DTN Midday Livestock Comments

Feeder Cattle Futures Tumble Lower

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

Sharp losses have quickly developed in feeder cattle trade early Tuesday, with nearby contracts holding losses of $3 per cwt. This strong morning pressure has the potential to add increased weakness through the end of the session due to prices quickly breaking through support levels. Live cattle futures are following feeder cattle markets lower at midday. Corn markets are lower in light trade activity. September corn futures are 1 cent lower. Stock markets are higher in light trade. The Dow Jones is 155 points higher while Nasdaq is up 20 points.

LIVE CATTLE:

Sharp losses have quickly swept through live cattle trade following the aggressive turn lower in the feeder cattle complex. Deferred live cattle trade remains focused on the $3 per cwt losses seen in nearby feeder cattle as traders try to wrap their heads around the aggressive market losses. Even with current losses, nearby live cattle trade remains in a sideways trading pattern following the recent rally higher over the last week. But continued pressure in nearby feeder cattle contracts and renewed buyer support in the grain complex could shift market direction through the rest of the week. Cash cattle markets remain undeveloped Tuesday morning with bids and offers still unavailable. There is limited interest in moving into the cash market space at this point, as both sides are likely going to wait until midweek or later before showing their hand. This is likely to push any active trade off until late in the week once again. Boxed Beef cut-outs at midday are higher, $0.90 higher (select) and up $0.35 per cwt (choice) with light movement of 68 total loads reported (36 loads of choice cuts, 14 loads of select cuts, 12 loads of trimmings, six loads of ground beef).

FEEDER CATTLE:

Sharp triple-digit losses have flooded the feeder cattle complex with nearby contracts holding losses of $2.50 per cwt to $3 per cwt. The most recent turn lower has quickly moved through July support levels, creating the expectation that additional liquidation may sweep through the feeder cattle market, as well as all cattle trade. September feeder cattle futures are $3 per cwt lower, falling to $148.82 per cwt. This is the lowest price since the last week of June and could add more uncertainty through the entire complex. Limited trade is expected to be seen through the rest of the Tuesday session, but the overall lack of support is adding uncertainty to the market.

LEAN HOGS:

Limited trade volume has developed Tuesday morning across lean hog futures with prices mixed in a narrow to moderate range at midday. August futures continue to lead the market lower due to limited open interest as traders have shifted their attention to the October and December contracts. This is pushing spot August futures 42 cents lower. The rest of the complex is moving sideways with prices 20 cents lower to 22 cents higher. The potential for prices to slip lower during late day trade is growing considering a weaker market shift has developed over the past few trading sessions. Buyers remain cautious as the choppy market moves at the bottom of the trading range are now able to establish good market support. Cash prices are lower on the National Direct morning cash hog report. The weighted average price is down $2.13 at $50.94 per cwt with the range from $49.00 to $52.50 on 4,485 head reported sold. Cash prices are lower on the Iowa/Minnesota Direct morning cash hog report. The weighted average price is down $1.97 at $50.99 per cwt with the range from $49.00 to $52.00 on 2,030 head reported sold. The National Pork Plant Report is unavailable at this time due to packer submission issues. Lean hog index for 8/3 is at $66.04 down 1.53 with a projected two-day index of $64.64, down 1.40.

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

(SK)

Rick Kment