Wide ranging price swings have quickly and aggressively developed through the entire livestock complex Thursday morning. Lean hog futures have exploded higher with nearby contracts trading near limit gains. Cattle futures on the other hand have quickly eroded with sharp triple-digit losses seen in live cattle and feeder cattle markets. Corn markets are lower in light trade activity. September corn futures are 2 cent lower. Stock markets are mixed in light trade. The Dow Jones is 25 points lower while Nasdaq is up 24 points.
Strong triple-digit losses have swept through the complex following the aggressive turn lower in the feeder cattle futures. Through the week, the live cattle market has done a very good job of not getting caught up in the volatile market swings seen in the lean hog and feeder cattle trade. But that has apparently come to an end with nearby live cattle futures could not hold the recent market support, and reacted by posting losses near $2 per cwt in nearby contracts. This move lower has broken through initial support levels of $108.60 per cwt, with prices trading at August lows at this point. Prices are still nearly $1 per cwt above the next measurable support level, but the aggressive move in the market has caused some underlying concern that follow-through liquidation is very possible through the end of the week. Cash cattle are still generally inactive with a few bids venturing into the market at $176 dressed basis through the north. This is not expected to gain much attention, which may push active trade to Friday. Bids may become more evident before the end of the day, but the defensiveness of futures trade is limiting overall interest at this point. Asking prices are holding at $115 to $116 live basis, and $180 to $185 dressed. Boxed Beef cut-outs at midday are lower, $0.50 lower (select) and down $0.03 per cwt (choice) with light movement of 63 total loads reported (50 loads of choice cuts, 27 loads of select cuts, 6 loads of trimmings, 19 loads of ground beef).
The inactivity in feeder cattle trade during the first hour of trade has quickly led to aggressive market losses as traders continue to post sharp triple-digit losses across the entire complex. August futures are trading $2.15 per cwt lower, which is not only affecting the ability to bring buyers into the feeder cattle futures, but quickly caused all cattle markets to turn sharply lower. Feeder cattle futures are grouped in an extremely tight trading range with August through November contracts all trading at $148 per cwt. The lack of premium in the market may create some overall market apathy over the next couple of weeks as traders become more susceptible to volatile market swings.
Nearby lean hog futures are flirting with daily trading limits at midday with October and December contracts trading $2.82 to $2.92 per cwt higher with the daily limit at $3 per cwt. At this point, pushing these nearby contracts to the market limit before the end of the session is very likely. A close at limit gains, would not only spark some additional underlying interest into the market Friday, but would also expand trading limits. This may help to bring active buyer support back to the market, which could help to spark technical support through the end of the week. Cash prices are lower on the National Direct morning cash hog report. The weighted average price is down $1.84 at $45.85 per cwt with the range from $45.00 to $46.00 on 3,754 head reported sold. Cash prices are lower on the Iowa/Minnesota Direct morning cash hog report. The weighted average price is down $1.54 at $45.84 per cwt with the range from $45.00 to $46.00 on 1,038 head reported sold. The National Pork Plant Report posted a total of 150 loads selling with cutout values gaining 2.14 per cwt at $73.11 per cwt in the morning report. Lean hog index for 8/7 is at $63.17 down 1.47 with a projected two-day index of $61.88, down 1.29.
Rick Kment can be reached at firstname.lastname@example.org
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