DTN Midday Livestock Comments

General Comments

Triple-digit losses in feeder cattle futures and building pressure through the rest of the livestock complex quickly developed following a morning rally in corn trade. The renewed support in corn and wheat futures is sparking concern of further production costs in livestock. Corn futures are higher in moderate trade. July corn futures are 6 cents higher. Stock markets are mixed in light trade. Dow Jones is 45 points higher with NASDAQ down 8 points.

LIVE CATTLE:

Mixed trade remains in live cattle futures despite the strong push lower through the rest of the complex. Traders have quickly backed away from initial market gains, although nearby futures are holding firm with prices steady to 10 cents higher. The triple-digit losses in feeder cattle trade has led to moderate pressure in deferred live cattle trade. Although there remain several factors limiting further market support, the sharp morning rally in corn and wheat markets is sparking renewed pressure. Cash cattle trade remains quiet Thursday morning following light trade that has developed each day this week. Business in the South appears to be done for the week following light to moderate trade at $112 to $113 per cwt. Dressed business in the North is likely to be the main focus over the next couple of days with limited bids of $183 seen through the morning. Asking prices are holding at $114 and higher live and $185 and higher dressed. Boxed Beef cut-outs at midday are higher, $0.25 higher (select) and up $0.44 per cwt (choice) with light movement of 57 total loads reported (37 loads of choice cuts, 13 loads of select cuts, 3 loads of trimmings, 3 loads of ground beef).

FEEDER CATTLE:

Cattle futures have quickly turned lower midday Thursday following strong buying moving into corn and wheat markets. This price reversal once again puts the emphasis on higher production costs and growing uncertainty of long-term market direction. August feeder cattle futures are holding losses of $2.35 per cwt, moving prices back to $137 per cwt. Given the strong buyer support over the last several days, feeder cattle futures are still well above contract and long-term lows, but the lack of stability in the market is creating widespread concern. If a 6-cent jump in corn prices can shift feeder cattle markets more than $2 per cwt, traders remain unsettled about further market shifts. This is likely to create underlying liquidation in the complex, weeding out short-term market participants from the complex.

LEAN HOGS:

Active pressure has quickly and aggressively moved into lean hog trade late morning with a turnaround in corn prices quickly eroding previous market support. July and August lean hog futures are leading the market lower with $1 to $1.60 per cwt losses at midday. This overall lack of support in the complex may add even more end-of-week pressure through the entire complex. Little additional direction has developed in the trade war with China, but continued sales to China have developed last week. A total of 17,100 metric tons were reported in the export sales report. This is supportive, but at this point traders seem to be looking for a much more significant weekly amount before getting excited about pushing prices higher. Cash prices are lower on the National Direct morning cash hog report. The weighted average price is down $1.31 at $75.05 per cwt with the range from $68.00 to $76.00 on 3,455 head reported sold. Cash prices are unreported on the Iowa/Minnesota Direct morning cash hog report. Pork values weakened following triple digit losses in rib and belly cuts. Pork cutouts fell $0.58 per cwt at $83.07 per cwt with 296 loads traded. Lean hog index for 6/4 is $80.67, down 0.23, with a projected two-day index at $80.56, down 0.11.

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

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