DTN Midday Livestock Comments

Weakness Develops Across Livestock Trade

John Harrington
By  John Harrington , DTN Livestock Analyst
(DTN photo by Russ Quinn)
GENERAL COMMENTS:

Moderate to sharp losses are holding in livestock trade early Monday morning with weakness developing in most commodity markets. The softness is most evident in lean hog trade with losses of $2 per cwt in several nearby contracts. Corn prices are lower in light trade Monday. July corn futures are 7 cents lower. Stock markets are higher in light trade. The Dow Jones is 308 points higher while Nasdaq is up 37 points.

LIVE CATTLE:

Moderate to strong pressure is seen in live cattle futures trade. This has limited the early morning losses which were consistently holding triple-digit losses through most of the morning. Trade is seen $0.35 to $1 per cwt lower as the overall market pressure continues to focus on a pullback in grain markets. Cash markets are quiet with packers and feeders focusing on inventory taking and show list distribution Monday morning. The sharp rally in cash markets Friday that pushed prices generally $5 to $10 per cwt higher will no doubt create sharply higher asking prices through the week. Given this market situation, it is likely that bids and realistic asking prices may not be seen until midweek or later. This could push active trade to the end of the week once again, as both sides are fighting for market momentum through the upcoming summer months. Boxed Beef cut-outs at midday are mixed, $0.39 higher (select) and down $0.39 per cwt (choice) with light movement of 49 total loads reported (28 loads of choice cuts, 8 loads of select cuts, no loads of trimmings, 12 loads of ground beef).

FEEDER CATTLE:

Moderate pressure is seen in cattle futures early Monday with feeder cattle contracts leading the market lower. Even though prices have cut early losses nearly in half at midday, the concern that additional market pressure may continue to develop through the complex. Strong gains seen in grain trade late last week is still having some impact when traders focus on long-term production costs. The building market pressure in live cattle trade is also limiting trade weakness in the feeder cattle market.

LEAN HOGS:

Sharp losses continue to develop in nearby lean hog futures. August contracts are leading the market lower with midday losses of $2.52 per cwt. At this point it appears that there may not be enough new pressure entering the market in order to move prices to limit losses before the end of the session, but the overall lack of support in the complex continues to add significant concerns to the entire complex. August futures are still holding an aggressive premium over the October contract, leaving traders to remain concerned about just how much follow-through pressure may be seen in the complex through the week. July contracts are holding 80 cent losses at midday, although most of the volume has moved to the August contract month, as July futures slowly wander toward expiration. Cash prices are lower on the National Direct morning cash hog report. The weighted average price is down $0.35 at $76.26 per cwt with the range from $74.00 to $77.00 on 5,339 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 134 loads selling with carcass values adding $1.45 per cwt. Lean hog index for 7/5 is at $82.11 down 0.13 with a projected two-day index of $81.92, down 0.19.

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

(SK)

John Harrington