DTN Midday Livestock Comments

Active Pressure Sweeps Through Cattle Trade

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

Strong losses have quickly developed at midday across all livestock trade. Cattle markets are leading the market lower with triple-digit losses seen in all contract months. The feeder cattle futures are leading the market lower as prices are $2 to $3 per cwt lower. Corn prices are higher in light trade Thursday. July corn futures are 3 cents higher. Stock markets are mixed in light trade. The Dow Jones is 128 points higher while Nasdaq is down 74 points.

LIVE CATTLE:

Triple-digit losses have replaced the strong gains which quickly moved into the market early Thursday morning. Nearby futures are holding losses of $1 to $1.65 per cwt lower at midday following aggressive losses in all livestock markets and overall concerns of eroding export levels. The early buyer support was focused on the potential of a trade deal reached with the EU, but the concern that the overall trade deficit continues to widen in June has more immediate implications to all markets. It is uncertain just how much trade is developing due to the recent market turn lower, but the concern that traders may continue to liquidate positions is causing widespread concern Thursday. Cash cattle activity remains sluggish with bids redeveloping Thursday morning in the same range as seen earlier in the week. Live bids are seen at $108 to $110 with the higher bids seen in the South. Dressed bids are at $176 per cwt. This still remains well below asking prices of $115 and higher live and $183 dressed. It is likely to be sometime Friday before any active trade develops. Boxed Beef cut-outs at midday are higher, $1.07 higher (select) and up $0.82 per cwt (choice) with active movement of 52 total loads reported (32 loads of choice cuts, 9 loads of select cuts, 8 loads of trimmings, 3 loads of ground beef).

FEEDER CATTLE:

Feeder cattle futures have tumbled sharply lower in moderate to active trade following the lack of consistency of morning buyer support that initially moved into the market. Traders are concerned with follow through pressure following the commerce department's report which posted the U.S. Trade deficit widened through the month of June following reduced overall exports. This has caused most commodities to quickly back away from session highs seen early Thursday, but is creating additional caution through the livestock complex. All feeder cattle futures are trading $2 per cwt lower at midday as limited support is expected to develop in order to curb losses before the end of the session.

LEAN HOGS:

Early triple-digit support seen in lean hog futures has quickly eroded as initial buy orders were cleared but limited additional market support was able to move back into the market. This pullback from early support is likely to create some additional market uncertainty as traders focus on the still weak fundamental market shifts taking place, while overall long-term export demand still remains one of the main concerns for traders. The volatility through the morning could spark some late-day buying to move back into the market with the up and down shifts likely to continue to develop across the complex through the upcoming days. Cash prices are lower on the National Direct morning cash hog report. The weighted average price is down $1.49 at $63.52 per cwt with the range from $61.00 to $65.25 on 3,764 head reported sold. Cash prices are lower on the Iowa/Minnesota Direct morning cash hog report. The weighted average price is down $1.48 at $63.74 per cwt with the range from $61.00 to $65.25 on 1,153 head reported sold. The National Pork Plant Report posted 137 loads selling with carcass values falling $2.63 per cwt. Lean hog index for 7/24 is at $45.23 down 0.94 with a projected two-day index of $74.43, down 0.80.

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

(SK)

Rick Kment