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DTN Livestock Midday: Sharp Pressure Redevelops in Feeder Cattle

Ernst Undesser
By Rick Kment DTN Analyst December 6, 2017

DTN Livestock Midday: Sharp Pressure Redevelops in Feeder Cattle

Photo: MSU Extension

Aggressive triple-digit losses in feeder cattle trade has created increased pressure through not only the feeder cattle market, but all livestock trade Wednesday. This may spark additional pressure through the end of the session.

GENERAL COMMENTS:

Sharp losses in feeder cattle trade has created significant pressure across the entire livestock complex. This softness remains focusing on increased market uncertainty as all markets are holding firm losses at midday.

Corn prices are lower in light trade. December corn futures are 1/4 cent per bushel higher. Stock markets are mixed in light trade. The Dow Jones is 2 points lower while Nasdaq is up 2 points.

LIVE CATTLE:

Pressure has continued to build through the complex with triple-digit losses quickly moving through deferred contract months following the lack of support in the feeder cattle market. Even though nearby live cattle futures are able to limit losses during the morning, increased pressure may spark follow-through liquidation in all contract months.

Cash cattle trade has started to develop in the North with dressed deals seen at $188 in Nebraska. This may not be able to set the tone for the week, but it is expected that the pressure in futures trade will keep markets soft through the end of the week. Bids are seen at $116 to $117 live basis, which may lend to markets steady with the extremely light trade seen Tuesday.

The Fed Cattle Exchange Auction today listed a total of 653 head, with 0 actually sold, 309 head listed as unsold, and 344 head listed as PO (Passed Offer). The state by state breakdown looks like this:

  • KS 242 total head, with 0 head sold, 92 head unsold, 150 head listed as PO ($117.25);
  • NE 217 total head, with 0 head sold, 217 head unsold, and 0 head listed as PO;
  • TX 194 total head, with 0 head sold, 0 head unsold, and 194 head listed as PO ($117.50);
  • CO — no cattle reported;
  • IA — no cattle reported;
  • other states — no cattle reported.

The delivery date/weighted averages breakdown is as listed:

  • 1-9 day delivery: 653 head total, 0 head sold;
  • 1-17 day delivery — no cattle reported;
  • 10-17 day delivery — no cattle reported;
  • 17-30 day delivery — no cattle reported.

Beef cut-outs at midday are lower, $1.61 lower (select) and down $0.2.26 per cwt (choice) with light movement of 81 total loads reported (42 loads of choice cuts, 25 loads of select cuts, 4 loads of trimmings, 10 loads of ground beef).

FEEDER CATTLE:

Sharp losses have flooded into the feeder cattle futures once again Wednesday morning following the aggressive triple-digit losses seen late Tuesday. The continued pressure in the market is adding even more concern that widespread selling pressure and liquidation will continue.

Losses have backed away from session lows in most contracts, but still are trading $1 to $3 per cwt lower as traders try to find some sense of support through the complex.

LEAN HOGS:

Moderate to strong pressure is seen in lean hog futures trade once again Wednesday morning following the triple-digit losses Tuesday and aggressive downward market pressure in the cattle complex. Spillover weakness has quickly and uniformly spread through the hog market which is adding concerns not only about the ability to offset fundamental pressure, but could bring some technical shifts back into the market.

Cash prices are lower on the National Direct morning cash hog report. The weighted average price is down $0.16 at $59.34 per cwt with the range from $54.00 to $60.00 on 4,086 head reported sold.

Cash prices are lower on the Iowa/Minnesota Direct morning cash hog report. The weighted average price fell $0.95 at $58.84 per cwt with the range from $54.00 to $59.50 on 895 head reported sold.

The National Pork Plant Report posted 193 loads selling with carcass values falling $1.34 per cwt. Lean hog index for 12/04 is at $64.35 up $0.43 with a projected two-day index of $64.85, up $0.50.

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Ernst Undesser
By Rick Kment DTN Analyst December 6, 2017