DTN Livestock Midday: Pressure Develops in Cattle Trade

©Debra L Ferguson Stock Photography

Sharp triple-digit losses have quickly moved through live cattle and feeder cattle futures. This move lower is not only quickly eroding price support but may significantly affect the ability for buyers to step into the market over the near future.

GENERAL COMMENTS:

Sharp losses have quickly flooded into the complex with triple digit pressure holding in both live cattle and feeder cattle trade. This overall lack of direction in the market may continue to add uncertainty to the entire market. Hog futures have backed away from early gains, but continue to hold moderate gains.

Corn prices are steady to higher in light trade. March corn futures are 3/4 cent higher Wednesday. Stock markets are higher in light trade. The Dow Jones is 101 points higher while Nasdaq is up 56 points.

LIVE CATTLE:

Sharp losses have quickly developed across all cattle trade as the feeder cattle market continues to lead the live cattle futures lower. What started out as narrow to moderate losses has quickly developed into a triple-digit market tumble as nearby contracts are trading near $2.50 per cwt lower. This not only is affecting potential trade activity, but is likely to change the tone of the market, which has posted moderate to strong gains over the last week.

Cash cattle trade still remains quiet with a few token bids developing at $127 per cwt in the South and $205 in the North. Asking prices are seen in the South at $132 per cwt although Northern cattle have not been priced at this point. The Fed Cattle Exchange Auction today listed a total of 218 head, with zero actually sold, 127 head listed as unsold, and 91 head listed as PO (Passed Offer). The state by state breakdown looks like this:

  • KS 218 total head, with zero head sold, 127 head unsold, 91 head listed as PO ($126.25);
  • NE – no cattle reported;
  • TX – no cattle reported;
  • 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: 218 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.

Boxed Beef cut-outs at midday are higher, $0.85 higher (select) and up $1.93 per cwt (choice) with light movement of 61 total loads reported (32 loads of choice cuts, 9 loads of select cuts, 5 loads of trimmings, 15 loads of ground beef).

FEEDER CATTLE:

Sharp losses have quickly developed across the complex with traders focusing on increased market pressure in all cattle trade. This has moved nearby futures from $3 to $3.50 per cwt lower as the overall lack of direction in the market continues to limit market support.

There is also a growing sense of market liquidation seen in the market following the inability to aggressively push prices higher at the end of last week and initial trade this week. Volatility in the market is expected to continue through much of the week.

LEAN HOGS:

Light to moderate buyer support is stepping into the lean hog futures complex. This is adding to the market uncertainty following strong triple-digit gains seen early in the session. The support through the week is helping to draw additional trade to the market, but it is uncertain just how much long support this will build through the entire complex term.

Cash prices are lower on the National Direct morning cash hog report. The weighted average price is down $0.23 at $64.06 per cwt with the range from $57.00 to $64.16 on 3,005 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 171 loads selling with carcass values falling $0.68 per cwt. Lean hog index for 2/19 is at $71.41, down 0.80 with a projected two-day index of $70.78, down 0.683.

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