at midday, there is still a growing concern that traders will return to the lower prices once initial short covering is accomplished. Volatility in all cattle markets and most outside commodity markets is likely to add to market swings through the rest of the week.

LEAN HOGS:

Buying has slowly returned to the lean hog complex Wednesday morning following limited activity and mixed trade levels. The sharp pressure seen over the last few days surrounding the China tariff issues has been offset by focus moving to other commodity markets. Although it is uncertain just how much support will continue to build over the near future. Trades seem to be willing to take a break from market liquidation. Cash prices are lower on the National Direct morning cash hog report. The weighted average price is down $0.77 at $45.07 per cwt with the range from $44.50-to-$45.56 on 5,875 head reported sold. Cash prices are lower on the Iowa/Minnesota Direct morning cash hog report. The weighted average price is down $1.00 at $44.77 per cwt with the range from $44.50-to-$45.50 on 3,615 head reported sold. The National Pork Plant Report posted 190 loads selling with carcass values falling $0.62 per cwt. Lean hog index for 4/2 is at $56.00 down $0.72 with a projected two-day index of $55.60, down $0.40.

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

(SK)

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