DTN Midday Livestock Comments

Continued Pressure Develops Monday

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

Livestock trade has eroded through the morning with cattle and hog futures showing very limited support despite morning gains. Trade activity is expected to remain sluggish through the remainder of the session, although the pressure seen during the morning is likely to hold in all contracts. Corn prices are higher in light trade Monday. September corn futures are 5 cents higher. Stock markets are lower in light trade. The Dow Jones is 127 points lower while Nasdaq is down 129 points.


Live cattle futures have quickly backed away from strong morning gains as the depth of buyer support in the market Monday remained very thin. This lack of continued support following the late week bounce Friday is causing many traders to take protection through the end of the month. There may be some additional uncertainty in the complex as traders look for losses of 40 to 90 cents to hold through the end of the session. Gains in grain markets which adds production costs through the next several weeks, is likely to prices shifting in a moderate but volatile trading range. Cash cattle activity remains sluggish with show list distribution and inventory taking the main order of business. The very limited trade seen last week is likely to keep packers short bought, but this may not escalate the cash buying process through the week. Boxed Beef cut-outs at midday are higher, $0.17 higher (select) and up $0.69 per cwt (choice) with light movement of 51 total loads reported (24 loads of choice cuts, 10 loads of select cuts, 5 loads of trimmings, 12 loads of ground beef).


Firm losses early Monday sparked additional market pressure that flooded through the entire cattle market. Feeder cattle futures are holding losses from 50 cents to $1 per cwt lower midday although prices have bounced back from session lows which pushed prices as much as $1.50 per cwt lower. The strong buyer support seen in corn trade as well as lack of overall underlying support in live cattle markets seems to have wiped out any indication of stability in the market over the near future. This could bring some additional volatility to the market through the end of the month.


Early support that quickly and aggressively moved into the lean hog complex was short lived as prices have moved back to a moderate loss in all contracts. Most nearby contracts are holding losses of 15 to 40 cents per cwt with very limited trade seen through the complex. This may add even more weakness to the market following the strong push lower in cattle trade earlier in the day. The strong pullback in cash and pork values is adding even more uncertainty to the overall weakness in the hog futures which has now fallen over $15 per cwt since mid-June. Cash prices are lower on the National Direct morning cash hog report. The weighted average price is down $1.63 at $60.77 per cwt with the range from $57.00 to $63.50 on 4,621 head reported sold. Cash prices are lower on the Iowa/Minnesota Direct morning cash hog report. The weighted average price is down $2.66 at $60.04 per cwt with the range from $57.00 to $62.25 on 1,726 head reported sold. The National Pork Plant Report posted 120 loads selling with carcass values falling $2.97 per cwt. Lean hog index for 7/26 is at $73.46 down 0.97 with a projected two-day index of $72.17, down 1.29.

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


Rick Kment