DTN Midday Livestock Comments

Sharp Losses Sweep Through Hog Futures

Rick Kment
By  Rick Kment , DTN Analyst

Moderate-to-strong follow-through pressure is developing in lean hog and feeder cattle futures late morning Thursday. This may spark some additional end-of-the-week liquidation as hog futures continue to show the most aggressive market pressure during mid-October. Corn markets are higher in light trade. December corn futures are 6 cents higher. Stock markets are lower in light trade. The Dow Jones is 408 points lower while Nasdaq is down 183 points.

LIVE CATTLE:

Cattle futures have hovered within a narrowly mixed trading range through most of the morning. Nearby gains of 10 cents to 50 cents seem to be firmly planted through the complex, while deferred futures are under light-to-moderate pressure in late morning based in part to active pressure in feeder cattle trade. Markets are likely to remain in the current trading range, with overall lack of direction expected through the end of the session. Cash cattle trade is starting to develop with light-to-moderate activity in most areas. Live cattle trade is at $111 per cwt in both the North and South, which is fully steady with last week's prices. A few more scattered dressed deals have been seen in the North with prices at $173 per cwt. This is $2 per cwt lower than last week, and generally $1 per cwt lower than the limited activity, which developed Wednesday. This may not be able to clear enough cattle for the week, although these moves may set the price tone for additional sales that may take place the next two days. Asking prices are at $113 to $114 per cwt live and $178 and higher dressed. Boxed beef cutouts at midday are mixed, $0.63 lower (select) and up $0.86 per cwt (choice) with moderate movement of 83 total loads reported (43 loads of choice cuts, 19 loads of select cuts, 10 loads of trimmings, 12 loads of ground beef).

FEEDER CATTLE:

Morning buyer support, which stepped into the market for a portion of the Thursday trading session, quickly evaporated, allowing for additional market uncertainty through the entire complex. Nearby contracts remain firmly higher with prices 50 cents to 75 cents per cwt in remaining 2018 contract months. The weakness in deferred contracts focuses on overall lack of commercial interest moving back to the complex, following strong gains in corn trade after the USDA crop report.

LEAN HOGS:

Even though lightly traded October contracts continue to hold narrow gains, the rest of the complex continues to quickly erode lower. This is holding triple-digit losses in all other contracts months. December futures are currently leading the complex lower with widespread commercial liquidation developing as prices are $1.70 per cwt lower. This pressure is likely to influence market activity through the rest of the week. Cash prices are higher on the National Direct morning cash hog report. The weighted average price is $0.34 higher at $62.99 per cwt with the range from $58.00 to $63.42 on 4,191 head reported sold. Cash prices are unreported due to confidentiality on the Iowa/Minnesota Direct morning cash hog report. The National Pork Plant Report posted 130 loads selling on the morning report. Pork carcass values gained $0.11 per cwt at $79.31 per cwt. Lean hog index for Oct.9 is at $69.34 up 0.01 with a projected two-day index of 69.28, down 0.06.

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

(SK)

Rick Kment