Sharp losses are seen through the entire livestock complex as traders remain focused on aggressive grain buying based on lower corn production expectations. This is likely to add even more weakness to livestock trade through the end of the session. Corn futures are higher in moderate trade. July corn futures are 4 cents higher. Stock markets are lower in light trade. Dow Jones is 50 points lower with NASDAQ down 32 points.
Active pressure quickly moved through live cattle trade Wednesday morning as traders were unable to sustain firm buyer support seen earlier in the week. August and October futures are leading the complex lower with $2.27 per cwt losses as trades try to focus on active gains in grain trade while feeder cattle futures have seen sharp market pressure over the last two sessions. Beef demand is expected to remain strong through the summer and fall months, but the current amount of cattle in the feeding system is likely to put increased pressure on the market, especially if beef prices move higher due to higher production costs. The impact of marginal gains in consumer price levels in non-peak seasons could quickly change buying patterns and create long term impacts on beef movements. Cash cattle activity remains quiet Wednesday morning with a few bids seen in Kansas and Nebraska. Bids are developing at $110 to $112 live and $185 dressed. Asking prices have quickly been offered at $115 and higher live and $185 to $188 dressed. It is uncertain if business will be accomplished before the end of the day, leaving most trade to be pushed to Thursday or Friday. Boxed Beef cut-outs at midday are mixed, $0.82 lower (select) and up $0.01 per cwt (choice) with light movement of 79 total loads reported (45 loads of choice cuts, 16 loads of select cuts, 11 loads of trimmings, 7 loads of ground beef).
Continued gains in corn and soybean markets Wednesday morning quickly added to the bearish market tone in feeder cattle futures. Sharp triple-digit losses re seen in all contracts with spot-August futures trade holding a $3 per cwt loss. At this point, it appears there is not enough momentum to push prices to limit losses of $4.50 per cwt based on prices finding a resting point with $2.60 to $3.20 per cwt losses. The underlying weakness in the complex has moved prices to $135 per cwt, but still well above May lows of $133 per cwt, and hovering in the wide $7 per cwt price range seen over the last two weeks.
Strong pressure has continued to develop across lean hog trade with increased softness. December through May futures are leading the complex lower with triple digit gains focusing on the overall lack of new information about potential trade moving to China. With increased feed prices likely to continue through the rest of the year, traders are unwilling to buy into the current market structure. Narrow losses are seen in spot trade, as current production will be less impacted by the sharp gains in feed prices and current demand is generally known based on domestic needs. Cash prices are lower on the National Direct morning cash hog report. The weighted average price is down $0.46 at $74.74 per cwt with the range from $67.00 to $77.00 on 7,122 head reported sold. Cash prices are lower on the Iowa/Minnesota Direct morning cash hog report. The weighted average price is down $0.26 at $75.18 per cwt with the range from $67.00 to $77.00 on 2,987 head reported sold. Pork values shifted lower following a $9.55 per cwt loss in rib values. Pork cutouts fell $1.02 per cwt at $82.74 per cwt with 179 loads traded. Lean hog index for 6/10 is $79.66, down 0.29, with a projected two-day index is $79.54, down 0.12.
Rick Kment can be reached at firstname.lastname@example.org
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