DTN Midday Livestock Comments

General Comments

Traders attention has quickly shifted to lean hog futures trade with most contracts are trading $2 to $3 per cwt based on continued expectations of strong pork demand through the rest of the year. Cattle futures are firming, due in part to spill over activity from hog markets. Corn futures are lower in light trade. May corn futures are 1 1/2 cent lower. Stock markets are mixed in light trade. Dow Jones is 102 points lower with Nasdaq up 2 points.

LIVE CATTLE:

Spillover support from the hog complex is helping to rekindle buyer activity in nearby contracts. April and June futures are leading the complex higher with 40-to-55-cent gains despite mixed moves in beef values. The focus on renewed short-term support has limited previous market pressure, as traders start focusing on underlying demand growth, and less emphasis on available cattle to the market. This could help to reestablish a wide trading range, which may contain the cattle market through most of April. Cash cattle interest is still quiet with bids and asking prices yet to be seen. Active trade is likely to be pushed to the last half of the week, although with packers remaining short bought and last week's early trade, it is possible that trade could be seen in the next couple of days. But if moderate gains hold in futures trade, both sides will likely wait as long as possible. Boxed Beef cut-outs at midday are mixed, $0.35 higher (select) and down $0.89 per cwt (choice) with light movement of 76 total loads reported (58 loads of choice cuts, 8 loads of select cuts, no loads of trimmings, 9 loads of ground beef).

FEEDER CATTLE:

Feeder cattle futures appear to be treading water Tuesday morning with most contracts mixed in a single-digit price range. April futures are holding a firm gain of 45 cents per cwt sparked by active support in nearby live cattle trade and aggressive hog market support. April feeder cattle seem to have been caught up in spillover buying activity, while the rest of the complex remains much more cautious Tuesday morning. The focus on potential long-term stability in live cattle trade is being tempered by overall lack of volume through the entire cattle market. This could keep prices moving higher and lower in a narrow range through the rest of the session.

LEAN HOGS:

Active gains seen early in the session Tuesday continue to hold with most contracts holding gains of $2 to $3 per cwt. At this point, deferred-month May 2020 contracts are the only contract trading limit higher, while most other futures are $2 to $2.50 per cwt higher. The stability seen Monday in the complex has helped to rekindle bullish fundamental support as traders quickly step into the market based on expected pork movement. There continue to be so many unknowns surrounding expected pork demand and export markets, but traders remain hopeful that U.S. pork will partially fill the void in Chinas demand needs due to African swine fever. Cash prices are lower on the National Direct morning cash hog report. The weighted average price fell $0.38 at $74.90 per cwt with the range from $68.00 to $77.00, on 2,960 head reported sold. Cash prices are unreported due to confidentiality on the Iowa/Minnesota Direct morning cash hog report. Pork values have started to quickly adjust higher once again with gains seen in all primals except rib and belly cuts. Pork cutouts gained $0.88 per cwt at $83.03 per cwt with 208 loads traded. Lean hog index for 3/29 is $75.80 up $1.92, with a projected two-day index is $76.70 up $0.98.

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

(CZ)

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