DTN Midday Livestock Comments

General Comments

Sharp triple-digit losses are seen in all livestock trade Thursday morning. Limit losses quickly moved into hog trade following a bearish export sales report which posted no new sales to China. Strong follow through pressure in cattle trade continued to focus on market liquidation after Wednesday's push lower. Corn futures are mixed in light trade. July corn futures are 1/4 cent higher. Stock markets are mixed in light trade. Dow Jones is 116 points lower with Nasdaq up 22 points.

LIVE CATTLE:

Active selling has continued through the morning across live cattle futures. Triple-digit losses are seen in all contracts, with June through December futures trading $2.20 to $2.30 per cwt lower. This latest round of pressure has continued to push through short term support with June contracts at $116.07 per cwt. The combination of pressure in cattle trade earlier in the week and limit losses in the hog complex has created widespread selling interest through the morning. It is expected that prices will continue to hover in the current range through the end of the session, with little to no additional buying stepping back into the complex. Light cash cattle trade is being reported in the North through late morning with prices at $205 dressed and $127 live. This is generally $3 per cwt lower than week ago levels and is starting to account for the sharp losses in futures trade. Business in the south may be done, as feeders may hold onto cattle into early May given the cash market reaction in the North Thursday morning. Boxed Beef cut-outs at midday are higher, $0.21 higher (select) and up $0.63 per cwt (choice) with active movement of 117 total loads reported (81 loads of choice cuts, 18 loads of select cuts, 6 loads of trimmings, 12 loads of ground beef).

FEEDER CATTLE:

Sharp losses redeveloped early Thursday morning and have continued to shift lower through the morning. This has pushed contracts $2 to $2.50 per cwt lower with August through October futures holding losses near $2.50 per cwt at midday. Traders are not only focusing on follow-through pressure following aggressive losses Wednesday, but sharp pressure in hog trade and concerns of very little supportive market news is allowing for widespread liquidation. Current losses are likely to hold through the end of the session, allowing for potential additional end-of-week pressure to develop Friday.

LEAN HOGS:

Sharp limit losses have quickly and aggressively flooded into the lean hog futures complex Thursday morning. The lack of additional pork sales to China in the export sales report has quickly caused aggressive market liquidation. June through December contracts are locked in $3 per cwt losses despite an attempt to back away from the limit losses early in the session. Traders seemed to expect continued consistent selling week after week, given the last two weeks posted total sales over 100,000 metric tons. Even with the sharp losses, nearby prices are still $14 to $18 per cwt above support levels set during early spring. Cash prices are lower on the National Direct morning cash hog report. The weighted average price fell $0.51 per cwt at $80.23 per cwt with the range from $73.00 to $82.50, on 3,631 head reported sold. Cash prices are unreported due to confidentiality on the Iowa/Minnesota Direct morning cash hog report. Pork values surged higher in light morning trade following aggressive gains in Picnic and Belly cuts. Pork cutouts added $3.51 per cwt at $90.49 per cwt with 142 loads traded. Lean hog index for 4/23 is $82.79 up 0.72, with a projected two-day index is $83.40 up 0.61.

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

(CZ)

Copyright 2019 DTN/The Progressive Farmer. All rights reserved.