DTN Midday Livestock Comments

Aggressive Pressure Developing in Livestock Complex

Rick Kment
By  Rick Kment , DTN Analyst
(DTN photo by Russ Quinn)
GENERAL COMMENTS:

Increased pressure has quickly swept through livestock trade as traders in the cattle market have turned their focus to the overall lack of support in outside markets. Sharp grain market pressure and lackluster interest in financial markets have allowed increased pressure to develop in cattle and hog futures Thursday morning. Corn prices are lower in light trade Thursday. July corn futures are 7 cents lower. Stock markets are mixed in light trade. The Dow Jones is 9 points lower while Nasdaq is up 61 points.

LIVE CATTLE:

The early mixed trade seen at opening bell Thursday was short-lived as traders quickly started to focus on the pressure in outside markets and liquidated cattle positions. Triple-digit losses are seen through the entire complex with traders focusing on increased overall pressure as the morning has continued. June futures have slipped to $106 per cwt with a $1.85 per cwt loss. The rest of nearby contracts are holding losses near $2 per cwt, but have pulled back from much more aggressive pressure which developed early in the session. Cash cattle remain generally quiet with a few scattered bids redeveloping in the same range as seen Wednesday. The fact that sharp losses have developed in futures trade is eroding some of the underlying support that feedlot managers hoped would develop through the rest of the day. But asking prices still remain well above asking prices as both sides appear to be waiting until the end of the week before pulling the trigger. The key reason that trade may develop Thursday is potential basis opportunities given the triple-digit losses in nearby futures trade. Boxed Beef cut-outs at midday are mixed, $1.16 higher (select) and down $0.48 per cwt (choice) with light movement of 57 total loads reported (36 loads of choice cuts, 16 loads of select cuts, zero loads of trimmings, 5 loads of ground beef).

FEEDER CATTLE:

Strong pressure has swept through feeder cattle trade. Even though prices have backed off of market lows, prices are holding losses from $1.50 to $2 per cwt in most contracts. The overall lack of support in the market is likely to lead to additional late-week softness through the entire cattle complex. It will be important to see if buyers are able to return early next week and stage a moderate to strong recovery to what has been a disappointing shift lower in the last couple of days.

LEAN HOGS:

Markets weakness has quickly developed across lean hog futures trade following the aggressive triple-digit pressure seen in cattle markets. Spot month June futures remain slightly higher with a 20 cent gain at midday, while the rest of nearby contracts are trading $1 to $1.50 per cwt lower. Even though firm support is seen in cash markets, the outside market pressure is driving sellers into the market following the aggressive market rally seen over the last couple of weeks. Cash prices are higher on the National Direct morning cash hog report. The weighted average price is up $1.08 at $82.02 per cwt with the range from $75.00 to $84.00 on 5,515 head reported sold. Cash prices are higher on the Iowa/Minnesota Direct morning cash hog report. The weighted average price is up $1.66 at $83.40 per cwt with the range from $75.00 to $84.00 on 2,955 head reported sold. The National Pork Plant Report posted 120 loads selling with carcass values falling $0.13 per cwt. Lean hog index for 6/12 is at $78.71 up 1.53 with a projected two-day index of $80.09, up 1.38.

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

(SK)

Rick Kment