DTN Midday Livestock Comments

Cattle Prices Rally Friday

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

Sluggish early trade has quickly turned to active price support in cattle trade. This is helping to solidify buying interest in feeder cattle and live cattle trade as traders cover short positions seen during the week. Hog markets remain mixed with trade war concerns still limiting additional buyer interest. Corn futures are lower in light trade. July corn futures are 3 cents lower. Stock markets are lower in light trade. Dow Jones is 165 points lower with Nasdaq down 77 points.

LIVE CATTLE:

Live cattle futures have gained underlying support late in the week with most contracts holding firm gains based on additional underlying support in feeder cattle trade. Front-month June futures are stable at $111.95 per cwt while other nearby contracts have moved back above $108 per cwt through midday trade. The potential to bring additional buying back to the table following recent market liquidation is expected to help solidify price levels, although markets are not expected to move back to previous highs due to the volatility and global economic uncertainty in the complex. Cash cattle activity appears to be wrapped up for the week with live trade in the South at $120 per cwt, $2 to $3 per cwt lower than last week. Northern Dressed trade was seen in a wide range of $185 to $196 per cwt, The weighted average is nearly $6 per cwt lower than last week. Boxed Beef cut-outs at midday are mixed, $0.76 higher (select) and down $1.53 per cwt (choice) with moderate movement of 74 total loads reported (32 loads of choice cuts, 19 loads of select cuts, 9 loads of trimmings, 14 loads of ground beef).

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FEEDER CATTLE:

Strong buyer support has moved into feeder cattle late Friday morning with traders focusing on end-of-week positioning as the strong weakness and emotional selling has eroded through the complex. Deferred trade is showing the most aggressive support through the complex with increased direction focusing on the ability to move late 2019 and 2020 contracts to triple-digit gains. The market remains extremely oversold, with recent selling creating a vacuum that traders are willing to step back into given the expectation that live cattle trade may stabilize through the next couple of weeks.

LEAN HOGS:

Lean hog futures continue to bounce higher and lower through the morning with the latest pressure focusing on short-term contract months with June futures leading the mixed trade lower. With concerns that a trade deal with China may not develop anytime soon, spot-month contracts are holding losses near $1 per cwt. The overall pressure in the complex is limited to nearby trade as light to moderate gains are seen in deferred trade with the focus on still bullish demand expectations to meet world demand. The threat to pork production continues to be real in most Asian countries, and beyond the focus of China. This may limit additional pressure in 2020 contracts. Cash prices are lower on the National Direct morning cash hog report. The weighted average price fell $0.05 per cwt at $80.47 per cwt with the range from $75.00 to $83.00, on 8,140 head reported sold. Cash prices are higher on the Iowa/Minnesota Direct morning cash hog report. The weighted average price added $0.18 per cwt at $82.88 per cwt with the range from $81.00 to $83.00, on 4,620 head reported sold. Pork values eroded through the endof the week with aggressive losses in rib and ham cuts. Pork cutouts fell $0.99 per cwt at $85.83 per cwt with 176 loads traded. Lean hog index for 5/8 is $82.76 up 0.08, with a projected two-day index $82.80 up 0.04.

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

(CZ)

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Rick Kment