DTN Midday Livestock Comments

Cattle Futures Shift Lower

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

Cattle futures have shifted lower early in the week with triple-digit losses seen in live cattle and feeder cattle through most of the morning trade. The focus on overall uncertainty in cash cattle trade which eroded last week is offsetting the lower production costs coming from recent grain market pressure. Hog markets are firm, but have backed away from strong triple-digit gains seen early in the session, currently holding moderate gains at midday. Corn markets are lower in light trade activity. September corn futures are 1 cent lower. Stock markets are lower in light trade. The Dow Jones is 129 points lower while Nasdaq is down 13 points.

LIVE CATTLE:

Triple-digit losses have continued to develop through the morning Monday with October futures leading the complex lower with a $1.45 per cwt loss. The overall lack of support in the entire cattle market is following the expectation that firm seasonal support will continue to develop through the remainder of the year. But pressure in outside markets and the overall uncertainty of how trade activity will affect the overall beef industry long term has traders quickly backing away from recent market gains. So far, no significant pressure has developed in beef values, but the overall lack of commercial interest returning to the market is causing many traders to prepare for additional market softness. Cash cattle markets are undeveloped through the morning with inventory taking and show list distribution the main order of business through the day. Following the market pressure last week where prices fell $2 to $3 per cwt from the previous week in most areas, the tone of the market remains defensive. Active interest is not expected until midweek or later, with trade likely to be pushed off to the last couple days of the week. Boxed Beef cut-outs at midday are higher, $1.16 higher (select) and up $0.67 per cwt (choice) with light movement of 54 total loads reported (30 loads of choice cuts, 12 loads of select cuts, no loads of trimmings, 13 loads of ground beef).

FEEDER CATTLE:

Strong losses have quickly developed across feeder cattle futures early Monday morning. The overall lack of support that has returned to the market early in the week seems to have offset any sense of market stability that tried to move into the complex Friday. The weaker shift in grain prices late last week has had very little long-term support to the feeder cattle futures, which has traded $1 to $1.40 per cwt through much of the morning. Even though prices have pulled off of morning lows, the focus of most contracts trading near or at $1 per cwt lower has continued to cause underlying weakness through the complex.

LEAN HOGS:

Moderate buyer support has held through the morning despite the pullback from aggressive triple digit gains seen during the first hour of trade. The extremely oversold market has quickly bounced off of market lows seen last week, and sparked widespread interest. But the market momentum has cooled significantly with gains of 20 to 90 cents per cwt seen at midday. The overall tone of the market is still firming, which may draw some additional longer-term interest back to the complex. The focus on increased buyer activity may help to add even more trader involvement later in the week. Cash prices are lower on the National Direct morning cash hog report. The weighted average price is down $1.32 at $43.62 per cwt with the range from $42.00 to $44.50 on 4,661 head reported sold. Cash prices are lower on the Iowa/Minnesota Direct morning cash hog report. The weighted average price is down $2.23 at $42.99 per cwt with the range from $42.00 to $43.50 on 1,705 head reported sold. The National Pork Plant Report posted a total of 110 loads selling with cutout values adding 1.14 per cwt at $72.21 per cwt in the morning report. Lean hog index for 8/9 is at $60.04 down 1.84 with a projected two-day index of $58.28, down 1.76.

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

(SK)

Rick Kment