DTN Livestock Close: Cattle Futures Crash In Reaction to Record March Placement

Triple-digit losses rocked cattle futures thanks to long liquidation and bearish reaction to larger-than-expected March placement activity confirmed on Friday. On the other hand, nearby lean hog futures bounced significantly higher.

 

Midday: Cattle markets have quickly moved sharply lower. The losses have adjusted to the increased placement levels seen in feeder cattle numbers on the cattle on feed report. This could add even more uncertainty to the volatile market through the end of April.

GENERAL COMMENTS:

Livestock futures are mixed to mostly lower at midday following a strong push higher in the cattle complex. There is expected to draw additional trade volume near closing bell.

Corn prices are lower in light trade. May corn futures are 5 cents lower. Stock markets are lower in light trade. The Dow Jones is 161 points lower while Nasdaq is down 51 points.

LIVE CATTLE:

Aggressive market pressure has continued to move into all live cattle trade. This has moved through the complex with weakness seen greatest in June and August futures. These contracts have posted $2 to $2.15 per cwt losses, although the rest of the market are also posting triple-digit losses and quickly pulling away from the support seen over the last couple of weeks.

Even with the downward movement in the market, it is hard to imagine that the overall tone of the market is turning bearish at this point, as traders continue to focus on the potential of recent market support and some underlying strength that could still move back into the market during the next couple of weeks.

Cash cattle trade is undeveloped with bids quiet Monday. Overall show lists are smaller with Texas show lists quite a bit smaller while Nebraska offerings are slightly higher. Overall numbers are slightly smaller than last week. Asking prices are still undeveloped but will likely be more readily available by midweek.

Beef cut-outs at midday are mixed, $0.17 lower (select) and up $0.71 per cwt (choice) with light movement of 65 total loads reported (32 loads of choice cuts, 15 loads of select cuts, 10 loads of trimmings, 8 loads of ground beef).

FEEDER CATTLE:

Sharp losses have quickly moved into feeder cattle futures with the most aggressive pressure seen in deferred contracts. October and November futures are holding losses over $2 per cwt as traders continue to focus on the cattle on feed report which was released Friday.

With 111% feeder cattle placed in feedlots compared to an estimated 107.5%, the bearishness of the market could continue through the next couple of days. The overall pullback from the bullishness seen over the last couple of weeks in the cattle markets is also giving to the market pressure.

LEAN HOGS:

Strong morning gains have developed through nearby lean hog futures trade focusing on short-covering activity. The focus on nearby buyer support helping to draw light support into the complex and cover spreading activity in cattle markets early in the week seems to be the main agenda early in the week.

May futures are holding an 80 cent gain, although at this point, any market move is just window dressing given the aggressive downward price moves seen over the last couple of weeks and significant pressure through the complex. There may be some additional follow through buyer support in the market, but unless some support is seen in pork values and the cash hog market, this new found rally will be meaningless.

Cash prices are lower at midday on the National Direct morning cash hog report. The weighted average price fell $0.39 at $53.10 per cwt with the range from $49.00 to $54.00 on 3,417 head reported sold.

Cash prices are lower on the Iowa Minnesota Direct morning cash hog report. The weighted average price added $0.80 at $52.76 per cwt with the range from $49.00 to $54.00 on 420 head reported sold.

The National Pork Plant Report reported 153 loads selling with prices gaining $0.95 per cwt. Lean hog index for 4/20 is at $61.10 down $0.49 with a projected two-day index of $60.49 down $0.61.




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