Firm pressure quickly developed in lean hog and feeder cattle trade Friday morning as traders once again face strong grain market support which will increase production costs in all livestock markets. Triple-digit hog losses are leading the complex lower. Corn futures are higher in moderate trade. July corn futures are 9 cents higher. Stock markets are lower in light trade. Dow Jones is 52 points lowerwith NASDAQ down 36 points.
Mixed live cattle trade is seen through midday with nearby futures steady to 30 cents higher based on end of the week positioning and underlying firmness in beef values. Deferred futures are shifting lower with narrow losses slowly replacing initial buyer support seen Friday morning. Trade is expected to remain sluggish through the end of the complex, limiting overall market direction in live cattle trade despite firm continued pressure in feeder cattle futures. Cash cattle markets remain generally undeveloped, although active bids are seen in most areas. Bids are seen at $112 to $114 live and $185 dressed. It is expected that at least light trade will need to be done Friday in order to secure desired procurement levels next week. Asking prices remain at $114 and higher live and $187 and higher dressed. Boxed Beef cut-outs at midday are mixed, $0.26 lower (select) and up $0.21 per cwt (choice) with moderate movement of 64 total loads reported (46 loads of choice cuts, 11 loads of select cuts, no loads of trimmings, 7 loads of ground beef).
Firm losses have continued to develop through the feeder cattle trade following increased corn prices during the morning. Traders continue to focus on the short and long term impact of higher feed prices and the impact on not only cash prices paid for feeders, but also the overall impact on beef production over the next year. Trade is hovering in a narrow to moderate range with prices 50 to 80 cents per cwt lower at midday.
Active pressure is quickly moving into lean hog trade with triple-digit losses seen in most midday contracts as prices are $1.50 to $1.80 per cwt lower. The lack of support has moved July futures below last week's support levels posting the lowest prices since early March. Continued strong domestic production remains a long-term concern for the entire market with limited export demand likely from China in order to help tighten supplies. Even though China needs pork, the assumption that they would buy aggressively from us given the trade war tensions is misguided. Some future sales are expected to move to China, but until a trade deal is reached and relations improve, active exports to the country are not likely. Cash prices are lower on the National Direct morning cash hog report. The weighted average price is down $0.14 at $75.69 per cwt with the range from $67 to $76.75 on 6,890 head reported sold. Cash prices are unreported due to confidentiality on the Iowa/Minnesota Direct morning cash hog report. Pork values firmed following mixed prices in primal cuts. Pork cutouts added $0.85 per cwt at $83.86 per cwt with 148 loads traded. Lean hog index for 6/12 is $79.57, up 0.03, with a projected two-day index is $79.46, down 0.11.
Rick Kment can be reached at firstname.lastname@example.org
© Copyright 2019 DTN/The Progressive Farmer. All rights reserved.