DTN Midday Livestock Comments

Livestock Futures Surge Higher

Rick Kment
By  Rick Kment , DTN Analyst
(DTN file photo by Russ Quinn)
General Comments

Triple-digit gains are consistently seen through the entire livestock complex. Lean hog futures are testing limit gains once again with $3 per cwt gains triggered in December contracts. Cattle futures are firmly higher, based on increased underlying support through the entire market. Corn futures are higher in light trade. May corn futures are 2 1/2 cents higher. Stock markets are mixed in light trade. Dow Jones is 100 points higher with Nasdaq down 48 points.

LIVE CATTLE:

Firm triple-digit gains have quickly moved into the complex Thursday morning as recent selling pressure in live cattle and feeder cattle has now triggered technical support. There is growing focus on regaining market stability in live cattle trade with the potential for additional long-term support. The most recent gains have established the lower boundaries or what could become a moderate to wide trading range. This trading range has the potential to hold through most of April. Traders still expect moderate to firm demand through spring and summer contract, although beef production continues to remain strong. Cash cattle bids are redeveloping in the North at $203 to $205 per cwt Thursday morning, but unable to gain much attention due to the higher futures trade. Light trade developed in the South Wednesday at $124 per cwt live basis. This is $1 per cwt lower than last week. Asking prices remain at $127 live, and $208 and higher dressed. Boxed Beef cut-outs at midday are mixed, $0.47 lower (select) and up $0.69 per cwt (choice) with light movement of 53 total loads reported (31 loads of choice cuts, 6 loads of select cuts, 4 loads of trimmings, 12 loads of ground beef).

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FEEDER CATTLE:

Strong triple-digit gains have flooded into feeder cattle trade with May and August futures leading the complex higher. May futures are $2.27 per cwt as active trade has moved back into the complex. The recent market pressure has left the complex in an oversold state, allowing for increased commercial and investment trade to quickly step back into the complex through the end of the week. Continued support is seen in live cattle trade based on morning gains in feeder cattle futures.

LEAN HOGS:

Lean hog futures are making another run at daily trading limits with aggressive gains developing Thursday morning. June futures are leading nearby contracts higher with $2.90-per-cwt gains, while deferred December contracts are trading at $3 per cwt, locked in limit gains. The continued focus on a potential trade deal with China has sparked underlying buyer support. This has moved June futures $9 per cwt higher since Monday. The rally continues to be based on the expectation that China will need to supplement pork supplies with U.S. production. Even though no sales or shipments to China were seen in the latest export sales report, the market remains extremely bullish. Cash prices are higher on the National Direct morning cash hog report. The weighted average price added $1.06 at $76.28 per cwt with the range from $67.00 to $78.50, on 4,005 head reported sold. Cash prices are unreported due to confidentiality on the Iowa/Minnesota Direct morning cash hog report. Pork values quickly surged higher with firm gains in most primal cuts. Pork cutouts added $1.94 per cwt at $82.20 per cwt with 108 loads traded. Lean hog index for 4/2 is $77.70 up 0.92, with a projected two-day index is $78.26 up $0.56.

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

(CZ)

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Rick Kment