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DTN Livestock Midday: Swift Losses Develop

Ernst Undesser
By Rick Kment DTN Analyst September 12, 2017

DTN Livestock Midday: Swift Losses Develop

Photo: MSU Extension

Triple-digit losses have quickly developed across the live cattle and lean hog futures complex midday Tuesday. Commercial liquidation has quickly stepped into the complex with underlying pressure seen in nearby contracts which is quickly eroding short term support.

GENERAL COMMENTS:

Strong pressure has developed across livestock markets with triple-digit losses seen in live cattle and lean hog contracts at midday Tuesday. The softness in outside markets and concern with pressure in underlying meat market fundamentals has allowed overall livestock markets to quickly erode Tuesday.

Corn prices are lower in light trade. December corn futures are 10 cents lower. Stock markets are higher in light trade. The Dow Jones is 60 points higher while Nasdaq is up 9 points.

LIVE CATTLE:

Strong pressure quickly developed in December through April live cattle futures with each of these contracts holding triple-digit losses. This has created moderate to firm softness through the complex as traders are looking for follow-through commercial selling activity to develop through the rest of the complex. December contracts have shifted below $112 per cwt, which may cause additional longer term softness through the end of the session.

Cash cattle remains at a standstill Tuesday with bids and asking prices still generally undefined with very little interest shown by either side at this point in the week. It is expected that a few token bids may start to develop by the end of the day Tuesday or early Wednesday, but it may not allow for trade to be seen until later in the week. The lack of follow-through support in futures trade may limit overall urgency in the cattle market.

Beef cut-outs at midday are mixed, $0.53 higher (select) and down $0.32 per cwt (choice) with moderate movement of 94 total loads reported (53 loads of choice cuts, 12 loads of select cuts, 18 loads of trimmings, 11 loads of ground beef).

FEEDER CATTLE:

Moderate pressure has developed through feeder cattle futures at midday after attempting to hold light to moderate gains through most of the morning. The inability to sustain early market support has come following pressure in live cattle and lean hog futures which has slowly eroded on the support in all feeder cattle markets.

Widespread pressure in grain markets following the USDA crop report has led to additional pressure through the complex during late morning. Although it is uncertainty about how much pressure will be seen through the rest of the week, traders are focusing on the ability to bring stability to the complex through the end of the session.

LEAN HOGS:

Active nearby market liquidation has developed in lean hog futures Tuesday morning with the early pressure developing into wide ranging triple-digit losses in nearby contracts.

This has pushed the October contract to a $1.70 per cwt loss at midday, and pushing prices below $60 per cwt. This is the first time since October 2016 that October futures fell below $60 per cwt, creating additional market concerns that additional liquidation may continue through the complex.

Cash prices are lower on the National Direct morning cash hog report. The weighted average price fell $0.92 at $56.24 per cwt with the range from $54.00 to $57.50 on 12,531 head reported sold.

Cash prices are lower on the Iowa/Minnesota Direct morning cash hog report. The weighted average price fell $0.83 at $56.16 per cwt with the range from $55.00 to $56.50 on 8,102 head reported sold.

The National Pork Plant Report reported 197 loads selling with prices falling $1.74 per cwt. Lean hog index for 9/8 is at $67.91 down $1.03 with a projected two-day index of $67.37, down $0.54.

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Ernst Undesser
By Rick Kment DTN Analyst September 12, 2017