DTN Closing Livestock Comments

Sharp Losses Develop at Midweek

Rick Kment
By  Rick Kment , DTN Analyst
(DTN file photo)

GENERAL COMMENTS

Cash cattle trade is still sluggish despite light action in Nebraska at $109 to $109.50 live and $173 dressed. This is generally steady to weak compared to last week. Bids still on the table are from $109 to $109.50 per cwt on a live basis, while dressed bids are $171 to $173 per cwt. Asking prices are $112 to $113 live and $178 dressed. Trade seen Wednesday is likely due to basis opportunities given the aggressive pressure in futures trade. Most trade is likely to be delayed until sometime Thursday or more likely Friday. The Fed Cattle Exchange Auction Wednesday listed a total of 359 head all from Kansas, with 280 actually sold at $109.50; 0 head were listed as unsold; and 79 head were listed as PO (Passed Offer). All cattle listed were set for a 1 to 9 day delivery. According to the closing report, the national hog base is $0.91 lower compared with the Prior Day settlement ($36.00-$40.00) weighted average $38.42. Corn futures are lower in light activity. September futures were 7 cents lower Wednesday. Dow Jones Index is 72 points lower with Nasdaq up 22 points.

LIVE CATTLE

Firm pressure developed in live cattle futures with triple-digit losses in all contracts ($1.05 to $1.57 lower). Sharp losses across the entire livestock market and most other commodity trade Wednesday helped spark some increased overall pressure through the entire complex. August futures fell $1.05 per cwt lower, moving to $108.22 per cwt. The remainder of nearby contracts were contained in a narrow trading range from $1.30 to $1.57 per cwt lower as the aggressive losses in feeder cattle sparked continued market liquidation. Even with the push lower over the last couple of days, nearby contracts are still trading $1 per cwt above short-term support levels seen early in the month. This may continue to keep prices hovering within a sideways trading range as overall long-term direction remains less clear. Beef cut-outs: mixed, $0.11 lower (select, $203.97) and up $0.47 (choice, $214.04) with light demand and offerings (53 loads of choice cuts, 20 loads of select cuts, 17 load of trimmings, 17 loads of coarse grinds).

THURSDAY'S CASH CATTLE CALL:

Steady. Interest Thursday is expected to remain sluggish early in the day following light trade in Nebraska Wednesday afternoon at $109 to $109.50 per cwt. These prices are steady to weak from last week's levels. Most trade is expected to be pushed until sometime late Thursday or Friday.

FEEDER CATTLE:

Follow-through losses swiftly moved through the entire livestock complex with feeder cattle holding aggressive triple-digit losses in all but spot August contracts ($0.47 to $2.32 lower). August futures were lightly traded, slipping 47 cents per cwt lower as limited activity has been seen in the front-month futures. The brunt of trade has moved to the September and October contracts, which posted sharp, triple-digit losses. October and November futures felt the most impact with prices falling $2.30 and $2.32 per cwt, respectively. This may add additional market liquidation through the end of the week as contracts in the fourth quarter have broken though short-term support levels seen last week. CME cash feeder index for 8/21 is $149.84 up $0.41.

LEAN HOGS:

Widespread pressure quickly swept through lean hog futures as prices shifted lower at midweek. The inability to develop any sense of stability in all livestock markets hit hog futures hard with most contracts holding triple-digit losses ($0.70 to $2.62 lower). Pressure, which was seen in most commodity markets Wednesday, heavily affected the lean hog complex. Spot-month October futures led the complex lower with a $2.62 per cwt loss as traders continue to focus on the inability to sustain buyer support. Even though traders are expected to focus on the potential of building price stability over the near future, the turn lower has caused some questions about market consistency. Pork values have continued to shift lower. Pork cut-out: $65.90 down $0.29. CME cash lean index for 8/20 $50.71 down $0.80. DTN Projected lean index for 8/21 $50.01 down $0.70.

HOG CALL:

Steady to $2 lower. Sharp losses in futures trade have continued to erode all markets. Bids are expected in a wide range, although most bids are expected to be $1 to $1.50 per cwt lower. Thursday runs are expected at 465,000 head with 218,000 head expected Saturday.

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

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Rick Kment