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DTN Livestock Midday: Price Pressure Develops

Ernst Undesser
By Rick Kment DTN Analyst November 16, 2017

DTN Livestock Midday: Price Pressure Develops

©Debra L Ferguson Stock Photography

Firm pressure has quickly redeveloped across all livestock futures as traders back away from midweek support. Trade volume in cattle and hog markets remain sluggish, although the overall tone of the market remains weak.

GENERAL COMMENTS:

Strong market pressure continues to be seen across the livestock complex with traders focusing on increased market weakness and pulling back from midweek gains in cattle futures. The overall tone of the market remains weak, although prices are still well above support levels in all markets, limiting the overall impact of eroding market prices due to the recent market support during the month of October.

Corn prices are lower in light trade. December corn futures are 1 cent per bushel lower. Stock markets are higher in light trade. The Dow Jones is 197 points higher while Nasdaq is up 90 points.

LIVE CATTLE:

Moderate losses have developed through the live cattle futures complex with 80 to 90 cent losses holding at midday in nearby contracts. The overall lack of support in the complex continues to focus on underlying selling pressure which has developed over the last two weeks.

Even with the wide market slide seen across all cattle futures, nearby and deferred contracts are in no immediate danger of breaking through support levels thanks to the aggressive market rally which developed through the last half of October.

Cash cattle activity remains generally light following trade which developed Wednesday. A few bids have resurfaced in the North at $188 dressed basis, which is in line with previous bids and sales earlier in the week. It is likely that the tone of the market has been set with most of the business needing to be done already accomplished.

Some potential sales may still develop in the North over the next couple of days, but with the light holiday week ahead, many may hold out at this point. Asking prices on remaining cattle are at $120 live and $192 dressed.

Beef cut-outs at midday are lower, $1.87 lower (select) and down $0.14 per cwt (choice) with moderate movement of 92 total loads reported (25 loads of choice cuts, 19 loads of select cuts, 10 loads of trimmings, 38 loads of ground beef).

FEEDER CATTLE:

Light activity is seen once again across feeder cattle futures with traders backing away from the gains which developed Wednesday, but unwilling or unable to push more additional selling pressure through the complex. This may continue to allow cattle markets to hold light to moderate pressure through the rest of the week.

Even with the aggressive losses seen during the month of November, cattle trade remains well within the short term trading range thanks to the aggressive price support which developed through late October. January futures still are over $3 per cwt above support levels, creating uncertainty as to long term direction.

LEAN HOGS:

Triple-digit losses have quickly redeveloped across the lean hog futures complex with traders focusing on increased market weakness despite the bounce higher in December contracts midweek. December futures are trading $1.12 per cwt lower, hovering at $60 per cwt while February futures have also traded over $1 per cwt through later morning.

Although the rest of the complex has been contained to a narrow trading range, the overall lack of support across the market is glaringly obvious. This may spark follow through pressure through the rest of the complex going into the holiday week.

Cash prices are lower on the National Direct morning cash hog report. The weighted average price fell $0.69 at $57.38 per cwt with the range from $52.00 to $57.90 on 2,495 head reported sold.

Cash prices are unreported due to confidentiality on the Iowa/Minnesota Direct morning cash hog report.

The National Pork Plant Report posted 161 loads selling with cutout values falling $0.07 per cwt. Lean hog index for 11/14 is at $66.31 down $0.31 with a projected two-day index of $65.97, down $0.40.

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Ernst Undesser
By Rick Kment DTN Analyst November 16, 2017