DTN Midday Livestock Comments

General Comments

Strong gains seen in the lean hog complex has sparked triple digit buyer activity through all nearby contracts. This move in the hog market has pulled increased interest from the cattle trade which is posting strong market losses Thursday. Corn markets are higher in light trade. December corn futures are 1/2 cent higher. Stock markets are lower in light trade. The Dow Jones is 50 points lower while Nasdaq is down 13 points.

LIVE CATTLE:

Strong losses have developed through the live cattle complex at midday following the triple-digit pressure seen in feeder cattle. There is very little new market direction seen in the complex as traders are now focusing on renewed strong market surges seen in lean hog trade. The concern of additional market demand through early 2019 has now offset any supply reduction activity following the last cattle on feed report, as traders remain uncertain about the ability to move additional beef supplies at higher prices due to economic uncertainty. Cash cattle activity is still undeveloped with bids still quiet through the morning. The pullback in futures trade has added some uncertainty from the packer side as they are hesitant to restate bids seen earlier in the week. Asking prices remain firm at $119 to $120 per cwt live and $187 and higher dressed, which may not change until sometime Friday if packers do not show interest. A Friday trade is likely at this point unless something major develops in futures trade. Boxed Beef cut-outs at midday are lower, $0.19 lower (select) and down $0.64 per cwt (choice) with light movement of 81 total loads reported (50 loads of choice cuts, 12 loads of select cuts, no loads of trimmings, 19 loads of ground beef).

FEEDER CATTLE:

Strong pressure has developed through the morning in feeder cattle trade with front-month January futures holding a $2 per cwt loss. The overall lack of support in the complex comes while aggressive buyer support is moving into the hog complex and leaving most cattle trade generally sluggish. Even with the sharp losses, prices are still well above short-term lows seen during early November, as prices continue to hover in the bottom half of the extremely wide sideways market trend seen through the fall months. Concerns surrounding long-term beef demand and overall economic market direction has eroded both commercial and investment activity in cattle trade through the week.

LEAN HOGS:

Aggressive buyer support is quickly moving into the lean hog futures complex through the morning with February futures leading the complex higher as gains of $2 per cwt have held through the morning. February futures are trading $2.15 per cwt higher with traders moving into the end of the month with expectations and hopes of positive trade news seen following the G20 Summit and discussions between the U.S. and China. Any good news that comes out of these meetings seems to be enough to bring buyers back to the hog market at this point. Even though prices are holding triple digit gains in most contracts, the inability to keep volume active through the morning may limit further support. Cash prices are higher on the National Direct morning cash hog report. The weighted average price is $0.34 higher at $50.19 per cwt with the range from $48.00 to $50.74 on 3,145 head reported sold. Cash prices are unreported due to confidentiality on the Iowa/Minnesota Direct morning cash hog report. Pork carcass values added $0.55 per cwt at $68.29 per cwt on 177 loads. Lean hog index for 11/27 is $56.84, down 0.33, with a projected two-day index is unavailable at this time.

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

(CZ)

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