DTN Midday Livestock Comments

Feeder Cattle Futures Tumble on Soybean Gains

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

Feeder cattle futures have posted sharp losses with all contracts holding triple-digit losses at midday. The strong shift higher across the grain complex has quickly added to the selling pressure in not only feeder cattle, but all livestock trade. Corn prices are higher in light trade Tuesday. September corn futures are 3 cents higher. Stock markets are higher in light trade. The Dow Jones is 180 points higher while Nasdaq is up 68 points.

LIVE CATTLE:

Moderate to firm losses have developed across live cattle trade Tuesday morning. The sharp losses in feeder cattle trade has been the main driver of lower live cattle trade, but the bearish market shift has been initially driven by strong gains in corn and soybean markets. Reports that China is willing to reestablish trade talks has caused increased buyer support through the grain complex. August futures have eroded 40 cents per cwt at midday with the rest of the complex holding losses of 50 to 80 cents per cwt. Limited trade volume is likely to be seen through the remaining trading session with traders also focusing on end of the month positioning. Cash cattle markets are undeveloped with bids and asking prices still unavailable. Combined with futures losses, it is expected that little to no cash market developments will be seen until the second half of the week. Boxed Beef cut-outs at midday are higher, $0.94 higher (select) and up $0.24 per cwt (choice) with light movement of 63 total loads reported (34 loads of choice cuts, 19 loads of select cuts, no loads of trimmings, 10 loads of ground beef).

FEEDER CATTLE:

Sharp triple-digit losses have flooded into feeder cattle trade as all nearby contracts are posting losses above $2 per cwt. The overall lack of support in the complex continues to leaver traders looking for protection at the end of the month. August futures are leading the market lower with prices $2.40 per cwt lower as all nearby contracts have pushed below $150 per cwt during the trading session. The sharp rally through the morning in corn and soybean markets is the main driver of the eroding feeder cattle complex. But the end of the month pressure has the potential to quickly spark some increased market weakness through all cattle futures during early August.

LEAN HOGS:

Initial buyer support seen in lean hog futures had a hard time building additional market support. This pushed August futures $1.90 per cwt lower with increased overall selling pressure in most contracts through the morning. Although some buyer support is starting to develop in early 2019 contracts due to traders squaring positions at the end of the month, the tone of the market remains extremely weak. Limited trade is expected to be seen in the hours before closing bell, with increased fundamental pressure likely to develop over the near future that could add even more weakness to the complex in the near future. Cash prices are lower on the National Direct morning cash hog report. The weighted average price is down $1.20 at $59.80 per cwt with the range from $57.00 to $62.00 on 4,965 head reported sold. Cash prices are lower on the Iowa/Minnesota Direct morning cash hog report. The weighted average price is down $1.13 at $59.78 per cwt with the range from $57.00 to $62.00 on 2,478 head reported sold. The National Pork Plant Report posted 192 loads selling with carcass values falling $0.39 per cwt. Lean hog index for 7/27 is at $72.17 down 1.29 with a projected two-day index of $70.80, down 1.37.

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

(SK)

Rick Kment